Impact of mobile phone-based money transfer services in agriculture: evidence from Kenya

Abstract

This study contributes to pioneering literature on the impact of mobile phone-based money transfer, especially in agriculture. It provides information regarding financial intermediation to the excluded through the use of new generation Information Communication Technology (ICT) tools, especially the mobile phone. The study employs propensity score matching technique to examine the impact of MMT services on household agricultural input use, agricultural commercialization and farm incomes among farm households in Kenya. It uses cross-sectional data collected from 379 multi-stage randomly selected households in three provinces of Kenya. The study found that use of mobile phone-based money transfer services significantly increased level of annual household input use by $42, household agricultural commercialization by 37% and household annual income by $224. We conclude that mobile phone-based money transfer services in rural areas help to resolve a market failure that farmers face; access to financial services. We discuss implications for policy and practice.