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Banking the Unbanked

Writing: Justin White


What would you do without a debit card?

Pay with cash, easily done.

So you would wait in the long line at Lidl every time?

I guess.

What if your student loan were to be paid to you in cash, where would you store it?

The bank.

But what if there wasn’t a bank, or wasn’t one you could access to even get a loan?

I don’t know…

What about receiving money from mum and dad, the post?

Is that even reliable?


In an age where we can pay for things using our phones it’s easy to take banking for granted. Like all infrastructure in our society banking goes largely unnoticed until it’s not there anymore. We often forget within years of how inefficient something was before its inception like contactless payments, yet most people in the global south are without banking altogether. As a result, international development scholars urge the implementation of what they define as financial inclusion. This is a process that increases the availability and equality of opportunities to financial services.[1] The term is shrouded in neoliberal thought and free market economics but has development progressed under its dictates?

Kenya serves as an example. Before 2007, during a time when mobile phones were just coming to be commonplace, all the problems in the above dialogue were true. The man in the street had no debit card and banks were inaccessible: they were either too far away or more likely because they only served a certain class. Remittance payments (money sent by relatives) were unreliably sent through the Kenyan Postal System or by public transport.[2] In other words, infrastructure was so limited that for the most part it didn’t exist. Vodafone and its Kenyan partner SafariCom saw this as an opportunity to bring banking to the masses and win over support from the UK’s Department for International Development, all while making a handsome profit. Launched in 2007, M-Pesa was the birth-child of this cross-body think tank. It allowed anyone to send or receive money over a mobile phone by topping up or withdrawing one’s balance from a SafariCom vender. And given the fact that mobile phone coverage at the time expanded across 80% of Kenya, it allowed rural populations located tens or hundreds of kilometres away from the nearest bank to have access to financial services. The effect was revolutionary with one million registered users by the start of 2008 increasing to ten million two years later.[3] It seemed as if financial inclusion and greater still free market economics could serve as a solution to international development.

However, M-Pesa’s success stemmed from its avoidance of regulation from the Central Bank of Kenya due to it not being a ‘bank.’ This continues to this day and as M-Pesa has dramatically developed over the past 12 years so have mobile phones. Apps designed in Silicon Valley with ‘development in mind’ have made their way onto Kenyans’ smartphones. The most prominent of these are Tala and Branch which offer loans delivered to one’s M-Pesa account at interest rates of up to 100% annualised.[4] They argue their apps promote development as loans before were not possible due to nonexistent collateral. Instead, using what they call ‘reputational collateral,’ collated texts, calls, social media, receipts, and metadata are used to judge one’s credit worthiness. For example, if someone were to have both first and last names in their contacts they would be more likely to receive a loan. This ease of access means many Kenyans balance their loans off multiple providers. Coupled with the fact that users- or even their friends and family- receive notifications to coerce them into repaying them doesn’t help with debt stress either. In fact, as a final number, 67% of Kenyans suffered from debt stress this year. [5]

If trapping the Global South in spiraling debt is what foreign corporations perceive as development, then our future isn’t bright. One cannot dismiss the role of banks in development but it seems state regulation is necessary to curb the exploitation of banking in the third world as to end up in a state of progress, not regress.


[2] Olga Morawczynski (2009) Exploring the usage and impact of “transformational” mobile financial services: the case of M-PESA in Kenya, Journal of Eastern African Studies, 3:3, 509-525, DOI: 10.1080/17531050903273768

[5] Donovan, K. P. (2019). From Financial Inclusion to Fintech. In J. White ed. Edinburgh.

Image: Wikipedia

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