Because it is helpful to think about exactly what intervention is needed to help mobile money expand (which may differ by country), I’m throwing here a few potential barriers (mostly based on my own experience in Kenya and Myanmar):
Regulatory barriers (India allowed it only recently because of this; in Myanmar it’s still ongoing)
Network effects: in Kenya I heard that an important reason it took off was that Safaricom had a very high market share (maybe near 70%?); in Nigeria I heard that the fragmentation of the telecommunication market is one reason it didn’t take off. I’m not sure if more countries are similar to Kenya or Nigeria, also these are all anecdotal. One interesting thing though is that lack of competition in Kenya may have contributed to the high charges (though there is more competition now including from mobile carriers and banks).
Lack of trust: people may not trust mobile carriers or mobile money agents. Probably less of a problem in a close knit community where agents are shopkeepers. Also, lack of trust in banks is a common problem in developing countries but I have no idea about trust on mobile carriers/agents.
Existing alternatives already good enough: this has been mentioned to me in Myanmar, that the traditional “hundi” system of money transfer works well and is cheap which may dampen adoption of mobile money. If that’s true then mobile money wouldn’t contribute much anyway, but I’m skeptical since mobile money is really much more convenient. (Also it can be used as a savings tool like a checking account, and the poor often face savings constraint too, but I’m not sure how effective that will be; interventions that tackle “self-control” have worked well on this so such elements might need to be bundled in order for mobile money to help with saving)
Hi carneades, thank you for your post! It is great to see a post by an international development professional on effective altruism. As someone who did field work in Africa during PhD, I am sympathetic to what you conclude from your own observation. However, it is important to see what rigorous studies conclude and based on my reading of the literature I have some disagreements.
On job creation, taking into account the environment in most poor countries in terms of infrastructure, legal environment and productivity of the labor force, it would be much more costly to produce bed nets there than importing from somewhere that can make it cheaper. So given the choices of (A) importing cheaper bed nets that can save many more children in the poor country, and (B) producing bed nets locally at much higher cost (and by the way one would need to sell it at much higher price, or put in large subsidy for its production, neither of which makes much sense) while creating not that many jobs, (A) seems much better. (And I said “creating not that many jobs” because you are talking about simply setting up a bed net factory to meet local demand; for significant job creation the country would need China-type export manufacturing but that would require transforming the whole economy in terms of the points mentioned above — infrastructure, legal environment and productivity of the labor force — rather than setting up and probably subsidizing a few unproductive bed net factories which seems like bad industrial policy.)
On need vs. demand for insecticide-treated bed nets, see this article linked to by Fluttershy, especially the 2nd point under “Points of possible disagreement”: “irrationality about one’s health is common in the developed world. In the developing world, there are substantial additional obstacles to properly valuing medical interventions such as lack of the education and access necessary to even review the evidence. The effects of something like bed nets (estimated at one child death averted for every ~200 children protected) aren’t necessarily easy for recipients to notice or quantify.” There is a chapter in the book “Poor Economics” that argues that poor people fail to implement health practices with high returns like treating their drinking water or getting vaccinated, not because they are less rational than people in rich countries. People in rich countries may do no better under the same circumstances, but governments in rich countries provide the infrastructure, nudges or mandatory requirements to make these practices much less costly or even compulsory. Also, there is not only evidence that free distribution of bed nets does not lead to decreased usage, but also that it increases demand and usage in the first year (initial demand is very sensitive to price) which causes people to learn about its benefits and demand more in the future.
On Give Directly, see this study on how people use the money they get. It’s ex ante unclear how people would use the money, but the study shows that credit (and savings) constraint is a really big problem in these people’s lives and people end up using their money to improve food security, invest in durable goods or businesses etc. There was no significant increase on alcohol or tobacco consumption (the study tried to rule out desirability bias including using list randomization questionnaire) or decrease in labor supply.
Of course the studies cited here aren’t perfect but they seem pretty well done to me (and many experts in the field), so I would trust them more than anecdotal evidence which could vary a lot from place to place.