Payment instruments, finance and development

This paper studies the effects of a payment technology innovation (mobile money) on entrepreneurship and economic development in a quantitative dynamic general equilibrium model. In the model mobile money dominates fiat money as a medium of exchange, since it avoids the risk of theft, but comes with electronic transaction costs. We show that entrepreneurs with higher productivity and access to trade credit are more likely to adopt mobile money as a payment instrument vis-a-vis suppliers. Calibrating the stationary equilibrium of the model to match firm-level data from Kenya, we show significant quantitative implications of mobile money for entrepreneurial growth and macroeconomic development

Does quality matter for innovations in low income markets? The case of the Kenyan mobile phone sector

Growing interest in lower income groups as consumers in emerging and developing markets has led to discussion on the issue of product quality, but so far work has generally focussed on simple goods rather than technology and innovations. However with innovations, one would expect that product quality would be more crucial in order to push trust of complex products amongst inexperienced users. Thus, this paper seeks to build understanding around issues around quality of innovations; focussing on what quality declines mean for vulnerable low income groups, and the types of policy approach that can be undertaken to improve quality.Research was undertaken in the mobile phone sector in Kenya where firms have increasingly focussed on diffusion amongst low income consumers. Here it was found that quality has become an increasing contested and problematic terrain. In the short term, decline in quality is often acceptable for inexperienced low income users, but in the longer term this becomes detrimental to innovations both in terms of trust and expense amongst consumers, as well as effecting the livelihoods of informal entrepreneurs who are often part of delivery of innovations to low income groups.Policy around quality was found to be present, but was limited by two key tenets. First, where implementation actors were unclear, public standards on quality tended to collapse into private standards followed only by diligent firms. Second, standards were often applied at a firm level which missed out on issues emerging amongst downstream diffusion actors often involved in adaptations which linked to quality variability.Undertaken and focussed correctly, policy on product quality drives diffusion of innovation and supports a level playing field, which in the long term supports more inclusive innovations. A lack of focussed policy can lead to the risk of rejection of innovation and 'big bang' policy interventions that are detrimental to the trust in innovations amongst low income groups. © 2014 Elsevier Ltd

Exploring the contribution of mobile money to well-being from a capability perspective

This study considered the impact of mobile money on well‐being and development from a capability perspective using data from the Upper East Region of Northern Ghana. The evidence suggests varied capability enhancing benefits of mobile money use, ranging from empowerment to participate in the financial system, to choice, and agency to meet various functionings that contribute to better well‐being outcomes in employment, health, and education. Erratic power supply and a poor network signal in some communities are unfreedoms that need removing for people to take advantage of the huge well‐being and human development potential of mobile money. The long‐term dependency on family and social networks for monetary support is a capability diminishing feature of mobile money. The study findings support the necessity to adopt a multifaceted and pragmatic conceptualisation of development in information and communication technology for development research