Best Practice for Implementing Mobile Finance in Low-Income Communities

Rebecca Martin & Richard Duncombe


Growth in access and affordability of mobile phones across the world has enabled financial services to be delivered digitally through handsets, referred to as mobile-finance. Despite large investments into mobile-finance in developing countries there has been a lack of active uptake among the poor. In this paper, the challenges of implementing mobile-finance in low-income communities are explored through literature review and analysis of secondary data from online discussions and webinars held by donor organisations.

Best practices of donor organisations are synthesised with the challenges faced by low-income communities and consideration is given as to whether there are misalignments between donor policies and the needs of the poor.  The findings identify challenges that can be partly addressed by the poor themselves, pertaining to trust, social norms and financial literacy, as well as donor best practices to counter those challenges, relating to financial education and the effective operation of agent networks. Other challenges, that cannot be addressed directly by the poor, are identified relating to competition policy and regulatory action to counter weak infrastructure and affordability.

Based on the identification of misalignments between donor policies and the needs of the poor, recommendations are made concerning transparency in relation to the benefits and risks of mobile-finance, addressing unequal power relations between providers and users of mobile-finance services, the enactment of bottom-up participative approaches to implementation, and proper consideration of local contexts in order that the poor are not seen as a homogeneous group.


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Educators’ Guide

Synopsis Questions

  1. What are the potential benefits of m-finance to low-income communities?  [Section B]
  2. Why is there a lack of evidence showing the benefits of m-finance?  [Section B]
  3. What are the three primary concerns which were identified by the donors and development practitioners in the online discussions?  [Section D1]
  4. What are the four approaches put forward by the donors and development practitioners on how to tackle knowledge and financial literacy challenges?  [Section D1]
  5. How is the deliberate use of over-the-counter (OTC) models of m-finance justified?  [Section D1]
  6. What are the key secondary themes within donor concerns about m-finance?  [Section D2]
  7. What misalignments between the needs of low-income communities and donors do the authors highlight in the paper?  [Section E]

Development Questions

  1. Think about and discuss the relationship between m-finance and financial inclusion.
  2. Do you think it is necessary for social norms to change for development interventions such as m-finance to be successful?
  3. Why do you think there is a high volume of low-inactivity among low-income communities for the active use and uptake of m-finance?
  4. How do you think mobile money agents should be deployed in order to  increase the success of m-finance programmes?  (For example, what should their roles and responsibilities be? How might agents be best incentivised? How could fraudulent activity among agents be prevented?)
  5. Which would you give highest priority to: financial literacy or programme literacy?
  6. Aside from the best practices highlighted by the donors and practitioners in the discussions, what other best practices can you think of that may mitigate the challenges faced in implementing m-finance?