Abstract:
Mobile banking affects the lives of billions of people around the globe, including the poor. However, despite all the attention M-Pesa has received, there is little or few financial survey available or conducted before and after the launch of M-Pesa in the area in spite of the potential of mobile phone banking in extending the provision of financial services to unbanked people particularly the poor and low income households. The general objective of this study was to explore the impact of mobile phone banking to the reduction of income poverty in the lives of individuals in Kinondoni district. A case study research design was used in the study whereby a sample of 99 respondents was involved. Data collected were descriptively analysed using Statistical Package for Social Sciences (SPSS) version 16.0. The findings revealed that, pricing of products through M-Pesa has motivated poor people to utilize the services for buying various goods and that M-Pesa has facilitated financial transactions to poor people and that it has boosted their economic growth by having agents at their doors. M-Pesa has removed the barriers of an experience and time consuming visit to the nearby bank as poor people are able to access financial services through M-Pesa because of its good service quality and reliability while becoming a vehicle for saving and transferring money from individual to individual with little storage value. Moreover, M-Pesa has reduced the cost of transferring money compared to formal banking as people have shifted savings from informal tools to M-Pesa due to the perceived security. However, the service providers need to facilitate users on better use of M-Pesa services and reduce service charges in terms of tariffs to enable users to effectively utilize the services. It is concluded that poor people are willing to adopt mobile phone banking as it is easily accessible, convenient, cheap, easy to use and secure, something that has necessitated the raising of their income. It is also recommended that service providers need to improve their services so as to avoid unnecessary accessibility and avoidance of loss of money in order to be trusted and relied upon.
