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INSTITUTE FOR MONEY TECHNOLOGY AND FINANCIAL INCLUSION
UNIVERSITY OF CALIFORNIA, IRVINE
Harsha de SilvaJinendra Kothalawala
Priyanwada Herath
LIRNEasiaNovember, 2009 Photo not ours. Source
unknown
Presentation flowIntroduction
Research Question and Objective
Theoretical Framework
Research Methodology
Findings; thus far
Discussion
Introduction: poverty in Sri LankaPopulation below national poverty line: 15.2% of
20 million population Urban sector: 6.7% Rural sector: 15.7% Estate Sector: 32.0%
Sources: Department of Census and Statistics, Sri Lanka (2006/07)
Population below USD 1 per day: 5.6%Source: Central Bank of Sri Lanka (2008)
Introduction: mobile usagePhone usage in Sri Lanka
Mobile phones: 12 millionFixed phones: 3.5 million
Source: Central Bank of Sri Lanka (2008)
Phone usage by the BOPPhone access: 73%
Urban (75%) and Rural (73%)Mobile phone ownership: 36% of BOP
Urban (43%) and Rural (36%)Source: LIRNEasia (2009)
Introduction: m-finance systemsStarted several years ago; mixed success
depending on country and business model. Future very optimisticKenya: M-PESAPhilippines: G-Cash, Smart MoneySouth Africa: MTN (planning on 21 African
countries), WIZZITDozens of mainly African countries beginning
Sri LankaNo formal m-finance business yet established
Research question and objectiveQuestion
How do m-transfer services help smoothen consumption expenditure among the poor with irregular income streams?
ObjectiveAnalyze the impact of m-transfer services, if
any, on smoothening consumption expenditure among poor with irregular income streams
Theoretical framework
Poor in generalLarge share of expenditure on consumption of necessities
Poor with irregular incomeEarning for day-to-day livingFace regular income-expenditure gapsHardly any capital accumulation; but if so, irregular
Smoothening Income-Expenditure Gaps
Mean expenditure
0
Time period
Income per time period
1 2 3 4
Irregular income
Surplus
Deficit
Research methodologyTarget respondents
Average individual HH income less than USD 1 per day Have an irregular income pattern Males and females between 18-50 years using mobile
phonesThree geographical locations
Colombo urban poor; Kurunegala rural poor; Nuwara Eliya estate poor
Qualitative 18 in-depth interviews: 45 -60 minutes at their residences 6 focused group discussions: 2 hours. Digitally tape recorded (with consent) and transcribedSeptember and October 2009
Research methodologyTarget respondents
Average individual HH income less than USD 1 per day Have an irregular income pattern Males and females between 18-50 years using mobile
phonesThree geographical locations
Colombo urban poor; Kurunegala rural poor; Nuwara Eliya estate poor
Qualitative 18 in-depth interviews: 45 -60 minutes at their residences 6 focused group discussions: 2 hours. Digitally tape recorded (with consent) and transcribedSeptember and October 2009
Research methodologyTarget respondents
Average individual HH income less than USD 1 per day Have an irregular income pattern Males and females between 18-50 years using mobile
phonesThree geographical locations
Colombo urban poor; Kurunegala rural poor; Nuwara Eliya estate poor
Qualitative 18 in-depth interviews: 45 -60 minutes at their residences 6 focused group discussions: 2 hours. Digitally tape recorded (with consent) and transcribedSeptember and October 2009
Research methodologyTarget respondents
Average individual HH income less than USD 1 per day Have an irregular income pattern Males and females between 18-50 years using mobile
phonesThree geographical locations
Colombo urban poor; Kurunegala rural poor; Nuwara Eliya estate poor
Qualitative 18 in-depth interviews: 45 -60 minutes at their residences 6 focused group discussions: 2 hours. Digitally tape recorded (with consent) and transcribedSeptember and October 2009
Urban poor . living in congested desperation .
Hand to mouth survivalCasual labor: street vendors,
construction site helpers etcExpenditure on basic needs:
mainly food on daily basis, that too skipping mealsDaily USD 3 for family of 4;
maybe 5-6 for a family of 6Try not to borrow but live with
whatever they get; but take food on loan from neighborhood shop
Emergencies get USD 10-15 from friends; worst case USD 50-100 at 10-20% per month
If at all save a little for kids
Rural poor . living in isolated desperation .
Life is difficult…
Living off small subsistence tenant or ‘chena’ agricultureOnly 10-15 days work, so look for work in village; “anything”
‘Manage’ with what they haveFrugality; small family can make do with USD 2 a day“Mostly… keep part of previous night’s dinner for breakfast…”
Purchase food on credit from village shop, if no moneyIn desperation would borrow from relatives USD 4-5‘Hide’ USD 3-5 somewhere for an emergency
Estate poor . living in institutional desperation .
Living on estates; tea Marginalized and isolated Estate management responsible
for all life aspects Pluck tea when there is work;
weather is key; even 2 days/weekPurchase or for credit food from
estate shops; pay on salary day Malnourished
Borrowing brings ‘bad luck’ Yet, borrow from neighbors,
friends Community savings-credit
schemeAlways try to save something for
the children; many
Totally dependent on plantation
Usage of mobile phoneFairly similar use of mobile phones by urban, rural
and estate poorKeeping in touchParticularly if relative overseas; middle eastDifference due to kind of livelihood
Use pre-paid connectionsKeep costs at minimum
Reload USD 0.50-1 per 1-2 weeksSignificant SMS useLivelihood wise, the mobile phone helps
to get information on availability of work to get market information; pricesto find out about tutorials for school children
competing at exams etc.
m-transfersPhone-to-phone credit transfers do take place
Not frequently, but yesMainly among friends or colleaguesVery small amounts; even as low as USD 0.05 – 0.25
Smoothening communication consumption via m-transfersNo money to purchase re-load and need to make urgent callUnable to access an outlet to purchase a reload
Pay backAs return re-load or top-up cardOr, as cash
Small transactions are costlyRelatively high service charge; can be as high as 25-50%But, circumstances compel them to do so
Needs differ based on circumstance of povertyMobile-money can make the transaction size smaller and
allow otherwise impossible transactions to take placeCongested urban poor
Instead of buying vegetables every morning to sell on the streets; can buy twice or three times a day. Can slowly build creditworthiness. Transactions among network of vendors
Isolated rural poor Instead of having to travel long distance to purchase full amount of
urgent daily needs (so not purchase) can create micro-businesses in sachet marketing in rural areas. Transactions between poor and micro-entrepreneurs
Institutional poor Can help break-free from the dependency on the plantation company;
can look for work outside and send money to family on the estate. Exchange between poor worker and his (her) family
But no difference for savingMobile-money can make the transaction size
smaller and allow otherwise impossible transactions to take place
Urban, rural and estate poorCan save small amounts; new possibilities
Need formalityThere is no clear regulation on what can
and can not be done in m-finance sphere CBSL ‘working on’; TRCSL silent
No operator has formally started a full-scale agent-based scheme
But, can pay bills etc (non poor) Credit transfers among friends take place
Issues with security How can security of transfers be
guaranteed; regulatory mechanismParties, or potential parties [network
operators, mobile users, money recipients and agents] need to accept the system
Rules and partnerships must exist to move beyond personal relationships
Opportunity Opportunity among the among the
poorpoor
“If someone is willing to
accept our mobile money for food items I will be happy to pay with my
phone since hunger is
unbearable and we need
food more than anything
else”
Need to build awarenessLack of awareness, specially among older people
in the rural and estate sectorsYoung people familiar with various mobile phone
services and are curious in moving forward with m-finance servicesBut, negative attitudes; trust issues
Opportunity among the poorOpportunity among the poor
“Even though we collect some coins in a till at home for our
kids, these savings do not remain in it for long. But we all would be able to save some money for our
children’s future if there is a formal saving system through
mobile phone.”
Improvement in infrastructureNetwork coverage need
to improve and electricity is a problem in the some rural poor areas
Agent networks need to be established
M-Pesa type model?
Opportunity among the Opportunity among the poorpoor
“Saving and purchasing with
mobile money could be a benefit to us if
we get an opportunity to do so.
But I am not quite sure whether people would engage in this as we do not have a
place nearby to “reload” our mobile
money”
Further discussionLiterature focus on ‘transformational’
financial services; but no need to be confinedOptions: cash, credit card, debit card, mobile-
money etc.Adoption
Demand side issues Supply side issues
Further discussionLiterature focus on ‘transformational’
financial services; but no need to be confinedOptions: cash, credit card, debit card, mobile-
money etc.Adoption
Demand side issues Supply side issues
Further discussionLiterature focus on ‘transformational’
financial services; but no need to be confinedOptions: cash, credit card, debit card, mobile-
money etc.Adoption
Demand side issues Supply side issues
