Does mobile money contribute to reducing multidimensional poverty?

Abstract

This paper aims to analyse the effect of mobile money on multidimensional poverty reduction. To that end, the Alkire and Foster (2011) approach was used to compute the multidimensional poverty index. Then, an instrumental variable strategy was adopted to control for endogeneity bias due to a two-way relationship between poverty and mobile money. The paper also applied propensity score matching methods to check for robustness. The data studied originate from the FinScope (2016) database. With regard to the multidimensional poverty index, the results showed that ICT contributes most to multidimensional poverty, with rural residents exhibiting higher multidimensional poverty rates than urban ones. As for the effect of mobile money, the results robustly demonstrated that mobile money has a positive and statistically significant effect on multidimensional poverty reduction. This effect of mobile money on poverty reduction seems to be greater among rural residents, women and those who are illiterate.