As most of the focus of cross-cultural management studies is towards commercial MNEs that make lots of money, I would say that cross-cultural management scholars should definitely be interested in money. But as a sub-discipline we rarely stop and think about the meaning of money, and how this meaning might change from one cultural context to the next, and the implications of this. I have been studying the introduction into African communities of mobile money by large MNEs that work in tandem with development agencies. This is big business. One of the major players Vodafone had 56.7 million mobile money (M-Pesa) customers in Kenya in 2023 with a transaction volume of 26 billion. From its operator in Kenya, Safaricom, with a revenue of £2.3 billion largely from M-Pesa growth, Vodafone received £249 million in dividends in 2023. Clearly mobile money, aimed at the ‘bottom-of-the-pyramid’ is a lucrative market, contributing to Vodafone’s total revenue of 45.71 billion Euros.
The dominant narrative in the literature is that mobile money facilitates financial inclusion in poor communities and assists in small enterprise development. Digging deeper, there appears to be a trail of disruption to community-led financial initiatives, as well as increased debt and local enterprise failure within communities. Moreover, rather than money, credit and debt being kept within local communities within the bounds of social relations created in a specific social and cultural context, it is siphoned out to impersonal and exogenous stakeholders. Plus, the very meaning of money created by those social relations is changed.
The meaning of money
Money is the basis of most, if not all, economies around the world. It is a cultural construct involving a credit relationship (a promise to pay). It involves trust, either directly between individuals or parties, in institutions such as banks and governments, in technologies such as the blockchain in the case of cryptocurrencies, or within a particular community. Above all, money is constituted by social relations, according to Geffrey Ingham, who conceptualizes the meaning of money as ‘.. the emergent property of a configuration (or “structure”) of social relations’ (p. 527). After the anthropologist Melville J. Herskovits, writing in 1948, I take the view that culture comprises all that is made and imagined by the human race. This would certainly include money. As part of culture, and being socially constructed, part of the (often local) context of commerce and everyday life, introducing exogenous ideas of what constitutes money and credit relations has the potential to disrupt social relations, including those specific to doing business and managing enterprises.
As an historic example, Ofonagoro, writing in 1979, described how the introduction of British currency in Southern Nigeria, replacing cowries and other traditional currency, disrupted traditional trade in subsistence farming in favour of the British-dominated import/export sector ‘siphoning off the dynamic elements of the local economy into export-oriented cash crop production’ (p. 651). He explains how this also changed traditional social relations, impoverishing local elites, as the British authorities did not allow them to exchange the basis of their wealth, cowries, for British currency. These elites were then replaced with new local and foreign elites who had made fortunes serving British interests. By introducing exogenous forms of money, often with a financial motivation on the part of the global player, economic and socials relations are changed, as the meaning of money is changed. In the case of African and other global south communities, this often has an effect on what happens in the informal economies. The concept of ‘bottom-of-the-pyramid’ encapsulates the view that such communities are in need of ‘modernization’ and ‘development’, and at the same times there is money to be made within these poorer communities by global MNEs.
MNEs and development agencies working together at the ‘bottom-of-the-pyramid’
Mobile money is an agent-assisted, mobile phone-based, person-to-person payment and money-transfer system. The main exemplar cited in the literature is M-Pesa in Kenya. Its introduction by the mobile phone MNE, Vodafone, was originally funded by the UK Department for International Development: a partnership between a governmental agency and a commercial enterprise. The former provided the funding of £1 million for research and set-up, the latter would take the profits from the enterprise, and the locals would benefit from their increased financial inclusion: a vindication of the concept of ‘bottom-of-the-pyramid’. From Prahalad’s original work, the accepted wisdom is that ‘Low-income markets present a prodigious opportunity for the world’s wealthiest companies — to seek their fortunes and bring prosperity to the aspiring poor.’
Community initiatives
What the introduction of mobile money failed to take account of was the disruption to community-led initiatives such as the chamas of kiSwahili-speaking east Africa (including Kenya), the tontines of French-speaking west Africa, the susus of Ghana and the stokvels of South Africa, as well as other such local arrangement in other parts of Africa and the global south. These are informal social collectives known in the literature as ROSCAs (rotating savings and credit associations). A group of friends, workmates, neighbours or relatives will meet periodically, and each put money into a ‘pot’, accumulating a significant amount of money over time. The total contributions are allocated to a member who has not yet received the pot. Contributions are made until each member has received the pot. After that, the group might be dissolved, or another round initiated. Most ROSCA are made up of women, but certainly not all. The pot can be used against financial shocks, or for financing micro-businesses. Defaults appear to be rare because of social sanctions from the group. Defaulters would be excluded from future ROSCAs and would be judged untrustworthy in the community. Yet ‘skipping’ is different: not able to make you payment because of a bad financial shock. This is the point of ROSCAs, to support personal financial needs and enterprise. Skipping members may be given the pot early or members may share in making the payments for the skipping member (see the excellent account by Cornelius in Ghana).
Mobile money
So, along comes the introduction of mobile money by ‘one of the world’s wealthiest companies’, with the blessing and financial support of a major western government development agency. What can possibly go wrong? According to the heavily cited article published in the journal Science by American-based economists William Jack and Tavneet Suri, based on a project funded more latterly by the Gates Foundation, nothing could go wrong. In fact, they tell us, M-Pesa in Kenya has ‘…increased per capita consumption levels and lifted 194,000 households, or 2% of Kenyan households, out of poverty’ (p.1288). However, according to the research by Bateman and colleagues, who contest these finding, a lot has gone wrong.
They contend that a particular claim that M-Pesa in Kenya provides financial resources to enable women to move out of subsistence agriculture to set up micro-enterprises and thus address poverty issues, does not bear scrutiny. It does not account for the fact that most such enterprises result in failure. An increase in enterprise activity redistributes local demand among a larger number of traders resulting in a very large number of failures among new entrants. Certainly, new entrants appear to be high, given the access to finance that mobile money provides, but this is because the opportunity to find work and an income are very limited. Yet any benefit appears to be cancelled out by the high degree of enterprise failure. There also appears to be a displacement of present micro-enterprises that the entry of many new micro-entries may create, thus disrupting already successful enterprises (that may not have had access to mobile money) by spreading out local demand among many more micro-enterprises. Jobs and incomes are therefore lost to present incumbents, cancelling out any benefits from increased access to finance: supply increases but demand does not. Entrepreneurial activity induced by easier access to finance appears to place strain on communities owing to sudden increases in competition leading to a reduction of living standards across the community.
This also appears to be exacerbated by rising levels of debt with easier access to finance through mobile money such as M-Pesa in Kenya. All that is needed to access instant loans is a mobile phone and a M-Pesa account. In Kenya 15 million individuals have M-Shwari (the finance arm of M-Pesa) accounts out of a population of 50 million.
What appears to be happening is that finance and indebtedness is being diverted from informal and community-based networks (such as ROSCAs), to formal, global financial institutions that disrupt community social relations and have implication for the sociocultural meaning of credit and money.
This may not therefore be an apolitical case of cultural insensitivity to local community values and needs that can be analysed from a simplistic cross-cultural perspective, but involves globalization driven by vested financial interests and access to political and economic power. Power shifts away from local communities and informal economic activity towards global institutions. Many small-scale transactions among poorer populations are being used to extract wealth away from these communities in the global South to large MNEs and investors in the North, with echoes of Africa’s colonial past.
The meaning of money discussed in our account above is part of this, where the money (as a credit arrangement) in circulation through ROSCAs has a social and community basis and is different from the meaning of money within the exogenous credit arrangements of mobile money technology. Its social basis is different and reflects a different power dynamic.
Money is not just an abstract medium of exchange. It is a cultural construct. It has a social meaning. Yet its analysis also highlights what critical cross-cultural scholars have been telling us for a number of years: cross-cultural exchanges in a global context involve a power relationship. Within a global context nothing signifies power more than money. In 1997 Graeme Buckley concluded from a study in Kenya, Malawi and Ghana that ROSCAs are not just popular they are very efficient: group solidarity, which forms the basis for risk management, is nurtured around a circular flow of money around the group. Savings match credit without recourse to interest rates or actual collateral (collateral is derived from trust and group solidarity), and transaction costs are low. He questioned the enthusiasm of international development agencies for promoting exogenous microfinance solutions to the development of enterprise in the informal sector in Africa, and concluded that the informal sector has prospered without such interventions, and that interventions of credit may add very little if anything to further development.
So, why the enthusiasm for superimposing another form of financial transactions and credit on an endogenous system that seems to work well for the benefit of community financial wellbeing and entrepreneurial development, and that has social meaning within communities? Even in India, Banerjee’s study in 2021 found that informal credit networks that were exposed to formal institutional microcredit suffered. Those better off who could gain from formal credit left the ROSCAs to the detriment of poorer members (the ones development agencies are supposed to help). I’ve found no evidence in the literature that mobile money enhances the work of ROSCAs despite the claims of its supporters. The answers to why western government agencies and MNEs appear to be blind to cross-cultural contexts and sensitivities lies deeper than cross-cultural management scholars would normally delve.
But this what cross-cultural management studies should be about: understanding and sorting out real world issues where corporation are operating globally across different cultural context, understanding aspects of cultural that need to be understood (in this case money), analysing the power dynamics involved, questioning the dominant narratives arising out of the power dynamics and asking from where these are derived (modernization theory and the need for ‘development’, neoliberal economics and the increasing role of free markets in government policy, globalization and exploiting ‘bottom-of-the-pyramid’ markets) and constructing empathetic counter-narratives (what does it look like from the perspectives of the communities that are impacted by global policies and strategies?). Cross-cultural management studies are concerned with everything and everywhere. Our studies should certainly include a focus on money and its cultural meanings.
© Terence Jackson 2024
Terence Jackson 