Barriers to Mobile Money Adoption among Tea Farmers in Rwanda
Findings from a qualitative study of mobile money usage among Savings and Credit Co-Operatives (SACCOs) sheds light on the potential benefits of digital final services in rural Rwanda, and persistent barriers to take-up.
In this post, CEGA Program Manager Sam Fishman interviews Mercyline Kamande (Mount Kenya University, Kigali) and Anna Kamanzi (UC Irvine), about their qualitative study in Rwanda. The project was supported by the Development Impact Lab (DIL), a USAID Higher Education Solutions Network (HESN) lab co-managed by CEGA.
Dr. Mercyline Kamande (Senior Lecturer at Mount Kenya University in Kigali) and Anna Kamanzi (PhD Candidate at UC Irvine) recently released the results of a qualitative study exploring uses of mobile money services among tea farmers and pickers in Rwanda. The study, conducted between February and August 2020 with support from the Development Impact Lab (DIL), follows up on the implementation of a payment automation project for Savings and Credit Co-Operatives (SACCOs) funded by Access to Finance Rwanda (AFR). The new evidence sheds light on the benefits of and constraints to adoption of mobile money services among rural laborers, along with the regulatory impacts and effects of COVID-19 on individuals’ experiences with mobile money.
Development Impact Lab (DIL): How popular is mobile money in Rwanda?
Mercyline and Anna (M/A): Mobile money is quite popular in Rwanda and can be used to pay for a variety of essential services, such as electricity or school fees, and is also used to send and receive money between individuals. Rwanda has a high percentage of mobile phone ownership — even in rural areas — so most people have access to mobile money services. We found, perhaps unsurprisingly, that mobile money tends to be more popular among younger people while older people tend to be more apprehensive about adopting a new technology such as mobile payments. Overall, there seems to be a broad use of mobile money in Rwanda.
DIL: Your research looks at a new payment automation feature developed by Access to Finance Rwanda (AFR). What does this feature do, and how did it motivate your study?
M/A: We worked with members of two tea SACCOs which had recently gone through an automation project with AFR. AFR’s objective was to reduce time wasted during pay days thus increasing productive time for tea farmers and pickers. The project helped the SACCOs digitize their payroll systems so when it was time to pay tea farmers and pickers they could do it using mobile money rather than having people line up to be paid in cash. Our research, in part, aimed to understand the workings of the automation project and to determine how or if this was working out for farmers and pickers and whether this changed the ways they used their money.
DIL: Your team conducted extensive qualitative interviews with farmers and other stakeholders involved in implementing digital financial services in Rwanda. What was the rationale behind taking this qualitative approach?
M/A: It is very difficult to determine people’s motivations, understandings, and rationale by collecting only quantitative data. We really wanted to understand how and why people used, or chose not to use, mobile money and to do that we needed to have conversations with people on the ground. By taking a qualitative approach to data collection in this project, we were better able to capture the opinions and feelings behind people’s decisions whether to use or not use mobile money, to understand what was working for them and what was not, and to get a more holistic picture of digital financial services in Rwanda. Qualitative data collection is much better suited for gathering the kind of in-depth information we were looking for.
DIL: COVID-19 hit right in the middle of your study implementation. What was it like being in the field when this happened?
M/A: We had just returned from a multi-day fieldwork trip at the beginning of March 2020 when questions about global lockdowns began to come up. There was so much uncertainty at the beginning so we were not sure how this would affect our research. The COVID-19 crisis and lockdowns meant that we couldn’t easily get back to our field sites so we had to adapt our data collection methods to the situation.
DIL: What did you find? And how do you think the COVID-19 lockdowns affect your findings?
What was really interesting in Rwanda was that initially the government encouraged everyone to use cashless payments (including mobile money) in order to curb virus transmission through touching and sharing cash. They also temporarily suspended mobile money transaction fees so that people could do this without fees, no matter how small. This allowed us to observe some immediate shifts in people’s behavior. There was a surge in mobile money transactions after the removal of transaction fees. And surprisingly, increases in mobile money transactions did not dissipate after fees were later reintroduced. Additionally, respondents diversified the types of mobile money services they used during the lockdowns — people started sending money, and in some cases paying for goods, services and bills and making transfers between SACCO accounts. Additional research could help identify some of the channels for increased usage.
However, overall challenges to adoption of mobile money remained. While mobile phone ownership and mobile money registration rates were high among tea growers and pickers, usage of mobile money services remained low (even after some sustained increase during the lockdown).
DIL: What kinds of barriers and/or benefits to mobile money use did you find? And how would you recommend that various stakeholders respond to your findings?
M/A: There are so many tangible benefits to mobile money use, especially in the SACCO automation projects we observed where employees were able to save an incredible amount of time by automating their payroll process. Mobile money limits the necessity to travel to various places to pay bills, etc. because so many things can be done directly from your phone. This was especially helpful in this prolonged period of lockdowns and social distancing due to COVID-19. However, there are some significant barriers as well and we found that frequent transaction fees, limited user knowledge and security concerns with digital payment services were most commonly cited. Reducing or eliminating the cost and frequency of transaction fees would be incredibly helpful in encouraging more people to use mobile money. Also, we would recommend providing free information sessions on how to use mobile money services and how individuals and companies work to keep their money secure on these digital platforms. This may help alleviate some of the mistrust people have with a new technology.
