Use of mobile financial services among farmers in Africa: Insights from Kenya

The recent proliferation of mobile phones in rural Africa has also led to increased interest in mobile financial services (MFS), such as mobile money and mobile banking. Such services are often portrayed as promising tools to improve agricultural finance, especially among smallholders who are typically underserved by traditional banks. However, empirical evidence on the actual use of MFS for agricultural activities is thin. Here, we use nationally representative data from Kenya to analyze the use of mobile payments, mobile savings, and mobile credit among the farming population. We find that more than 80% of farmers use mobile money, but only 15% use this innovation for agriculture-related payments. Mobile loans for agricultural investments are used by less than 1% of farmers. Usage rates are somewhat higher among farmers in modern supply chains, even though for them traditional banking services are often also accessible and still much more important. Overall, the use of MFS for agriculture is lower than commonly assumed, indicating that these services do not yet have a transformative impact on smallholder farming. As Kenya is one of the leaders of the MFS boom in Africa, this general finding likely holds for other African countries as well.