ABSTRACT
This chapter examines the impact of mobile money on the welfare of internal remittance recipient households in Kenya. Using an instrumented household fixed effects model, the results reveal both a direct and an indirect positive effect of mobile money on the welfare of recipient households. First, mobile money directly improves the welfare through the maximization of receipts, caused by an increase in the count and regularity of remittances received. Second, this maximization of receipts indirectly affects the welfare of recipient households through a higher allocation of expenditures towards education in the long run, which has never been empirically identified by the literature on mobile money. Although this later finding is not statistically significant at the conventional statistical levels, the effect on education expenditures remains the strongest compared to any other expenditure category. This chapter advances that this growth in demand for education should be converted into quality education by policy makers, which would thus contribute to Target 4.1 that aims to ensure quality primary and secondary education leading to relevant and effective learning outcomes. Even though this is not the main focus of this chapter, a discussion related to SGD 10.C is provided. While this target primarily focusses on reducing the cost of remittance channels, the chapter exposes that other factors, such as the speed and easiness to remit, should also be considered.
