Monday, August 22, 2016

Is the Rural Hometown a Worthwhile Investment?


This post is the second in a 2-part blog post series. For part one, see here.

The rural hometown is where all human mobility begins. In the case of developing countries, poverty, fewer job opportunities, and limited business activity hound rural development. It is thus not surprising that migration — be it to the cities, to the more gainful towns, or to overseas countries — pulls people to go elsewhere. Place becomes a livelihood and unfortunately rural birthplaces become less attractive, even to their own residents. But since not all can move, kith and kin stay at home, in their rural hometowns. The person moving, for his or her part, forges an economic relationship with their families through domestic and international remittances. 

Compared to non-migrant households, these kinds of households can be financially fortunate. These remittances can even contribute to local economic activity by enticing demand for more goods and services. Moneyed households, especially those with surplus incomes, can start businesses — or even invest in local property, in the products of local financial institutions, and other opportunities available locally. So remittances come to be an economic lifeline for rural areas. Remittances become a type of financing rooted in people and institutions that have links with origin communities of the migrants. Given that remittance incomes flow into rural areas, a crucial question that emerges is related to how rural communities could maximize the benefit of these remittances? For this, it is necessary to identify the local conditions that can stimulate the fruitful use of remittances. It may also be important to assess if moneyed income-earners like overseas migrants are financially capable of investing.

This is the case for the Philippines, a major origin country of overseas migrants who are scattered worldwide. Here, a group of researchers has been implementing a project that goes by the acronym RICART: Remittance Investment Climate Analysis in Rural Hometowns. Ricart sought to find out if overseas migrants and their families find wisdom in parking their money in the place —the rural hometown — they are familiar with. Even the way the rural hometown is governed, as well as the place’s socio-economic and investment-related conditions, was examined. Four municipalities have been studied over the last four years. The latest one is in Guiguinto in Bulacan, an hour’s ride away from Manila and a hub for manufacturers. Guiguinto is a progressive local community, economically.

Guiguinto is first-class in terms of income, and in securing business permits is perhaps the quickest in Bulacan. Registered businesses in Guiguinto are some P9.343 billion big in terms of resources. Local productivity, estimated at P1.235 million per worker, is high in Guiguinto. This is not to mention that Guiguinto has an estimated 3,959 overseas Filipinos sending incomes to loved ones back there, supplementing local incomes. Guiguinto’s economic lure has been a catch basin for 44 branches of financial institutions found in the community along with shopping centers. These institutions are accessible to local residents. 

So do overseas Guiguinteños find their community worthy to invest in? Ricart’s survey there (n=229 respondents who are overseas migrants and migrant and non-migrant households) found that only 30 percent of overseas remitters and 43 percent of overseas migrant families invest in Guiguinto. About 33 percent of remitters and 40 percent of migrant families have businesses in Guiguinto. And 44 percent of remitters and 26 percent of migrant households hold savings accounts.

These results can be surprising to observers. Why are many of these moneyed people not investing? One reason could be attributed to limited levels of financial literacy. The same Ricart survey for Guiguinto found that the three respondent-groups claim they do not need assistance in handling money, and have “good” levels of knowledge and skills on handling money. But when asked about three basic concepts surrounding finance — interest, inflation and loans — less than eighty percent of respondents gave correct answers to the survey’s questions. However, this does not mean respondents’ reasons for not investing in their rural hometown are suspect. Migrant households’ heads were asked in a focus group discussion what governs their decisions to invest in their own rural backyard. Their answers can be visualized like a magnifying glass, so a Magnifying Glass of Rural Investing Assessment was developed (see diagram). From the perspective of the person making the investment decision, in this case the remittance-receiving household, their assessment can be likened to holding a magnifying glass, inspecting personal, familial, environmental and institutional developments before saying yes to rural hometown investing.

The magnifying glass of rural investing assessment
(in Alvin Ang and Jeremaiah Opiniano, 2016)
The person trying to decide looks at his or her experiences as well as personal disposition toward saving and investing. The family also plays a role in the investment decision, with the household’s current financial condition being an important factor. Family members also assess present and future needs while weighing daily needs against short-to-long-term prospects. If we zoom out to the immediate geographical environment of Guiguinto. Visible economic progress is both good news and yet also a matter of concern given that moneyed people may then become prey for scammers. Peaceful and orderly local conditions may encourage the desire to invest in the hometown.

Finally, there is the assessment of the available financial institutions. While interviewees are concerned with the litany of requirements necessary to avail of a financial product, the financial institution’s stability is also a primary consideration. Previous as well as ongoing episodes of scams are reasons for such careful assessment. Some financial institutions operating in Guiguinto were also asked about overseas town mates’ financial behavior. There is concern about how incomes are predictably used for more consumption. But some overseas Guiguinteños save and even avail of housing loans. Some migrant town mates are also concerned about the accessibility of the financial institution, signaling the need to receive the overseas remittance quickly.

This Magnifying Glass of Rural Investing Assessment may reveal differing perspectives and attitudes on the part of prospective rural hometown investors like overseas migrants. There may be those who are attuned to risk-taking or those who are risk-averse. Despite the variations, financial literacy initiatives are an important development agenda, more so for the rural community. If a rural economy that is progressing wants to sustain the gains of such growth and benefit more from overseas remittances, capacity building through local financial literacy programs may well be the perfect complement.

For rural localities like Guiguinto, overseas and even domestic remittances signal the need to address a policy gap: how can these remittances be maximized for local development? Localities also have their own contexts to consider when remittances are to be channelled to productive purposes (in the case of Guiguinto, there’s industrialization and a declining role for agriculture, although gardening is a culturally-rooted entrepreneurial venture that still clicks locally). For its part, the local government has instituted many reforms over the past decade to make Guiguinto’s business climate friendly to investors and entrepreneurs.

Lessons from this migration-and-development story of Guiguinto have informed a Philippine local competitiveness agendum. Regardless of who sits in power nationally and locally, harnessing remittances for rural development will require political will and strategic interventions so that resources like remittances naturally go to productive economic activities found locally. Improving the business climate is a necessary precondition to overseas remittances development potential. It may help that financial institutions properly inform their clients locally of the many savings, investment and entrepreneurial options available to them.

In the end, if rural residents are more financially literate and capable, and if local officials offer programs and policy-making that account for the needs of local investors, moneyed rural residents like overseas migrants could be encouraged to make their rural hometown the natural choice for investing.


This piece is an outcome of the research project "Overseas remittances, hometown investing and financial inclusion: A remittance investment climate (ReIC) study in a rural hometown." This project was conducted by the non-profit Institute for Migration and Development Issues (IMDI) and supported by the Institute for Money, Technology and Financial Inclusion (IMTFI) of the University of California-Irvine. Read their final report here.

Read Dr. Ang's recent commentary on financial literacy and financial inclusion in the Philippines here.

Dr. Alvin Ang is professor of Economics at the Ateneo de Manila University.
Jeremaiah Opiniano is the IMDI executive director and an assistant professor of Journalism at the University of Santo Tomas. For comments:

Tuesday, August 9, 2016

Women, Social Capital, and Financial Inclusion: Linking Customer Data with Ethnographic Perspectives

By IMTFI Researcher Sibel KusimbaAmerican University, Gabriel KunyuIndependent Researcher, and Dave MarkCTO, M-Changa

December 2015, research team with one of our participants in the IMTFI project
Photo Credit: Chap Kusimba 

Financially including women has become a priority among development and finance experts. Women are less likely to be financially included. However, it has been widely observed that when included they are more likely to produce substantial economic gains for their households. It follows then that any good financial inclusion strategy must include women (GPFI 2015). Women face barriers to inclusion due to combination of various factors such as lack of literacy, access to mobile phones or banks, and time constraints among others. What does finance mean to unbanked women? For some time now, advisers to the industry have been suggesting flexible bank hours, mobile agents, and phone interfaces in multiple languages to address these realities (GPFI 2015; El-Zoghbi 2016; Murray 2016). In this context, IMTFI’s approach to use an ethnographic perspective to understand practices of money and finance around the world can help build models for women’s finance that connect to their existing practices (Dalinghaus 2015).

M-Changa platform:
fundraising for a wedding 
Our research seeks to understand the effect of gender on networks across differences in social class, income, and rural/urban settings. In this post we focus on a customer dataset from the fundraising platform M-Changa in Kenya, which provides interesting clues. M-Changa collects money via mobile money, EFT or Paypal into a unique account and is used by originators to fundraise money for medical needs, funerals, school fees and weddings. The company provides transparency and its activities are directed towards ensuring both trust and transparency which include posting and making public on their website hospital and school bills and funeral certificates. Since its launch in 2012, M-Changa has managed over 6000 fundraisers.

A customer data analysis by FSD Kenya categorized M-Changa fundraising events into five types based on the success of the fundraiser. Among these, one cluster was distinctly successful in fundraising events and was able to raise a large amount of money over a relatively short period of time from the largest number of contributors. In this cluster the originators were 45% female – even though only 20% of all fundraiser originators in the dataset as a whole are female.  What can account for the great success of women in using M-Changa fundraising?

The M-Changa dataset finds a compliment in the findings of ethnographic study that we undertook in 2012 and 2014 focusing on the social networks of primarily farming people in western Kenya. Supported by IMTFI, the study recorded examples of informal finance groups based on friends, family, co-workers, and neighbors, and drew the pathways of money sending connecting family members. We found that money circulated among close relatives, especially siblings, who were often connected to mothers and mother’s relatives. In these networks, women tended to be central nodes in the many pathways of money sending and receiving to other network members.

Furthermore, emotional connections and powerful social norms around reciprocity and obligation often seemed to drive remittances to women in Western Kenya. For instance, consider the case of Emmanuel, an unmarried 22 year-old caretaker at a private primary school. Emmanuel was raised by his maternal grandmother Wilbroda because he was born out of wedlock. His mother eventually married elsewhere and he has eight half siblings. He dropped out of school after the eighth grade due to financial reasons.

Emmanuel (Photo Credit: Gabriel Kunyu)
Emmanuel sends money to Wilbroda every month before she even needs to ask him. In the case of his mother, however, he normally waits for her to call, which she often does at the end of each month. Emmanuel explained that normally, if the amount he sends his mother is less than her minimum expectation (say 200 shillings (US $2)), she will not call back to give thanks but instead go silent, implying she was not satisfied with the amount. He says she will sometimes call with a false excuse of checking on him, but at the end of the call inquire if he has something to send her. In May 2016, Emmanuel’s mother called and requested assistance, barely two weeks after Emmanuel had sent her 300 shillings (US $3). As a way of encouraging Emmanuel, she also called her brother − Emmanuel’s maternal uncle − who in turn called Emmanuel and persuaded him to send her money, explaining that she needed it for buying fertilizer. Because of his uncle’s call, Emmanuel said he broke into his savings and sent her 1000 shillings (US $10). Emmanuel never sends money to his father, who took little interest in him growing up and refused to pay his school fees. His remittances to his mother rely on nudges from his maternal uncle and his own sense of obligation. His grandmother is clearly his financial priority.

The M-Changa dataset, like the Western Kenya study, shows a similar advantage for women in collecting resources, as nodes and hubs of social networks. It is all the more intriguing that M-Changa women are not rural farmers, but primarily college-educated, salaried, and technology-savvy Nairobi women. Further ethnographic work with M-Changa’s clientele will seek to tease out more of the sources of fundraising skill for its affluent, urban female users. Are emotional bonds or gendered social norms around obligation to women the common factor such that these urban women leverage close ties of family? Do they have broad networks reflecting diverse social circles, in which they perhaps cultivate more or closer friendships than men? How far do these urban-centered networks extend to relatives in rural areas? Following questions like these through a thick data understanding (Wang 2013) of users − taking into account well-elaborated customer data and ethnographic studies simultaneously − can reveal otherwise overlooked insights into the ways in which women may be financially included based on their existing financial strengths.

Sources Cited 

Digital Financial Solutions to Advance Women’s Economic Participation. GPFI (Global Partnership for Financial Inclusion), November 2015. 

Dalinghaus, Ursula. 2015. Going to Where the Women are: Insights from the Making Finance Work for Women Summit in Berlin, Germany.

El-Zoghbi, Mayada. 2016. What Excludes Women from Formal Finance in the Arab States?

Murray, Inez. 2016. Catalyzing Women’s Financial Inclusion: The Role of Data.

Wang, Tricia. 2013. Big Data needs Thick Data.

Wednesday, August 3, 2016

The Heads and Tails of Monetary Duality in Cuba

Read more about the rise and imminent fall of Cuba's dual currency experiment in a piece titled "The Heads and Tails of Monetary Duality" by IMTFI Postdoctoral Scholar and Fellow Mrinalini Tankha in the webzine Cuba Counterpoints. Using the striking iconography on the two national currencies - the Cuban Peso and the Cuban Convertible Peso - she shows how at the core of monetary duality in post-Soviet Cuba is the process of reconciling the role of the state and market.

Tuesday, July 26, 2016

Can I try again? Working with research participants as they map their networks

By IMTFI researchers Sonia Laguna, Rosa Guerrero and Maria Elisa Balen

Our larger research work focuses on the deployment of mobile banking in changing practices of social protection for forcibly displaced families in Colombia. Part of our research entailed drawing family maps of our informants’ family practices of social protection. Methodologically, this involved two steps: First, we mapped members of the network and in the second step we mapped the different goods and services circulating within that network. The goods and services included not only money but also care, food, housing, etc. Here, we draw from our fieldwork experience to highlight some of the interactions between research participants and researchers engaged in the process.

We were interested in discovering the map drawing with our research participants in order to discuss different aspects of the maps rather than assuming them beforehand. Networks can be drawn using computer software which allow for homogeneity of representations, ease of navigation for spatial arrangement and rearrangement of nodes, and the possibility to build and manipulate layers of information. However, using computers was an obstacle for our participants, so we chose to work with hand drawn maps. Such a choice entailed a series of challenges and findings that we share here.

During this and other research endeavors, we noticed various methods to which research participants were already accustomed: for instance, being asked questions and their answers being recorded in paper or audio formats, and being asked permission to take pictures or videos of them whilst they go about their everyday lives. With these and other methods however, the stages of design and analysis tend to be carried out elsewhere: back home in researchers’ rooms or offices, discussing with colleagues or poring over their notebooks or computers. As researchers, we take our time in formulating problems, carefully crafting and often piloting approaches before we throw ourselves into fieldwork. We also take considerable time in reflecting upon and analyzing the information being explained. This can also be the case in mapping social networks that are used primarily as a tool for the researcher to interpret and convey her research findings. Our research departs somewhat from this model. Our approach encouraged an active involvement of participants in the elucidation and visualization of their own worldviews, as well as fostering an ongoing, joint reflection about findings. The rationale for an approach that places the interaction of researchers and research participants into central focus can be traced back to various theoretical and ethical considerations. These include participatory action research approaches giving prominence to the collective construction of knowledge and highlighting the transformative aims of scholarship (Salazar, 1992; Fraser, 2004) as well as an understanding of explanation as something that does not displace people’s experience (Smith, 1996). But this post is less about our research methodology’s underpinnings and more about their implications while mapping networks.

For the first step of mapping the members of the network we conceived of a set of conventions: circles for females and triangles for males, double lines for marital unions and lines stemming from such unions conveying offspring. The circle/triangle differentiation was easily incorporated by research participants and perhaps showed how ingrained such distinctions are. It was the other aspects of the exercise that presented difficulties. 

For the first participant, we provided a sheet of paper (size A2) and colors for drawing her map. In this, some hurdles came up with handling spatial distribution: it so happened that either some members of the network ended up being cramped in a corner or just did not fit within the page even as a large part of the page remained blank. In response to this we changed our strategy which proved useful. We provided participants with a large piece of paper for practice so that they could get a feel of how the distribution could look like (see picture below).

Other issues had less to do with practice and more to do with fitting the realities of their networks into the picture: if a widow remarries but keeps her connections with the family of her late husband, does she include both mothers-in-law? How does one distinguish between formal unions and those outside of marriage that have nonetheless produced offspring? What if a neighbor or friend, who is not part of the family, is actually quite important and ought to be included?

We realized that the practice of encouraging participants to have another go and include the adaptations they saw fit was quite productive. One woman, for example, devised a convention to distinguish formal unions from informal ones or those that were no longer operating. She used a crisscrossed double line (similar to this: ₩₩₩ ) to include another woman her husband had lived with during a period in which they were separated and from which he had other sons, and she used it to include the father of one of her grandchildren who never assumed his responsibility. Others came up with diverse solutions: participant ‘A’ organized different types of relationships in different sections of the map (siblings in the bottom left, nieces and nephews in the bottom right, children in the upper left) to allow for her friends to have a space in the upper right, whilst participant ‘B’ drew her connections towards different family units that were themselves organized around the woman in each family (her mother, her late husband’s mother, and her current husband’s mother). 

Our lesson was that, on the one hand, it was important for the participants to have many attempts, as it gave them the chance to ‘polish’ their work between drafts, just as researchers do. Additionally, this allowed for the sequence of attempts to be used as a resource: why does an estranged husband appear in the second, but not first attempt? Why do some members appear in more central positions in one draft compared to another? Such questions ended up being engines for further discussion. Rather than impose a correct way of doing things, giving participants leeway to adapt allowed for a more creative and richer grasp of their own worldviews. Such adaptations allowed for differences among the maps, instead of the homogeneity of results one would get using a computer program for this procedure.

We are, however, left with the question of whether these deviations stemming from reflections – as well as interactions between the researchers and participants- are to be located within the metric of the problem or as a resource in itself. This is a real question, for which we don’t have a set answer. If participant A in the example above aggregates types of relationships, whilst participant B focuses on family units organized in terms of couples and their offspring, this can affect both the sorts of flows being drawn and the interpretation of them. In the case of B one can see how a sibling with many children tends to receive more money than what he can give to others, and this is not something that would be as evident in A’s map. But insisting on the organization around family units could be an imposition on A, who may be telling another story: one in which personal relations with a nephew, for example, are not mediated by the sibling/parent but rely on the relation or affinities between the two specific individuals.

Going back to the parallel with network-mapping computer software in which centrality is provided by the flows in the network, in our research the centrality of a node in the distribution was based on the person’s perception. Thus, while the drawing of flows could eventually challenge the initial centrality given to a node (´look how many things pass/ don’t pass through this person’), this was not something that could be resolved by means of a straightforward formula. And this was so because we wanted to map different sorts of flows, which do not necessarily have numerical equivalents. Let us move on to discuss, then, the second step of our mapping exercises: the drawing of flows.

We began by ascribing different colors to the different sorts of goods and services flowing through the network: yellow for food, red for housing, green for money, dark blue for care and light blue for advice. To this we added an extra color (orange) to be used if the participant wanted to draw another flow that was not included in the ones we presented. Not all used it, but this extra provision turned out to be interesting. One participant chose to draw ‘union’ which for her denoted joint participation in festivities or everyday recreation and hanging out, while another drew ‘yahé’ — the traditional indigenous medicine through which he communicated and took care of his daughters. This signaled to us other sorts of interactions that pertained to wellbeing and a good life while highlighting that the components of such rituals and interactions were quite diverse.

Arriving at the most relevant categories in research tends to be an exercise of fine tuning between two poles that can be equally unproductive: too much abstraction and too much complexity. Too much abstraction can empty the map of the sort of referents that are meaningful for a person, or enforce the invisibility of particular dimensionswhich has happened often enough, particularly when discussing the activities carried out in the domestic sphere. That too much complexity can also be problematic was a lesson, which became all-too-evident for us in this second part of the exercise. The design issues we faced in the drawing of goods and services circulating through the network were, again, both a matter of operational convenience and flexibility. For while including different sorts of flows could give us a more comprehensive view of the interactions in the network, too many flows could make the resulting map unreadable. Even without the extra color, our maps ended up being quite saturated and difficult to read (see picture above).

Fortunately, we had the opportunity to try again. Instead of drawing all the flows on a single sheet of paper, we used acetate sheets in order to be able to juxtapose layers. Adding and extracting layers gave us considerable room to play with. And it allowed for this to happen on site, with the combination of different layers becoming a resource for discussions with participants. In the end, there were iterative changes not only in the various attempts by research participants but also in the implementation of our methods (see an example of the outcomes in the pictures below). Trying again is an option that we as researchers were thankful for, and so were participants: for who hasn’t in general had moments and situations where they have thought ‘this is what I should have done’ or finished a conversation and after a while thought ‘Ah! This is what I should have replied!’

Sonia's fourth attempt, and her map with the money layer on top
The interpretation of these maps began along with their crafting, and has not finished. We still have some work to do, including analyzing what these maps tell us about present views in the context of other fieldwork material we gathered about past and future perspectives of families’ social protection practices. We want to emphasize that drawing their maps was something these participants enjoyed (and so did we). Some of the pros discussed hereof the different attempts and on-site conversations during the map-drawing becoming a resourcecould also be obtained in other contexts using computer software. But one thing to be said about whatever means chosen is that networks can help visualize not only quantities of flows but entire worldviews. And for the latter, thinking about the best way of harnessing participants’ abilities is key for their engagement.    

Fraser, N., H. Dahl, P. Stolz and R. Willig (2004) ‘Recognition, redistribution and representation in capitalist global society: An interview with Nacy Fraser’, Acta Sociológica, Vol.47, No.4, pp.374-382.
Salazar, M.C. (1992) (editor) La investigación-acción participativa. Inicios y Desarrollos.  Editorial Popular: Madrid, pp.14-20.
Smith, D. (1996) ‘Telling the truth after postmodernism’, Symbolic Interaction, 19, pp.171-202.

Tuesday, July 19, 2016

IMTFI Summer 2016 Newsletter

IMTFI Summer 2016 Newsletter is finally out!

Now available:
  • IMTFI’s Insight & Impact Conference videos, blogpost write-ups, and photos
  • Upcoming learning event in Abidjan, Ivory Coast
  • And a whole new slew of syntheses, publications, presentations, media hits and collaborations to catch up on

Have a read:

Wednesday, July 13, 2016

"Financial Practices on the Borderlands (la línea) in times of Crisis" in Human Organization

What are "informal" currencies? How do people transact using both formal and informal currencies? What economic and social calculations do these financial practices entail, for women in particular? For more, read Magdalena Villarreal and Lya Niño new article in Human Organization, "Financial Practices on the Borderlands (la línea) in times of Crisis" based on their IMTFI-funded research on women who frequently travel back and forth between two border cities in Mexico and the United States!

Article Abstract:
Financial practices are not only about money. This paper discusses how people living and working in the Mexico/United States borderlands weave their economic lives by combining, associating, and disassociating formal and “informal” currencies. We base our analysis on transactions carried out by women who commute regularly between the twin cities of Mexicali and Calexico, detailing their financial practices; the frameworks of calculation they employ; and the social, cultural, and financial mechanisms they and their families use to cope with their daily lives. These include the use of monetary and non-monetary calculations and resources, different types of indebtedness and forms of reciprocity. Such findings reveal mistakes in the tenets upon which much anti-poverty and financial aid programs are based. A focus on people's use of particular calculations, resources, and social relations will help substantiate better alternatives that can be implemented in supporting their economies.

Tuesday, July 5, 2016

Cashlite or Cashless? It Depends on the Financial Ecosystem

By IMTFI Researchers Vivian Dzokoto & Mwiya Imasiku

Advertisement for a Mobile Money brand
Some say that the end of cash is in sight because we’re all going digital. Conducting financial transactions with cash has some perks like ease of use. However, it is also associated with problems and handling costs (see for example David Wolman's The End of Money). Therefore, going cashless – or cashlite - makes sense. In this blog on our research in Zambia, we focus on the form of cashlite-ness in which there is a transition to a more portable form of cash. Going cash-lite by introducing new cash denominations made sense in Zambia, which experienced inflation rates as high as 188% during the 1900s and early 2000s.

Introducing more portable cash
Going cashlite can alleviate some of the problems associated with cash. This is especially true in countries (especially in developing economies) burdened with large volumes of low-value currency notes because of high rates of inflation. 

Low Value Currency notes
Transitions to a lower volume of cash can occur when people favor other forms of payment over cash. But another way to reduce the volume (and costliness) of cash transactions is when states introduce a new, higher value legal tender (currency), here referred to as “Cash2.0.” When higher value denomination notes are introduced, the volume of cash being handled decreases, while the value remains unchanged. This improves efficiency, and reduces costs and hassles. Switching to Cash2.0 means switching to a lighter (less bulky) form of cash.

In Zambia, high rates of inflation led to a number of difficulties with accounting and bookkeeping, keeping statistical records, and data processing software. The need for consumers to carry large amounts of cash created higher risks and inconvenience. It also increased the costs for technology and maintenance of banking and payment systems. 
However, a 5-year period of much lower inflation combined with a more optimistic economic outlook and favorable macroeconomic conditions convinced Zambia’s Central Bank to implement a rebasement of the national currency in 2013. The process of going cash-lite in Zambia involved changes to the national legal tender summarized below:

Simultaneous Cashlite and Cashless Options: New Currency vs Mobile Money
Since going cashless and cashlite (via a currency change) both make sense, what happens when both of these are introduced to citizens of a country around the same time? Would the introduction of a more convenient form of cash make people less interested in cashlessness? Or, could the transition to cash-lite spur an interest in going even lighter, eliminating interest in the use of notes and coins altogether? To explore this idea, we examined people’s preferences for and experiences with the new currency and mobile money in Lusaka, Zambia shortly after the new Kwacha was introduced.

Our main sources of data were: 
  • A sample of 687 survey respondents from Lusaka
  • A subset of 34 participants who provided additional information via interviews 
  • Vendor surveys in malls and markets in Lusaka 
  • Representatives of Mobile Network operators and the Bank of Zambia who provided us with additional information
Fieldwork was conducted for five to seven months following the rebasement. We asked individuals about their experiences, knowledge and use of the new currency and mobile money. Vendors were asked whether they accepted Mobile Money as a form of payment.

Three Major Findings

The new currency notes were generally favored over the old currency due to increased portability and ease of use

“One Pin” Old currency
The new notes were perceived as easier to use than their predecessors. Unlike in other countries (e.g. Ghana’s redenomination in 2008, people experienced minimal confusion when encountering the new notes. Some interviewees suggested this had to do with the font and form of the cash value printed on the old Kwacha note. Instead of 10,000, the value was represented as “10000” with the last three zeros in smaller font than the rest of the value of the note. As such, our interviewees argued they were already used to ignoring the three zeros at the end of the currency, which were dropped in the rebasement. Similarly, the three zeros at the end of the currency were ignored in the local nickname for the old currency. In local parlance, 1000 old kwacha was referred to as 1 “pin,” 10,000 as 10 pin, etc. presumably because a bundle of low value notes were kept and “pinned” in sets of a 1,000 to keep track of large volumes of Kwacha notes. In this sense, there had already been a culturally driven rebasement of sorts in local representations of the old currency preceding the actual rebasement. In essence, the three zeros of the old Kwacha were being discounted long before the rebasement made this official. An additional factor leading to the ease of transition which one bank official noted was the fact that it was three zeros that were dropped during the rebasement, which differed from all other previous old to new currency conversion rates. 

The new coins were perceived as burdensome to use and cumbersome to carry around

The rebasement included the re-introduction of coins to Zambia, which previously had limited use due to inflation. The general consensus was that while the notes were convenient to use and keep on one’s person, the coins were less so. A typical strategy people adopted to deal with coins was saving them for a rainy day. An alternative was to gradually learn or remember how to incorporate them into daily use.

It’s not a question of cashless versus cashlite - yet

More than half of our sample did not use mobile money (MM) in the initial period following the currency rebasement. Our sample’s MM users – who used the product mostly to send remittances - did not report a change in MM use post-rebasement. 

saving coins for a rainy day
Our data indicated that the initial slow adoption of mobile money was markedly influenced by: 
  1. The limited “payment spaces” in which it could be used 
  2. Lack of awareness of mobile money companies and their products, and 
  3. Unclear distinctions between online banking and mobile money for banked consumers. 

At the time of data collection, most groceries and other consumer items that the average Lusakan purchased on a daily basis could not be paid for using Mobile Money. Apart from bill pay, only 2 of the 50 retailers sampled in malls, and none of the 100 retailers in markets sampled, accepted mobile money as a form of payment. However, some retailers mentioned that they were considering mobile money as a payment option in the future.

Example of Mobile Money-Retailer partnership:
Customers who paid with Mobile Money got a free movie ticket.

Post Fieldwork Developments

In the years since our fieldwork was conducted, mobile money has been marketed aggressively in Zambia. For instance, the company Zoona (, interestingly a non Mobile Network Operator (MNO), has become a major player in Zambia’s mobile financial service marketplace. The harder Zoona and other Mobile Money providers work to enlarge the Mobile Money ecosystem beyond remittances and bill pay, the more likely it will be for the average Lusakan consumer to find themselves needing to choose between cashless and cashlite payment options. For now, the answer will be more retailer than consumer driven.

Read their final report here