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Does Mobile Money Matter? A Rebuttal to the Mobile Disconnect

(The New America Foundation recently hosted "Mobile Disconnect: Can Mobile Solutions Really Combat Global Poverty?", an examination of the potential benefits and pitfalls of mobile technology in the developing world. The following is a guest post from Kevin Donovan touching on issues raised during the very lively discussion. It is reposted here with permission.)

The unprecedented diffusion of mobile connectivity around the globe has caused much excitement from development practitioners, especially those seeking to advance financial inclusion. And as with any excitement, there is bound to be detractors. Jamie M. Zimmerman and Sascha Meinrath of the New America Foundation have put a forceful stake down in that camp with regard to mobile money. They have sparked undoubtedly a useful debate but their cautionary piece on why mobile money “is hurting huge swaths of the developing world” ultimately missteps.

Zimmerman and Meinrath argue that despite having significant benefits to users, mobile money is out of reach for broad swaths of the world’s poor because (a) connectivity is not universal and (b) mobile money has “remarkably high fees”. Taking Kenya as one of the countries on the avant garde of mobile money availability and adoption, they fear that mobile money “may, in fact, be driving a new wealth divide… leaving [Kenya’s] poor in even more dire straits.”

However, their well-intentioned but dour speculation misses key features of the financial landscape in developing countries and misinterprets fundamental characteristics of mobile money.