MOBILE MONEY, which offers the equivalent of a basic bank account to almost anyone with any sort of phone, has long been seen as a boon for financial inclusion. So recent evidence that it is leaving problems in its wake is causing dismay. Digital credit through mobile phones is leading in some places to overborrowing, hardship and—horror of horrors—even more financial exclusion.
The starkest evidence is in east Africa. Thanks to M-PESA, its largest mobile-money service, with over 20m users, Kenya has been a pioneer in both mobile money and mobile financial services, such as lending. Anecdotal evidence is mounting of abuses—most notoriously of young Kenyans borrowing to splurge on online betting sites. The number of Kenyans blacklisted by the country’s credit bureaus, and so unable to borrow, has risen to more than 500,000, up from 150,000 three years ago. The…
