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«bath papers in interna onal development and well-being ISSN 2040-3151 Compe ng visions of financial inclusion in Kenya: The ri revealed by mobile ...»

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The evidence for the use of MMT demonstrates that its use is more varied in terms of relationships and reasons for sending money than a simple logic of remitting funds to family and household or even extended family in rural areas. It appears instead to seamlessly facilitate a wide array of inter-personal transactions that are part of people’s financial lives and does this over distance in the context of a mobile population. This opens rather than closes the question of what the underlying logic of these transactions is. From Graeber’s perspective it is important not to over-interpret all of these as exchange relationships when some of the ‘gifts’ or ‘assistance’ may represent aspects of basic sociability – transfers that ‘would’ be returned if the need arose – donations in support of funerals, sickness, fundraising events of various kinds (e.g.

harambees) as well as occasional support at times of need may fall into this category.13 The boundaries between such basic sociability and exchange in which these transfers - appearing to go one way – in fact produce a reciprocal flow of support or assistance are therefore hard to identify. Some are entrustments which produce future obligations of resources as Shipton identifies for the Luo and some are clearly and straightforwardly inter-personal borrowing – but both appear to have at their core relations of equality.

Informal financial groups offer proximate liquidity which can be accessed either directly through the mechanism itself as a loan or re-timed payout, or indirectly through the social connections that people gain through them. This is not to suggest that elements of power dynamics are not at play in these groups (see for example Bouman 1995; Johnson and Sharma 2007). Even if people do not always repay in the time frame set, ‘delays’ are not the same as default and continue rather than end relationships. Their logic is to circulate funds in ways that benefit members and they also go beyond to have elements of additional support through welfare funds which respond to need. The language is of contributions and the social connections allow for The reciprocity approach has been extended to social insurance and the idea of “conditional reciprocity” (Platteau 1997) but while membership of groups where insurance does take place, there are levels of assistance that are not so clearly codified in this way.

16 | P a g e Competing visions of financial inclusion in Kenya: the rift revealed by mobile money transfer Johnson “negotiability” in access to resources seeming to operate in a strong framework of equality (see also Johnson 2004).

The social relations of resource access and use for these two services stand in stark contrast to the relational dynamics of banks. In this case the entrustment of deposits to them results in, at best, the obligation that the amount is returned less a withdrawal fee. Interest is effectively irrelevant on balances of the level held due to higher inflation rates. But the difficulty of gaining loans through them means that the evidence confronting poor people is that a relationship with a bank is not a dynamic system of exchange in which funds are lent in both directions. The bank does not therefore represent a social relationship of equality and a means through which social connections are developed in ways that offer access to resources.

Further, the politics of the banking system has in the past been identified with the wealthy political elite leading to instability and failure (Brownbridge 1998; Ogachi 1999). Regulatory and supervisory improvements have now produced stability (Beck, et al. 2010; Upadhyaya 2011) but a system that is still oligopolistic in its structure with the majority of assets concentrated in a small number of government-owned or influenced, and foreign-owned banks. Banks as a result continue to be popularly understood as affected by political influences in the context of Kenya’s on-going political dynamics.

Equity Bank has been instrumental in changing the perspective of the banking system on the scale and scope of the low income market, has changed the charging structure (see above) and had a focus on lending which has helped lead to its popularity and increased client base. This in turn must be understood in the context of its origins in Central Kenya under Kikuyu-ownership during the period of Kikuyu opposition to the Moi government prior to 2002 when resources flowing to this area were reduced, in particular, from Government-owned banks. Equity’s Kikuyu identification has developed since 2002 with Kibaki’s government although it has also sought to address this through its staffing, board directors and branch expansion. 14 But despite its focus on the low income market, it has nevertheless not yet delivered a proposition that completes on the lending side of the exchange dynamic for the majority of poorer people. Critically, then the possibility that lending a few hundred shillings to a bank yields an exchange or reciprocal obligation is entirely absent and also leaves no scope for negotiability to operate. By contrast, the history of banking in Kenya suggests that banks do operate this way for particular rich and politically connected elites.

From this perspective therefore, financial groups and MMT operate within social relations of equality. For low income people banks behave in a manner that is more hierarchical in nature, or, as a respondent in an earlier piece of research put the emphasis on their power in the Indeed, the recognition of the alignment of Equity Bank with the Kikuyu led Kibaki Government is noted in (Morawczynski and Miscione 2008) and in the wake of the post-election violence of 2008 Equity’s opening of a branch in the home district of the opposition leader Raila Odinga was particularly symbolic in seeking to heal the political divide (see http://kenyapolitical.blogspot.co.uk/2008_05_01_archive.html accessed 21/03/12).





17 | P a g e Bath Papers in International Development and Well-Being Paper Number 30 relationships: “mountains move!” [Johnson 2004]. Thus, scope for negotiability is different and the boundaries between equality and hierarchy in debt relations in the contemporary Kenyan context are brought into view. The use of banks for payments underlines the point. The trust required to utilise a payments system is much shorter in terms of time horizons than that required in institutions for longer term saving or accumulation – it is more akin to the situation of barter in which enduring ties are not established (Peebles 2010). Indeed, MMT is being used in a largely similar way and raises the question as to whether MMT does in fact have the potential to become a recipient rather than simply a conduit for funds.

6 Conclusion Within the context of literature that calls for new understanding and analysis of money, debt and financial practices, and a policy emphasis on financial inclusion, this paper has examined the financial transactions of low-income people in Kenya in their use of MMT and compared them with financial groups and banks focussing on the social relations involved. Graeber’s perspective is on the contrast between equality and hierarchy in these relationships and problematic definition of debt as part of an exchange relationship which operates in the “shadow of equality” when hierarchical relationships ultimately backed by power and violence are in fact at work.

Berry’s perspective on African “negotiability” and its origins in institutions, whose bases are open to the shifting sands of social relations and meaning, highlights both the logic of developing social connections in order to secure access to resources but also the ever present need to identify their limits.

Together these offer insight into the financial practices underlying the use of these three services and shows how they operate on different social relational dynamics. MMT has allowed relationships of exchange between equals to occur much more cheaply and efficiently, even extending the potential for social connections and negotiability to be developed. This allows new routes to resource access to be developed and sustained, especially over greater distances through the cultivation of relationships with extended family and friends as well as more immediate family. While this expands the opportunities for access to resource transfers in the face of idiosyncratic shocks, the dynamics of these relationships are more open-ended and varied and cannot therefore so easily be reckoned in terms of insurance. This therefore offers a dimension of analysis far beyond the simple remittances story. Financial groups engage in a similar dynamic although are a more structured basis of equality and provide routes to negotiability in resource access.

Banks by contrast give little evidence to poor people that these relationships are equal – debt extended to banks in the form of deposits by poorer people are not returned in equivalent value, and nor does this debt flow in both directions. Indeed, the preference of banks for salarybased lending in which they can directly control the means of repayment further confirms their risk aversion and failure to engage in direct building of relationships with borrowers who do have control over their means of repayment. Hence they do not enter into the landscape of social relations with negotiable dimensions but present a boundary which the history of banking

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and its relationship to political elites suggests is better understood as having elements of hierarchy. This further explains their heavy use for payments rather than savings. This analysis also underlines the importance of these social dynamics as investments in themselves which also engender economic resource mobilisation in contrast to the view that they are necessarily suboptimal and a drain on resources.

This analysis suggests that policy efforts towards financial inclusion which seek to lower transactions costs and which seek to ‘nudge’ people towards ‘savings’ services operate on an etic vision which is at odds with the emic vision revealed here and will therefore encounter this ‘rift’ in social relations. While mobile money transfers may create the infrastructure for payments services through reduced transactions costs, this research suggests that neglecting an understanding of the social relations within which they actually operate is likely to render the ambitions of financial inclusion policy a more challenging goal.

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