Credit Cards, Social Relations, and Serresian Parasites in Chile

IMTFI fellow José Ossandón reports on how the use of credit cards is intertwined with complex social relations in Chile in a case study for IMTFI's Working Paper Series. Drawing upon Michel Serres's notion of "the parasite," Ossandón examines how low-income credit card customers in Chile use their "hidden" social networks to extend credit limits beyond those designed by the credit card companies. By lending cards to relatives and friends, Chileans leverage their existing social networks in complex and surprising ways, demonstrating how financial technologies are always already embedded in intricate interpersonal relations.

Read the full report here.

Understanding the transformative value of Tongan women’s kau tou lālanga: mobile mats, mobile phones, and money transfer agents

By IMTFI researcher Charmaine 'Ilaiu Talei

A kau tou lālanga  in Kāmeli, Neiafu Vava’u,
Tonga. Photo: C. ‘Ilaiu Taleidd caption

Kau tou lālanga is a group of Tongan women who collectively weave one another’s fine pandanus mats to barter and sell. Their prime customers are Tongan women living in diasporic communities around the Pacific Rim. Our research has determined two business negotiations of kau tou lālanga: firstly, to weave per lineal foot, also known as ‘iate, and secondly, to weave towards a ‘gathering’, or kātoanga. An ‘iate negotiation starts with a customer, usually a local person, making an order to a collective to weave one or two mats—only a small quantity. The second negotiation, kātoanga, is a gathering between a number of weavers from a collective and a group of customers, who are mostly Tongan women from overseas. Before a kātoanga, the parties involved negotiate the large number of mats to be exchanged, the sum of cash for the order, and the date and venue of their gathering is also agreed upon. Kātoanga agreements reach higher annual returns than ‘iate negotiations.

Tongan mats, or fala, are part of a wider system of customary gift exchanges within Tongan society. In this customary sense, Tongan mats are cashless forms of value storage. Such value is traditionally activated during a Tongan occasion, such as funerals, weddings and birthdays. A traditional gift from guests to hosts or vice versa could consist of tapa cloth and several types of fine mats. Thus, fine mats—the products of kau tou lālanga businesses—are highly prized items in Tongan material culture. For this reason, this work is part of a wider discussion of gifts of exchange studied by anthropologists: Adrienne Kaeppler (1999), Phyllis Herda (1999), Ping-Ann Addo and Niko Besnier (2008), and Fanny Wonu Veys (2009). However, their analyses exceed the purposes of this blog.

A participant displaying her mats (fala hinehina)
for a kātoanga with her United States of America
based Tongan customer, Tongatapu, Tonga.
Photo: C. ‘Ilaiu Talei

The Kingdom of Tonga is located in the South Pacific (20 00 S, 175 00 W) and is an archipelago of 169 islands stretched throughout 747 square kilometres. The main central island is Tongatapu, where the capital Nuku’alofa is located. Three fieldwork trips were conducted within the project timeframe. A total of eight weeks in two remote islands groups: Vava’u and Ha’apai. Being remote islands they generally have less access to a wider range of cash making opportunities in comparison to the main island. Vava’u and Ha’apai are also mat making epicenters. The fieldwork sites in Vava’u include the rural village of Leimatu’a and Kameli in Neiafu town. In Ha’apai, the sites include the rural villages of Fangale’ounga on Foa Island and Pukotala on Ha’ano Island, and finally, the urban village of Pangai. These village sites were selected based on existing contacts and referrals of where to best find kau tou lālanga groups. A total of 24 participants were interviewed over the course of three trips, 14 from Vava’u and 10 from Ha’apai. Some 20 were sole weavers and all were women and 4 acted as trading agents, of which 2 were men. 

The first objective of this research was to understand what is the transformative value of kau tou lālanga in Tonga and secondly how mobile phones and money transfer platforms help to achieve this transformation. The transformative value was first defined by the authors at the project’s conception as, ‘the potential to move away from an uncontrollable financial situation to a position where one can manage financial challenges with confidence’. The findings have refined and elaborated on this statement.

The first survey investigated (a) motivations for joining a kau tou lālanga (b) understanding one’s financial role in their family and (c) what one spends their profits or wages on, the survey attempted to shape an initial understanding about the transformative value of kau tou lālanga. Preliminary findings show that paying childrens’ education fees, maintaining one’s home through utility bills, feeding dependents and donations to church offerings and supporting village fundraisers are reasons why participants weave and join kau tou lālanga. The three top reasons ranked in order are (1) to pay household utility bills, (2) to pay childrens’ education, and (3) to make church donations. 

It became clear after the first survey that the original definition was limiting the emotional motivations of the weavers. For this reason, the interviews of the second fieldtrip included asking weavers why they chose to do this business and in other words what value they see in this kau tou lālanga? Their responses certainly highlighted that it is not about creating a huge savings account but instead creating a sense of personal satisfaction when one has met the needs of their families. The outcome of providing therefore embeds value into what they do as weavers.  

Our final fieldtrip allowed us to present back a summary of their responses. They were asked to vote yes or no if they agreed with this statement as accurately describing transformative value of kau tou lālanga and why they choose this business. All the weavers present at all presentations answered in confidence ‘yes’ to this statement of transformation. Translated into English:

The transformative value of this business for you as a weaver is not about receiving money to spend or save, but being enabled to financially satisfy the needs of your family, at the time of need and every time of need. Importantly, it is from this position that you gain emotional and mental confidence. It is for this significant reason why you choose to weave and partake in the business of mats.

Moreover, this study broadens our focus on transformations that take place because of the business of kau tou lālanga, such as socio-cultural changes in the role of female weavers in their families. Traditionally, mats have been considered the woman’s domain in Tongan society and it was shameful for a man to dabble in women’s work. Evidently, the financial appeal of the business has normalized the dual-gendered activity of making mats and has helped to remove the male shame of helping, especially when many hands do make the work easier. Undoubtedly, kau tou lālanga is changing the female weaver’s role and consequently others in her family and within the wider Tongan society.

In answering the second objective of this project, the findings reveal that there is a technology knowledge gap for older members of collectives, who are also the leaders and decision-makers in the group. This gap delays business innovations like mobile money and the use of banking applications to facilitate transactions. The very establishment of kātoanga negotiations stresses that weavers and customers alike still prefer to transact face-to-face, so customers can thoroughly check mats before closing a deal and weavers can count their money before releasing the mats. In this way money transfer agencies have not displaced the practice of kātoanga, which explains why money exchange platforms were less important for some collectives and less used by such weavers than what was first assumed. 

The transformative value of kau tou lālanga has been an invaluable investigation because now we can begin to understand the ‘livelihood’ of Tongan weavers; revealing how kau tou lālanga affects the weavers and their dependents but also how weavers shape this business to achieve their customary and financial goals. 

Please click here to see the final report. 

The Thirteenth Cow: Closing Conversations at the IMTFI Sixth Annual Conference

In closing out the public portion of the annual IMTFI conference, Scott Mainwaring reminded participants about all of the work of unpacking the global and the local and interpreting intertwined tangled histories and the challenges to adoption when there are mixtures of devices, which might even include a lockbox with satellite device attached among the ensembles of different technologies.  He also drew attention to the fact that even without smart phones, people in developing countries were doing "amazing work" managing their finances with "just a few alphabetic lines of text."  Now that smart phones with "high resolution beautiful color displays" were on the horizon, the devices were opening up possibilities for more literacy training with "engaging media forms."

Ph.D. candidate Taylor Nelms noted the range of missions and agendas addressed at the conference, including how institutional instability, turnover of officials, and how state offices play into "lines of contestations" that involve everyday practices of the government and different histories of the state in different places to different degrees of heterogeneity.  As the author of Virtualpolitik, a book about the state as both regulator and digital content-creator, I appreciated his emphasizing that the state never functions as a "singular monolithic or homogenous actor," because it has a "range of missions and agendas," as well as his praise for the "fine-grained detail about the state" in many presentations.   He also noted how risk and liquidity may be a function of "the tools we use" and that savings is not one thing, particularly as it involves material infrastructures. As an example, he pointed to the metal box in the collection shown by Ellen Feingold, Curator of the National Numismatic Collection at the Smithsonian, which could not be opened without being torn apart by metal shears.

Caroline Schuster, a previous IMTFI grant recipient, who is now a lecturer at Australian National University) marveled at how rapidly work on mobile money had developed in a comparatively short time and how being "durable and instituted" practices as a "matured" practice.  In particular she claimed that the research questions around access had fundamentally changed, as well as issues about privacy and secrecy.  Like many closing commentators, she cited the work on "the thirteenth cow" presented on the first day on the opening panel about tradition.  To movie goers, she also recommended the Paraguayan film 7 Cajas (7 boxes) to show the complexity of financial interrelationships.  To find out more, you can watch a trailer for 7 Cajas here,

Mrinalini Tankha, an IMTFI postdoc, also reminisced about being part of the first generation of researchers.  But she asserted that -- despite the changing language of research -- the constant of considering trust continues to be "fundamental and contentious in any social organization."  According to Tankha, inequalities of power obviously exacerbate distrust.  She also warned that excessive trust among researchers in seemingly authoritative products, services, institutions, and scholarship could undermine research, and she gave a plug for the closed-door workshops on methodology to follow.

In taking the microphone, organizer Bill Maurer lauded the "six year long conversation" that had begun with a handful of people and had now grown to including 140 researchers in 43 different countries.  In praising this "long conversation," he described the ongoing and continuing revision of hypotheses and how no one was compelled to "tow one line."  As researchers try to understand the "contingent composition" at the heart of various resources, they mirror similarly a "constantly emerging network" that is a "community of inquiry" coming together "with a generosity of inquiry and spirt."

A discussion about collaboration with the financial sector was initiated by Amol Jadhav (GSMA) about working with industry and managing the "balancing act" between on the one hand merely providing opportunistic "market research" and on the other hand generating work that only "exists in paper" and is thus less valuable to the public.  When Maurer turned the question to IMTFI researchers, it was a lively set of responses.  Ana Echeverry of Inspira Lab bemoaned the fact that it was "extremely difficult when you are no one" to have "anything actionable reach those influencers."  She critiqued financial central planners who were "always in Europe" and the impossibility of reaching power brokers like Carlos Slim.  Vivian Dzokoto indicated her enthusiasm for collaboration but acknowledged barriers to uptake and hesitance toward independent perspectives.   Sosthenes Kewe, Technical Director of Financial Sector Deepening Trust, who sat with Johnson Nyella, economist from the Central Bank of Tanzania considered this conversation valuable to "build capacity."  Kewe wanted to hear more about collaborating researchers focusing the design of financial services.  He also encouraged researchers to hold more IMTFI conferences in Africa.  Such venues could have a leveling effect, as in the case of a recent conference in Ghana, which allowed participating market women to challenge the assertions of regulators.   Maurer said that UC Irvine, potential African university hosts, and other forums "defined by academic settings" demonstrate how "the university and academia can provide a neutral space" in which "identities of participants" can be "kept confidential" and "issues of competition" could be ameliorated.

I'll sign off myself as well with this entry for a while.  I've posted a very abbreviated explanation of what has drawn me to this place as a blogger for a number of years, and I hope to be posting some more new stories before this group assembles again.

IMTFI featured on Digital Media and Learning Blog

IMTFI resident blogger, Liz Losh, has been super-busy over the holiday break providing in-depth and fascinating summaries of the findings presented at both days of our annual conference. Her work is reaching a wide audience across the twittersphere under the handle @lizlosh and she has posted about the conference on the Digital Media and Learning Blog. It is well worth a read!

"The fact that a cellular telephone can transmit the value of a particular currency from one party to another may be increasingly obvious, given the rise of specialized digital money services in the United States, such as Square or Apple Pay. Around the world, mobile money does much more than signal access to disposable income or brand name consumer electronics; it can quite literally ensure survival for people on the bottom of the economic pyramid..."

Moving Research Applications into Circulation: Putting Knowledge to Work

The final session of the IMFTI conference focused on research applications.  "Putting Knowledge to Work" was moderated by discussant Michael Joyce of TNP2K (the Indonesian National Team for the Acceleration of Poverty Reduction) who noted that Indonesia had already opened electronic accounts for a million people receiving government-to-person transfers.  He also thought that IMTFI research would be important in ensuring the success of such programs to get people to actually use the "next generation" full suite of tools realized by leading service providers in places such as Kenya with services such as  M-Shwari that had interest-based saving, credit, and more sophisticated models than existing microcredit paradigms.

The first paper on "Effectiveness and Challenges of Using Mobile Money Service in the Implementation of the Social Assistance Grants for Empowerment Programme: A Case of Kiboga District in Uganda" by Julius Okello and Dorothy Massa of the African Institute for Strategic Research Governance and Development  emphasized a G2P case in the Kiboga District of Uganda. Okello explained that SAGE (Social Assistance Grants for Empowerment) was the first major social protection initiative by the government of Uganda and how it was an arm of expanding social protection under the Ministry of Gender, Labour and Social Development. It received funding for launching its services from DFID, Irish Aid, and UNICEF, and it is also supported by Maxwell Stamp, a UK based consulting firm.  Okello explained that SAGE was a five-year pilot program which started in 2011 in Kiboga, Kaberamaido, and Kyenjojo but was later rolled out to another 11 districts.   Researchers noted that Kiboga has a population of 148,606 people, of which 4,808 citizens, both male and female, participate in SAGE.  SAGE targets elderly citizens, those from intact heritage cultures, and other vulnerable populations.

According to Okello, the MTN mobile money service was launched in the country in March 2009 and has registered 1,553,770 users since. He asserted that this translates into an adoption rate of 64,740 persons per month.  On average the relative market share of MTN Mobile Money, ZAP, and M-Sente between March 2009 and February 2010 was 89.6 percent, 9.1 percent, and 1.3 percent, respectively. Given the history, coverage, and capability of MTN Uganda, the government opted to hire MTN mobile services to remit funds to SAGE beneficiaries.  The use of mobile money in Uganda is still relatively new, according to Okello, however.

Okello's study used a mixed methods approach that combined quantitative and qualitative information gathering and was inspired by Creswell & Plano-Clarks' 2011 manual for researchers.   The Kiboga project was designed to consult about three hundred informants.  Quantitative methods included regression analysis and involved statistical figures, tables, and graphs, while the group's qualitative methods emphasized detailed explanation with evidence about their informants' livelihoods.  He showed a complex circuit of stakeholders in the project, who included the government of Uganda, the Bank of Uganda, development partners, The Ministry of Gender, Labour, and Social Development, the Uganda Communications Commission, MTN, MTN district agents, the district coordinators of ESP, and the SAGE beneficiaries themselves.  Because Uganda is one of the worst countries in the world for corruption, according to Okello, the hope is that this system of checks and balances will protect SAGE constituents.  He also worried about potential complaints from telecommunication companies that might feel "locked out" of participation.

For elderly participants without cellphones, MTN created a variety of devices and services, including this yellow box that performed all of the functional financial operations of MTN transfer services.  Yet MTN has relatively limited coverage outside of the capital, so money sometimes cannot reach the beneficiary and becomes diverted to other parties through corruption and fraud.  Unfortunately researchers found that the elderly are often targets who unwittingly share pin numbers because they are reluctant to travel the distance to the point of contact with mobile money agents or are too gullible when told that machines have broken down. In concluding Okello argued that the elderly could still be vibrant economic actors capable of launching businesses, and he closed with hopeful stories of growing sunflowers, poultry, pineapples, and piglets and an anecdote about how ritual slaughter is combined with the seeming windfall of mobile money.

Another G2P program was featured in "Paying Conditional Cash Transfer Programs in Bank Accounts" by Enrique Seira of ITAM-QFD, and the panel shifted its focus to Mexico, where it was also possible to analyze characteristics of debit card owners and their behaviors as consumers.  Seira noted that in Mexico debit card owners have three times more tertiary education, three times more savings, and more trust in general in society and institutions.  (One Seira survey question asked if informants thought that a lost wallet would be returned to measure such trust.)  Debit card owners tend to live in municipalities with 20% more ATMs per capita.  In contrast, Oportunidades “Debit” beneficiaries, who were not self-selected by their decision to get a card and used accounts relatively little, as described in this earlier IMTFI panel.  Seira noted that they also had significantly less education, and although about 45% claimed to have savings, only about 10% had "formal" savings.  This amount of savings represented about 1/50 the numbers common in the general population.  A comparison of late vs early debit card owners in Oportunidades showed that they were similar, which was good for measuring the impact of debit card expansion, as the cards became able to work in ATMs and be accepted in stores.

Seira claimed that the aspect that influenced the value and use of the account was its convenience, although a savings account with no branch nearby and no card able to pay in POS devices was not very useful.  Unfortunately, this was how Oportunidades (Mexico’s main CCT program) operated pre-2009. Of about 1 million savings accounts, none had ATM/Debit card features.  In 2009, Oportunidades started awarding Debit ATM cards in a staggered fashion. Expansion was decided by Oportunidades at the local level (not by bank branches).

Seira has planned to do a DID analysis of the effect of ATM/debit on savings in recipients' accounts. He noted that his sample was based on data on account savings for 342,000+ beneficiaries of 308 Bansefi branches in 411 municipalities during a period covering 17 bimesters: January 2009 to October 2011 (5 bimesters pre-treatment and 12 post, max).  About 70% of participants received an ATM card during the researchers' sample period.  There were three group studied: early switchers, late switchers, and those who had not yet switched.  The three groups were distributed geographically across the country and included similar distributions of indigenous groups.  Although seemingly counter-intuitive, Seira also posited that debit cards could impact savings behavior positively, because withdrawals could be smaller and done in a more controlled manner.  He acknowledged that yesterday's IMTFI session with Jonathan Morduch reached the opposite conclusion that plastic could encourage more irresponsible spending behavior.  Subjects in Seira's study ultimately saved 30% more than non-implementers, although this behavior often took six months to manifest itself.  It also often followed a pattern of significant variation among users, and research indicated that subjects had relatively low financial literacy regarding ATM use and fees.  He observed that new users also frequently checked balances, because they were distrustful about money remaining in the account.

Researchers also found evidence of early implementation problems, especially involving emigration to debit card accounts.  Surveys were also given to 100+ personnel from ATM providers, and those serving in early adopting municipalities seemed to have less knowledge about training materials.  There were also surveys distributed to 5000+ beneficiaries, which revealed that early adopters (even if they have had more time to learn) needed more help to use ATM card than late adopters (57% vs 50%, 5% significance).  While 32% of early adopters knew they had a savings account, only 30% of early adopters knew (10% significant).  Late adopters did 35% more ATM purchases per bimester.  According to Seira, there seemed to be increasing use and trust with time as well.

The final formal presentation at the IMTFI annual conference was "The Use and Impact of M-Shwari as a Financial Banking Product in Urban and Rural Areas of Kenya" by Jane Mutinda of Kenyatta University and Ndunge Kiiti of Houghton College and Emory University.  You can read more about previous IMTFI research produced by Kitii and Mutinda's collaborations here.  Mutinda credited Professor Charles Nzioka of Nairobi University, who also participated as an author in their findings presented this year.  Monique Hennik of Emory served as a consultant to improve the group's training, because the university students that they used as field researchers came from many different institutions.

Mutinda opened her presentation with a gorgeous and evocative video that explained that the Jua Kali (the word refers to the heat of the sun) were self-employed people working in the informal sector of the Kenyan economy doing 90% of the service work, which included masonry, plumbing, carpentry, metal working, and many artisanal trades.  According to experts shown in the film, this sector also employs about 19 million people and is critical for successful development.  Even the economic commentators described their own experiences as Kenyans in the bankable population as very difficult, so that someone might have to walk dozens of kilometers to make just one transaction.  People in the Jua Kali sector found opening and maintaining accounts particularly challenging, although access to resources, small loans, and savings for small businesses were all among their critical needs.  In the film researchers argued that Safaricom needed to do more outreach and education to explain the product, which was less widely in use in rural areas divorced from cosmopolitan populations of users and which privileged English speakers over those who communicated in Swahili or tribal languages. 

Kiiti took over the presentation after the video to explain the "why" and the "how" of the project, which built on their earlier work in mobile money in Kenya.  They also observed increased use of the M-PESA platform and an expansion of Safaricom bank partners providing mobile money services and products.  In addition to M-Shwari, provided in conjunction with the Commercial Bank of Africa (CBA), Kiiti also noted the existence of M-Kesho with Equity Bank and M-Benki with Kenya Commercial Bank.  Researchers chose to focus on M-Shwari, which was introduced in 2012, because it allowed subscribers to save and borrow from their phones and to earn interest on money saved.  It also provided access to credit and a paperless form of financial transaction.  Nonetheless, more needs to be done to reach the unbanked: apparently CBK has estimated that over Kshs. 300 billion ($3.5 billion) sits outside formal banking systems, and millions of Kenyans are still unbanked.  She noted that 50% of people using M-PESA still did not have a bank account.  Researchers also consulted with Safari.com to attempt to influence policy, although they were wary of possible influence.

Kiiti summarized from research highlights that indicated that M-Shwari loans were "essential in providing quick cash-flow for the Jua Kali businesses."  She also cited a number of strong assertions from those in the financial sector about the power of this product, including Michael Joseph, Director of M-Pesa within Vodafone, who argued that "M-Shwari is a 'transformational service'; saving is no longer the privilege of the elite."  She justified the study's focus on the Jua Kali, by emphasizing the fact that the informal sector contributes about 18.4% of Kenya’s GDP while creating 74% of all new jobs annually, although researchers were sometimes stymied by a lack of data.  She incorporated research done by the Africa Development Bank in her presentation as well, and argued that Kenyans rely on the Jua Kali sector for services and feel strong investments in those communities. She explained that workshops continue to be part of their research study design.

The study trained 15 graduate students and professionals.  Students came from six different campuses and were tested on their cultural/language representation (both vernacular & national).  Their training in a mixed methods approach included role-playing and practice listening, probing, and note-taking, and they included M-Shwari representatives in the process.  8 counties were and 4 regions were included in their fieldwork.  Consent was very important given the nature of the very personal questions asked by researchers about money.   160 Questionnaires were gathered with 10 users and 10 non-users of M-Shwari in each county.   Researchers examined sample characteristics, such as access/convenience, usage, gender, and sectors and found trends that involved social status.  As the research team moves forward they hope that the link/gap between marketing or promotion and knowledge or application could be better addressed if policy and practice questions receive more attention.  Obviously researchers felt that their findings could be very significant for issues of financial inclusion and exclusion in mobile banking in Kenya.

Safe Passage: Making Money Mobile: Remittances and Transnational Financial Practices

The panel on remittances was headed up by moderator Allison Truitt, author of Dreaming of Money in Ho Chi Minh City and an expert on how Vietnam might serve as a model for "new markets, digital telecommunications, and an ideological emphasis on money's autonomy from the state."  Truitt summarized the panel at the end over which she presided as being about the "affective and physical labor of making money mobile" in a variety of ways.

Mariam Sangare of CESSMA situated her research in "Mobile Money and Financial Inclusion in Mali: What has been the Impact on Saving Practices?" by  searching for factors that have had more impact on financial inclusion than microcredit initiatives that often receive disproportionate attention from philanthropic organizations.  Sangare described her objective as assessing "the potential of mobile banking in favor of financial inclusion, with particular consideration of users’ saving practices."  She had previously worked on microfinance service quality in the same geographical area, but she now argued that the increasing access to mobile phone networks since 2006 was reshaping the inclusion paradigm.  The first mobile banking service, Orange Money by Orange Mali was established in 2010.  Mobile money services included monetary deposit, withdrawal, and transfer.  Unfortunately such services did not allow for borrowing or saving against remuneration. and users were charged for withdrawal, so there was sometimes little incentive for creative appropriation of the technology beyond limited remittance services.  Nonetheless, users saved anyway.

Sangare described her central research questions as follows: "Is mobile money meeting people’s saving needs?  Is it a strong alternative for rural people?  For which forms of savings is it used for (consumption, precautionary or investment saving)?  What are the differences between somewhat agricultural areas, and Sahelian ones dependent on remittances from migrants?"   She described how her theories about poor people’s saving were shaped by a critique of the so-called "liquidity trap" in which users supposedly did not have enough surplus left for saving.  She insisted that this stereotype about savings aversion was not supported by evidence.  To understand remaining unmet saving demands, she argued that mobile money actually was better accommodated to juggling with different informal saving means and arrangements than more rigid financial inclusion initiatives.   According to Sangare, in some cases, such saving also seemed to have more transformative impacts than microcredit did.   However, she strove not to minimize "constraints and barriers undermining the poor," including transaction costs that could involve monetary and non-monetary assets, a lack of trust in institutions, and regulatory barriers that included prudential regulation.  In addition, she was concerned about information and knowledge gaps and social constraints that involved intra-household and inter-household dynamics.  Finally, she asserted that it was important to take behavioral biases into account, which could include biases in preferences, in expectation, and in price appreciation.

In closing, she posed an important hypothesis that "the potential of mobile money in saving access depends on the service features and the other existing formal and informal means of saving."   Her field research included Orange Money users’ surveys in three different areas in Mali: Bamako (urban area), Kayes (sahelian and emigration region), and Sikasso (agricultural region).  In November 2014 researchers held a meeting with partners (including mobile operators and research partners) and addressed the recruitment of assistants, the testing of the questionnaire, and sampling method choice.  Preliminary results indicated a growing number of mobile money account holders since 2012 from 800.000 (2012) to 2 million (2014).  She noted that there were often regular small deposits in mobile money accounts and that users described usage motivated by accessibility, low transaction costs, and ease of use.  Responses to the questionnaire could also be put in the context of clients’ financial profiles, and mobile money usage and interactions with other financial services were evaluated in a larger fiscal economy in which mobile money could be used for saving purposes.

Sangare plans a second field visit scheduled for February 2015 that will include customer surveys and data collection in the three concerned areas. The survey will be designed to understand the involvement of different constraints in the users’ choice of mobile money service for saving reasons. From this field work she hopes to understand the poor’ saving demand and strategies, how much they accept to pay for saving commitment, and the facts on the future of mobile money services.

Although their initial abstract focused on one question -- "Does Financial Inclusion Spur Overseas Filipinos to Invest?" --  Jeremiah M. Opiniano of the Institute for Migration and Development Issues (IMDI) and Alvin P. Ang of Ateneo de Manila University retitled their talk to emphasize "Overseas migration, hometown investment and financial inclusion: A Remittance Investment Climate Analysis of a rural hometown" after being thwarted by a frustrating five-month delay involving ethics institutional approvals.

Opiniano opened with an explanation of the background of RICART, as a Global Development Network prize-winning mixed methods tool, which was developed as a way to interpret the influence of the 240 billion dollars in remittances generated by over 10 million Filipino citizens working abroad or at sea.   Unfortunately researchers feared that the supposed "diasporic dividend" represented by 10% of the nation's GDP might do little to promote substantive investment at home, particularly for the two-thirds of migrants leaving in rural areas that lose educated and industrious members of society.  He explained that the RICART acronym stood for Remittance Investment Climate Analysis in Rural Hometowns intended to determine the conduciveness of the rural hometowns of overseas migrants (found in origin countries) for investment.  Opiniano described how the "hometown empathy" of migrant Filipinos seemed to produce less tangible development and financial inclusion, despite the intense affective investment involved and how "when you send money there is love attached to it," because remittances are a type of financing "rooted in people and institutions that have links with origin communities."  In their framework, it is important also to progress from local development to global competitiveness in stages in which intermediate phases of regional economic development and competitiveness and national economic development and competitiveness are supported with infrastructure, economic dynamism, and government efficiency.

By focusing on investment needs for development and poverty alleviation in the rural hometowns, researchers hoped to "bridge the disconnection" between remittances and investment.  Starting with some raw qualitative data from ongoing rapid rural appraisal work (based on six key informant interviews and two focus group discussions), Opiniano and Ang ventured to do some hypothesizing using the descriptive results of previous rounds of RICART (Round 1: Magarao, Camarines Sur and Maribojoc, Bohol; Round. 2: Pandi, Bulacan) to prefigure what to expect in RICART Round 3, which had been stalled by ethics approval issues.

Opiniano introduced the audience to Guiguinto and described it as a place that was "improving" in terms of income and could also be described as a relatively "investment-friendly" municipality aspiring to become a full-fledged city, according to local officials.  It also was known for a variety of cooperative ventures at a range of scales.  The Guiguinto economy is fueled by non-agricultural sectors, because there are factories and produce warehouses being transported from the north to Manila.  Because of its proximity to Manilla, there had been a real property "boom" and a mushrooming of subdivisions. Guiguinto had the distinction of being the first municipality in Bulacan province to computerize real property tax information and business permits and licensing.  Nearly five percent of the total population are migrants.  To get a sense of the place, you can watch footage shot at the town fiesta, Halamanan, a garden festival with floats and parading dancers, here.

As Opiniano explained, there is some measure of fear of putting money in a bank, as a result of the trauma of the closures of banks, especially rural banks.  Additionally informants reported the "usual complaint" that "asking for loans leads to many requirements."  Gender dynamics also might be important, because there might be more trust in having female family members handle remittances responsibly. Money management was often tied to awareness of needs for school expenses and emergency.

Ang described the informant pool, which was relatively well educated, as was common in a country in which most had a high school education as a minimum, although they often lacked financial literacy formally and were resistant to advice.  Although they had high self-assessments of their financial literacy, their knowledge of interest rates, inflation, and loans indicated noticeable deficiencies.  They were also more informed about borrowing rather than saving, probably because of the nature of their own practical experience,  For a good overview of learning theory, see this summary of influential learning theories compiled by UNESCO.

"Juggling Currencies in Trans-Border Contexts: Mexico/US" by Magdalena Villarreal and Joshua Greene of CIESAS and Lya Niño of the Universidad Autonoma de Baja California also dealt with the emotional investments of migrant laborers.  (Villarreal's IMTFI work has been covered before in this blog here.)

Villarreal opened by noting that there were "many kinds of currency," including social currencies, symbolic currencies, and different kinds of resources, with another IMTFI conference plug for Zelizer's The Social Meaning of Money.  In looking at how Mexican families manage two locations, she argued that it was important to understand how "certain kinds of limits are placed" and how borders may be more than just geographical constructs.   Although she acknowledged that there may be very complex forms of multiple citizenship in an increasingly globalized world, in which people may belong to as many as four countries, she focused on either double nationalities or undocumented Mexicans.  Her research team focused on two populations: bi-national commuters at the US- Mexico border (Mexicali- Calexico) and bi-national workers from the remote village of Sabinilla in western Mexico coping with complex transnational contexts involving work in Hawaii.   She used these case studies to illuminate the "signification and valuation of currencies" and to argue that "in the intertwining of economies, cultures, normativities and practices we tend to conceive as different and dissagregated."

To introduce the theme of the volume of the cross-border flow, Villarreal showed footage of turnstiles in which immigrants were constantly moving through.  As they moved through the turnstiles, she argued that more than many resources were in circulation, including Family, Workers, Wages, Debts, Taxes, Savings, Investments, Insurance, Social benefits, and Social Security Numbers.  (Even tax returns can be a currency in Mexico, as she observed.) Those who cross must make many calculations, including measurement of risk, perceived potential of particular resources, prediction of costs, social differentiation, and value considerations, which may even result from the "renting" of social security numbers. Calculating in dollars and calculating in pesos might also indicate important cultural differentiations. Such people are faced with need to juggle currencies: both with two national monetary languages and the social and cultural values attributed to different coinages within distinct spaces of interaction. Villarreal explained that her research team was concerned with how to inquire into multiple meanings, expectations and normative frameworks associated with forms of money and economic resources, into family arrangements and the capitalization of resources, into translation of values from one currency to another, into the need to accommodate to particular procedures and practices at the interstices, into the need to calculate and transact in monetary, but also social and symbolic currencies, and also into social and cultural experiences, expectations, and desires.

Niño then took the microphone to introduce the case of Calexico-Mexicali transnational men and women who work in the US and live in Mexico and manage identities as commuters, as well as those who live in the US and have livelihoods in Mexico. Such informants may work in rural and urban areas. In Mexicali, 44% of those in the US work in agriculture, and 32% work in services, including domestic workers, those in care-related jobs, and those engaged in various forms of commerce (formal and informal). Many of these informants were hard-hit by the U.S. financial crisis, because many had their money in US banks or were involved in sub-prime mortgages or credit card debts or department store debts that were impacted by financial instability. Ironically, many sold properties in Mexico to pay US mortgages, while others borrowed from Mexican friends or family, and still others returned to Mexico after having lost their homes. Yet most of them maintain links to the US, to carry out business, to look after children, etc.  In closing, Niño showed "dollar boys" (pictured above) who approach cars to trade currencies at the border and other practices documented by researchers.

The final presenter, Joshua Greene, introduced Sabinilla, population 81, a very rural village connected to the outside world by twenty miles of dirt road and separated from the next village by two rivers.  Those living in Sabinilla used to manage herds of cattle for neighboring ranchers and farmers, but now almost everyone migrates to Hawaii, because a half century ago the owner of a California Denny's where some Sabinillans worked decided to open a branch in Hawaii and suggested relocation.  With a questionnaire of about 120 questions, the team was interested in what workers brought back other than money, including tools, experiences in the tourism economy, and expertise in world cuisines, including that gained as Thai chefs and Italian chefs in the Pacific.  Those who still make cheese in the village from cows are dislocated.  The village has also immersed itself in a green economy, and eco tourists come to see their soil retention projects, greenhouses, filtration efforts, solar water heaters, and alternative livestock and crops.  Although residents may try to start small businesses with money earned abroad, often these efforts are frustrated.  Even the most entrepreneurial workers struggle as they are working with debt, managing multiple frameworks of calculation, participating in networks, capitalizing in parallel economies, and managing the anticipation of potential value and mobilization of resources.  They must operate networks in which information and double standards matter, and they must exploit ambiguities and respond to opportunities.  In mobilizing resources, they might not have monetary resources.  Researchers found that those newer to migration often had more difficult financial inclusion experiences than those more experienced with migration histories.  Of course, this investment is a serious one, because this six thousand dollar journey can take a year to pay off.

The question-and-answer session addressed how the juggling framework might be especially relevant for women already juggling domestic labor and answered queries about choosing the family as a unit of analysis.

Hurry Up and Wait: “G2P or G&P”: Governments, Payments, and Publics

In this panel about how state policies shape financial inclusion, IMTFI alumni participant Jing Gusto of Mercy Corps suggested that coordination with government agencies required a "Gangnam Style" spirit and an understanding that it was "more fun to not dance alone."  He argued that the innovations of government could serve as a significant vehicle for financial inclusion, although many researchers on the panel complained that it was difficult to make much progress on understanding the synergies between government and the private sector when policies and practices were being changed by new administrations struggling to keep up.

"The Physical and Electronic Payment Interface and its Influence on Consumer Payment Choices and Informal/Fraudulent Practices: A Case Study of the National Water and Sewerage Corporation (NWSC) Uganda" by Tugume Howard of Benda Associates Ltd also reflected the work of Nanteza Justine and Kobusinge Justine, although the Justines were unable to attend the conference.  By focusing on the physical and electronic payment interface and its influence on consumer, Howard argued that a case study involving a national water and sewage could provide understanding of the influence of consumer choices, payment choices, and informal practices.  Howard argued that Benda Associates benefited from its knowledge of business start-ups and agribusiness as an agency capable of comprehensive research.  He began by noting that the Bank of Uganda had an ambitious Financial Inclusion Project and that the BOU's recent financial inclusion report indicated that there had been significant growth of bank branches and ATMs, although the distribution of banks and ATMs failed to serve large sectors of the population, because 41 percent of districts in Uganda lack access to any bank branch.  He also described dramatic growth in mobile money technology with 17 million people have registered.  Additionally, the distribution of mobile money agents in Uganda was more likely to follow the distribution of population than offices of the traditional financial sector.  For those who want to learn more about the financial landscape of Uganda, you can check out the maps and information graphics produced by the Finclusion Lab.



The National Water and Sewer Corporation already offered a range of payment options including mobile money, direct debit, and  ePayment, and researchers were interested in seeing if these options might ameliorate systemic problems of corruption and reduce fraudulent informal practices.  They explained that they wanted to examine the factors that drive people’s payment choices and examine the impact that the interface between physical and material might have as well.  Researchers chose to focus on a diverse set of survey areas, comprising four districts – Kampala (the capital city), Mukono (urban), Mpigi (semi-urban), and Luweero (rural).  The methodology included user interviews, expert interviews and document review.  They discovered that users reported relatively good knowledge of payment methods: 89% were aware of mobile money, 37.06% were aware of bank transfers, 85% knew about cash deposits, and  58% knew about cash.  Because the NWSC stopped accepting cash payments in its offices, users had incentives to learn about alternative methods.  Now 40% used mobile money, 23% persisted in using cash, 79% used the cash deposit method, and 8% tried bank transfers.  Although the work of the last six moths indicated that electronic payments could reduce corruption, users were also exposed to modern malpractices, such as hacking now that water bills could be paid thanks to mobile money and access to ATMs.  The Ugandan researchers also noted a number of limitations to a study largely done in urban centers that depended on a consumable (water) that presupposed development and the fact that informal practices were not yet documented, as were aspects of behavior related to gender.  Although they described it as "too early to draw conclusions," they sketched out the rest of their research plan including data entry and analysis and dissemination of results.

The IMTFI has funded a number of researchers to study practices in Mexico around digital money, and cross-border collaborations have been a particularly important aspect of the institute's scholarly work.  "Delivering Conditional Cash Transfers via Savings Accounts: Default and Mental Accounting Mechanisms" by Carlos Chiapa and Silva Prina also focused on a specific area -- conditional cash transfers that reward poor families for school attendance, preventative health visits to clinics, or participation in nutritional and other forms of education --  that IMTFI field researchers have done work on in other countries, including Gusto's own work in the Philippines (described in blogging from previous IMTFI conferences here) and work on CCTs in Brazil (as detailed here.)

Prina noted that their study was situated in the context of a large body of existing scholarship that showed that inclusion into the financial system helps the poor escape poverty (Aghion and Bolton 1997; Banerjee and Newman 1993; Banerjee 2004).  Those new to this work might start with the work of MIT Professor Abhijit Banerjee and the university's Poverty Action Lab.  Unfortunately, the poor are usually excluded from the financial system, and thus they end up using imperfect substitutes (Collins et al. 2009; Rutherford 2000).  Fortunately, it seems possible to find alternatives to this Catch 22, because there is untapped demand for formal savings devices and access to and use of a savings account increases savings and investment and promotes the welfare of small entrepreneurs and households (Dupas and Robinson 2013; Prina 2014).

The research team focused on Oportunidades, which is now rebranded Prospera, a series of social protection programs that include depositing transfers of cash to accounts of participants in BANSEFI, the social bank of Mexico.  Although most of poorest Mexican households have been granted access to the formal financial system, researchers argued that having an account (being banked) is a necessary but not sufficient condition for financial inclusion, which is defined not only by access to formal financial services, but also by use of those financial services, appropriate regulation, and financial education.

In understanding the "supply vs. demand" problem of the CCT program in Mexico, researchers found that users made little use of their accounts and that most withdrew their funds at once.  Grim results from a 2009 pilot changed little in a 2012 study that showed that 81% still withdraw at once.  Now that researchers have begun a more granular study in May 2014, they have discovered that 58% of beneficiaries do actually save: 38% save in the formal formal (although only 30% of this group does so with BANSEFI) and 79% save in informal institutions.  To understand problems on the demand side, researchers surveyed users and found out that 42% felt that they did not have enough income to save, and 43% had been told to withdraw all at once, which pointed to a "hint of misinformation and disinformation."  Indeed, 11% feared being kicked out of program if they saved, and 11% worried that the government would keep their money if they tried to keep some in reserve.   Only 51% of recipients knew they could save in their BANSEFI accounts, and basics of procedures seemed mysterious to participants, since 83% didn't know how to make a deposit, and 88% didn’t know the money was protected by federal government, although 62% did consider that keeping money in a formal back account did have advantages.

To tackle the problem of low financial literacy, they began with assessment.  They discovered that a simple question about calculating 10% of 1,250 pesos – roughly the amount of a typical conditional cash transfer – could only be answered by 31% of participants.  43% could answer questions about interest correctly, and most knew about inflation.  Drawing on a literature that showed that mental accounting could affect savings and financial accounting decisions (Feldman 2010; Sahm, Shapiro, and Slemrod 2010; Thaler 1990, 1999) and that defaults have also been shown to be very effective in increasing savings in developed countries with low-income population (Thaler and Bernatzi 2004; Madrian and Shea 2001), the researchers looking at CCT programs in Mexico wanted to design a study that emphasized these features. Unfortunately automatic savings programs are often not available in poor households in developing countries, although the concept of an account denominated for emergencies was something salient to people.  Researchers argued that it should be more salient, and that such accounts could be facilitated by a default feature, so that participants don’t have to remember to save.  Speaking on a personal note, I know that the automatic deductions from my paycheck for my retirement have certainly spurred my own default savings behavior, so this assertion certainly seems logical.

Researchers designed a randomized controlled trial in which those in Control 0 all receive a special educational workshop on how to use their accounts and booklets to track savings, those in Treatment 1 are also given an account for emergencies with sticker, and those in Treatment 2 have an automatic designation in which 10% of their income is deposited into emergency savings.  With three treatments it becomes possible to separate out the effects of mental accounting from those of a system default.  Unfortunately researchers described delays caused by political changes in Mexico, particularly now that the entire CCT system was being redesigned.  Although they said that "we know very little," they were confident that "replication should not be particularly difficult."  In the question-and-answer session afterwards participants proposed using better graphic design to promote financial literacy and considering the gender dynamics of banking behavior uncovered by IMTFI researchers working in Chiapas.  One participant also argued that it may be wrong to assume that "people are misinformed," given that banks may have incentives to push customers toward investments in risky ventures and that even a middle-class Mexican research center pension might be tied to speculation with Goldman Sachs.

'The New Financial Architecture in Ecuador: Public Regulatory and Sociopolitical Contexts for Payment Systems" by Javier Felix of Renafipse and Monica Pozo of SENPLADES began by providing the context before the financial crisis of Ecuador in 1999, which resulted in the dollarization of Ecuadorian Economy and a big currency devaluation with very high levels of inflation.  The economy had already been dollarized informally, so the government's pragmatic policy was intended only to acknowledge the existing reality.  Soon it payed off and the economy stabilized, so that the country moved from 95% inflation to rates at a more manageable 3 to 4%.  This period was also marked by extreme political instability in an era in which there were eight presidents in a short period of time.  The government has since embraced policies based on a new constitution oriented around the well-being of citizens, harmony between humans and nature, and new economic systems of a "popular and solidarity economy" that was a response to neoliberalism and deregulation, typical of what Felix described as "21st century socialism in Latin America."

By placing a priority on public policies that addressed the fact that 70.5% of Ecuadorians didn't have a bank account, the government decided to analyze new forms of payment, particularly in response to huge movement in the mobile payments sector in a country with 17.9 million mobile phone subscribers.  Policy makers envisioned a "Public Electronic Monetary System in which the electronic money system, as defined by the Central Bank of Ecuador, is a "set of operations, mechanisms, procedures, and regulations that facilitate the flow, storage, and real-time transfer of monetary value between the different economic agents."  To further this vision, the use of electronic means would include "mobile devices," "Internet," "Smart cards," and other digital monetary instruments.  Although the Central Bank of Ecuador would serve as the Distributor and Administrator, there were other regulatory institutions and technological channels to consider.  For example, there were three mobile companies in Ecuador, and the central bank has signed agreements with all of them.

Like other IMTFI researchers, Felix described flux in the process, including a "pilot phase ending tomorrow," which examined macro agents, transactional centers, users, and delays and changes.  By imagining a financial structure of inclusion that was not based on any private institution, mobile money could become a legal tender and a state liability, as a currency that all must accept.  In this particular theory of money, money should be a public good.  The Ecuadorian team warned that private companies might want to influence users and exploit market share.  Because electronic money in circulation must be backed one hundred percent with the liquid assets of the BCE, there were established limits on the system.  For example, users were limited to three accounts and $2000 per month.  Nonetheless the researchers were eager to acknowledge different perspectives on the strategy of monetary policy to speed up the recirculation of money, especially in rural areas, and they even granted that speculative markets might be necessary.  Although nationalization is often seen as a bane to private industry, the researchers asserted that mobile companies saw a new line of business and technological adaptation and that macro agents saw business opportunities and cost reduction for collections.  In closing, the presentation raised the question of how it could have a greater impact than a private system, particularly in the wake of "trauma about owning national currency."  For these researchers, money serves "as a social agreement" that "needs people’s trust and approval to be part of their lives."   Therefore, "rules should be constructed transparently and with democratic accountability."