Abstract
Orientation: The article examines the impact of mobile money adoption and regional financial integration in sub-Saharan Africa.Research purpose: The study sought to uncover the relationship between mobile money adoption and cross-border remittances as a de facto measure of regional integration.Motivation for the study: The extent to which differences in mobile money penetration rates across sub-Saharan Africa influence cross-border remittances remains a grey area that necessitates empirical investigation.Research approach, design and method: A quantitative research method was adopted and the study examined aggregated quarterly data obtained from 41 countries making up the four regions of sub-Saharan Africa. The study applied the dynamic ordinary least squares and fully modified ordinary least squares approaches as the estimation techniques.Main findings: Mobile money adoption has positively impacted cross-border remittances and improved de facto regional financial links in sub-Saharan Africa. The study’s findings also support the view that better governance through control of corruption and political stability removes dependence on remittances.Practical/managerial implications: There is a need to integrate mobile money and other cross-border remittance platforms to improve access to financial services for migrants and harness their savings into the mainstream economy.Contributions/value-add: The study adds to the body of knowledge by showing that higher mobile money penetration rates have regional integration benefits.
Highlights
The advancement of technology has brought along a new form of financial services known as fintech
Results of the Granger causality tests confirmed the presence of unidirectional causality from mobile money accounts to cross-border remittances, implying that an increase in mobile money accounts is associated with an increase in cross-border remittances
The study sought to investigate the impact of mobile money on regional financial integration in sub-Saharan Africa with cross-border remittances as the measure of regional financial integration
Summary
The advancement of technology has brought along a new form of financial services known as fintech. In sub-Saharan Africa, fintech advancement has mainly been in the form of mobile money. The GSMA (2019a) agreed with this assertion placing sub-Saharan Africa’s adoption of mobile money at 45%, followed by South Asia at 33%. The high adoption rates in subSaharan Africa have seen the region having mobile money accounts surpassing bank accounts (Sy 2019). The Fourth Industrial Revolution has brought with it fundamental changes, including increased automation, enhanced intelligence and instantaneous connection (IFC 2019). Such disruptive inventions are expected to have farreaching impact on every industry, including the financial services sector. Some of the impacts include increased access to financial services, especially for unbanked communities (Buchak et al 2018; Philippon 2019). Most of the small and medium enterprises did not use formal banking channels and had difficulties in accessing financial services (Demirgüç-Kunt et al 2012)
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