Mobile Banking in KenyaFor the past 18 years, mobile banking in Kenya has helped thousands of people gain control over their money while reducing the country’s poverty rates. The phone-based mobile money service named M-PESA, started by Vodafone in cooperation with Safaricom, has expanded financial inclusivity by allowing access to financial services for even the unbanked through the convenience of a mobile phone. According to the Vodafone website, “M-PESA offers a safe, fast and low-cost way to pay, receive, transfer and store money.” Through local M-PESA agents, individuals are able to withdraw, send or deposit cash, negating the need to visit a bank that may be located far away from a community.

More than Mobile Banking

One of the main benefits of M-PESA is that a bank account is not necessary for using its services. This is a significant advantage to impoverished people in rural, remote areas who cannot afford hefty bank fees, do not earn enough to warrant the opening of a bank account, do not have the formal documentation necessary to open a bank account or simply reside too far away from a bank, making bank services costly and inconvenient.

M-PESA transaction fees are low and M-PESA resolves the need for individuals to travel long distances with physical cash to give to another, which could also be potentially dangerous. With many M-PESA agents, typically local small businesses or vendors, situated across Kenya, individuals can easily transact whenever necessary.

M-PESA was officially launched in Kenya in 2005, and by 2016, Kenya had 40,000 M-PESA agents operating in the country and more than 20 million M-PESA users in a country of 47 million people at the time. A study published in 2016 by Georgetown economics professor Billy Jack, and a colleague at MIT, Tavneet Suri, highlights the impacts of M-PESA on poverty in Kenya. The researchers conclude that between 2008 and 2014, MPESA “increased per capita consumption levels and lifted 194,000 households, or 2% of Kenyan households, out of poverty.”

Statistics from the World Bank confirm the poverty reduction progress during this period. The percentage of Kenyans living under the poverty line dropped from 46.8% to 36.1% over a period of one decade ranging from 2005 to 2015. Kenya’s rural areas noted the most significant decrease as poverty declined from around 50% in 2006 to about 38.8% in 2016, marking a decrease greater than 10%.

Empowering Women

The study by Jack and Suri states, “The impacts, which are more pronounced for female-headed households, appear to be driven by changes in financial behavior — in particular, increased financial resilience and saving — and labor market outcomes, such as occupational choice, especially for women, who moved out of agriculture and into business.”

In the report, Suri mentions that the service helped about 185,000 female farmers move out of farming jobs and into business or retail, giving them a more secure income considering the volatility of the agricultural industry due to changing weather patterns.

Other Issues Impacting Kenya

Despite mobile banking in Kenya bringing poverty rates down, Kenya is currently grappling with the impact of severe droughts, and this is affecting the financial and food security of farming families.

A press release by the International Rescue Committee in February 2023 highlights that the current drought in Kenya has the potential to leave 5.3 million Kenyans facing acute food insecurity from March to June 2023. The report notes that 2.4 million livestock have died due to recent droughts, putting pastoralist families out of work and diminishing their food security.

A United States Agency for International Development (USAID) press release in February 2023 reports that the Horn of Africa has experienced a fifth failed rainy season and Kenya’s cumulative rainfall is now 70% lower than the country’s 30-year average. On top of previous aid measures, USAID intervened in February 2023 with a provision of more than $126 million in emergency food aid to cover the needs of about 1.3 million Kenyans in drought-affected areas.

People will receive food aid in the form of physical food items or cash-based assistance, depending on whether or not local markets are operational. Cash-based assistance will not only allow families to purchase food items according to their needs and preferences but will also help boost local economies as local vendors will see an increase in sales.

Looking Ahead

In spite of the challenges posed by drought and food insecurity, mobile banking in Kenya, particularly through the M-PESA service, has made significant strides in reducing poverty rates and empowering marginalized communities. By providing easy access to financial services and enabling secure transactions, M-PESA has helped lift thousands of households out of poverty and fostered financial resilience, particularly among women. As Kenya continues to tackle the impact of droughts, ongoing support from organizations like USAID will help alleviate food insecurity and further boost local economies through cash-based assistance programs.

– Samuel Kalantzis
Photo: Pixabay

Food insecurity in Kenya
One of the most devastating effects of the COVID-19 pandemic in Kenya has been the significant increase in food insecurity. Food insecurity in Kenya was already a notable problem prior to the pandemic. In February 2020, 1.3 million people were classified as in crisis, emergency or catastrophe, according to the Integrated Food Security Phase Classification (IPC). A year later, in the midst of the pandemic, that number rose by 15% to an estimated 1.4 million people. Furthermore, 542,000 children aged between six to 59 months are acutely malnourished to the extent that they need treatment.

With the number of people experiencing food insecurity in Kenya continuing to increase, it is more imperative than ever that solutions are implemented. Fortunately, major nonprofit organizations and agencies have enacted policies to significantly reduce food insecurity in Kenya. Here are three innovations that are having a positive impact on the country.

UNICEF Cash Transfers

In coordination with the governments of Finland, Italy, Sweden and the U.K., UNICEF has instituted a cash transfer program for 12,500 families across Kenya. The program grants these families 2,000 shillings bimonthly. This is on top of the 2,000 shillings they receive every month from the national safety net program. The program identified recipient families as the most vulnerable based on existing beneficiary lists for COVID-19 stimulus recovery. The lump-sum transfers have been pivotal in improving food security and child malnourishment. For many families impacted by the pandemic, food security would not be possible without this direct support.


PlantVillage is a project consisting of a website, mobile app and on-the-ground team helping African farmers diagnose crop diseases, monitor pests and crowdsource answers to crop questions. The project has been instrumental in improving food security in Kenya. It helped manage Kenya’s worst locust swarm in 75 years, which exacerbated the nation’s food insecurity problem that was originally ignited by the COVID-19 pandemic. The main goal of the project is to help farmers by providing them with affordable technology and agricultural knowledge. Additionally, the project encourages citizen reporting of the locust situation and food insecurity in general.

The widespread impact of PlantVillage has been immense. According to the Food and Agriculture Organization (FAO), the project protected the food security of 36.6 million people. The project also helped avoid a $1.56 billion loss in cereal and milk production. Melodine Jeptoo, a field coordinator in Kenya for PlantVillage, stated that the organization’s efforts “saved Kenya in terms of food security.”

Agricultural Technology

Another solution that is instrumental in improving food insecurity in Kenya is the innovative agricultural technology initiatives from major organizations and small startups. The two most significant organizations involved are the U.N. Commission on Science and Technology for Development (CSTD) and the World Bank.

CSTD has coordinated with the U.N. Conference on Trade and Development and the CropWatch Program to create an online workshop for Kenyans. The workshop helps farmers understand and utilize an improved crop monitoring system with better agricultural productivity. Meanwhile, the World Bank is in ongoing partnerships with 15 AgTech startups to utilize digital technologies to improve the delivery of inputs, soil testing and crop insurance to enable farmers to overcome restrictions related to COVID-19. In addition, farmers will have better targeted and more effective service delivery, particularly within remote areas.

During the same period of time, two notable startup companies have also been pivotal in mitigating food insecurity in Kenya. The first is Taimba, which is an online platform that has connected rural small-scale farmers to urban retailers. This enables farmers to access markets more easily in the midst of constraints related to COVID-19. The other startup is Solar Freeze, which provides smallholder farmers solar-powered cold storage to store temperature-sensitive fresh agricultural produce in a simpler manner.

Proposed Recommendations for Further Action

The IPC, in cooperation with the European Commission, has proposed numerous recommendations for what could be done to improve food insecurity in Kenya in the long run. In response to acute food insecurity, the IPC has recommended the following:

  • Utilize farm inputs and pest and disease control to ensure long-term post-harvest management.
  • Ensure the extension and maintenance of water structures and systems and promote further rain harvesting.
  • Improve infrastructure in existing schools and expand school meals programs.

By taking these actions, Kenya can hopefully reduce its high levels of food insecurity. Moving forward, it is essential that humanitarian organizations continue to make this issue a priority, coming up with new innovations that have the potential to improve the lives of millions.

– Gabriel Sylvan
Photo: Flickr