Mobile Money Use Research Articles

Does mobile money use increase firms’ investment? Evidence from Enterprise Surveys in Kenya, Uganda, and Tanzania

Private investment can be an important engine of economic growth in East African countries, which, despite recent growth rates, are still plagued with adverse economic conditions. Against this backdrop, there has been substantial penetration of mobile money, moving beyond simple person-to-person exchanges toward adoption by private firms. This study explores whether there is a relationship between firm adoption of mobile money and firm investment. Using firm-level data that are nationally representative of the private sector in three East African countries -- Kenya, Tanzania, and Uganda -- a positive relationship is found between mobile money use and the probability of a firm’s purchase of fixed assets. This relationship is attributed to reduced transaction costs, increased liquidity, and increased credit worthiness associated with the use of mobile phone financial services.

Does Mobile Money Affect Saving Behavior? Evidence from a Developing Country

We investigate whether the use of mobile money can help individuals build savings to face predictable and unpredictable life events. Studying the case of Burkina Faso, we use hand-collected data from individual responses to a survey we designed and conducted between May and June 2014. Our main results show that, although using mobile money services has no impact on saving for predictable events, it increases the propensity of individuals to save for health emergencies. We also find evidence that using mobile money increases the propensity of disadvantaged groups such as rural, female, less educated individuals and individuals with irregular income to save for health emergencies. In our further investigations, we address the mechanisms underlying individual saving behavior. We find that safety and the possibility to transfer money within the sub-region associated with mobile money may be factors that increase the propensity of mobile money users to save for health emergencies. Overall, our results are in line with policymakers' agenda worldwide to increase financial outreach and improve financial inclusion by using mobile technologies.

Does Mobile Money Affect Saving Behaviour? Evidence from a Developing Country

We investigate whether the use of mobile money can help individuals build savings to face predictable and unpredictable life events. Studying the case of Burkina Faso, we use hand-collected data from individual responses to a survey we designed and conducted between May and June 2014. Our main results show that, although it is not possible to detect any correlation between using mobile money and saving for predictable events, it seems to increase the propensity of individuals to save for health emergencies. We also found robust evidence suggestive that using mobile money increases the propensity of disadvantaged groups such as rural, female, less educated individuals and individuals with irregular income to save for health emergencies. In our further investigations, we address the mechanisms underlying individual saving behaviour. We found that safety and the possibility to transfer money within the sub-region associated with mobile money may be factors that increase the propensity of mobile money users to save for health emergencies. Overall, our results are in line with policymakers’ agenda worldwide to increase financial outreach and improve financial inclusion by using mobile technologies.

Mobile Money Use In Ghana: An Assessment Of Its Relevance In The Financial Inclusion Of Rural Communities

Mobile money offers new possibilities for making financial services more inclusive in Africa, especially in rural Africa. Unlike conventional banking and financial services, mobile network operators (MNOs) have made huge investments to create networks that reach further and deeper into rural areas historically marginalized in an effort to satisfy their demand to communicate. Infrastructure changes in rural areas are external factors that may force new models for the mobile services. Since 2005, a new technology—mobile money—has become available in over eighty (80) countries worldwide. Mobile money (m-money) is a product that allows clients to use text messages to store value in an account accessible by the handset, convert cash in and out of the stored value account, and transfer value between users. As compared with the traditional means of sending and receiving money within many developing countries, such as Western Union and MoneyGram, the postal service or delivery by friends or family, m-money substantially reduces the costs of transferring money. M-money offers a new potential mechanism for increasing the financial inclusion of the world’s poor. The main objective of this investigation is to critically examine mobile money usage and its relevance in the financial inclusion of rural communities. The generally attained educational level by the participants is Junior high school/Middle school qualification. Deposits, withdrawals (cash-in and cash-out), fund transfers and airtime purchase were the most patronised services. Results from the focused group discussion (FGDs) also showed that participants had used the mobile money services and the most used services were the funds transfer (receiving remittances) and buying airtime. The study also found that most of the participant sent and received mobile money compared to those that had either only sent or only received. Mobile money service has improved the financial inclusion of rural folk as demonstrated by the access and use of mobile money by the rural people. The researchers recommend that mobile money service providers should educate rural people to save through mobile money service.

The Economy of Financial Inclusion in Nigeria: Theory, Practice and Policy

A large number of adults in developing countries lack access to formal financial services but there are many things that are required to reduce the number across nations. This study investigates through the use of questionnaire, the extent to which adults in Nigeria participate in financial inclusion measures as access to and use of bank accounts, mobile money and insurance services. The benefits and barriers to the use of these services were also identified. We found that though access to bank accounts is high, a majority of the respondents operate savings accounts. However, bank account ownership penetration ratio of 1.4 accounts to an adult including inactive accounts is very low. The use of bank accounts in receiving money from, and sending money to family members living far away helps to service and maintain good family bond typical of Africans where family ties are held in high esteem. Most adults use their accounts between one and five times in a month but 24.01% of the accounts are inactive in receiving deposits while 6.91% are inactive for withdrawal in a month. The most popular non-cash payment methods are ATM/Debit card and wire transfer/on-line payment. 59.58% of those who save used a bank account, 32.5% save with cooperative societies while 26.25% used daily contributors and rotational savings scheme. The use of mobile money and insurance services is very small among account holders. The highest self reported barrier to the use of bank account is lack of necessary documents. Account opening conditions and documentations need to be reduced while the KYC requirements should be tailored to take care of the realities in some areas. Increase in public enlightenment campaigns is required to low income earners, emphasising the benefits of financial inclusion to everybody using different languages, rather than just the middle class and the elite as it is currently done. There is need for stable electricity supply to drive the infrastructural facilities provided by banks, telecommunication companies and other related service providers such that fluctuation in internet and other network communication is reduced to the barest minimum if not fully eliminated, this also include ATMs and point of sales terminals. This will ensure stability and wider network coverage of these services as more ATM, POS, mobile money etc are deployed to areas not yet covered.

Are we ready to adopt mobile money in non-profit sector?

Mobile money has grown rapidly in the past few years. It has contributed to greater financial inclusion for the poor and unbanked, bringing millions of people into a formal financial system. Despite the increased use of mobile money, little research has focused on non-profits’ preparedness to mobile money adoption. This article explores staff perceptions regarding mobile money at a large Bangladeshi non-profit. The objective of the study was to understand staff and clients’ opinions about using mobile money specifically focusing on reliability, efficiency, and quality. In this qualitative study, we focused on five projects and conducted a total of 11 focus group discussions and 50 in-depth interviews. We found staffs and clients were amenable to using mobile money. Most people felt that using mobile money could reduce the workload, save time and money, and make life easier for both staffs and clients. However, significant client adoption barriers exist including client literacy and numeracy levels, a lack of national identity cards and challenges obtaining them, poor mobile networks in remote areas and service fees. Some staff also expressed concerns about mobile money posing a threat to their job security. If mobile money is to realize its full potential as a financial inclusion tool for the poor and unbanked, further research is needed on mobile money adoption and implementation obstacles encountered by non-profits.

Elements Enhancing the Use of Mobile Phone Money Services: A Case of Homa Bay Region, Kenya

The history of mobile payments is more than 10 years old and mobile money services in various countries such as Finland are still relatively unpopular, even though consumers have shown clear interest towards mobile money. The Mobile phone banking idea was initially born out of the intention to reach the unbanked poor. There exist a spectacular mobile phone money service divide, highly skewed against the rural population. The study therefore, established mobile phone elements enhancing mobile money services, in Homa Bay Region. A sample size of 48 participants for semi-structured interviews, focus group discussion and participant observation was used. The data for the study was both primary and secondary. Interview was the main tool for primary data collection, supported by focus group discussion and participant observation, while secondary data was obtained from online journals, books and Daily Newspapers. Data was analyzed using thematic analysis. The study established that remittances had a positive influence on mobile phone money use, while lack of National Identification cards as well as lack of information by some users had a negative influence on mobile phone money use in the study area.

Challenges Facing the Use and Adoption of Mobile Phone Money Services

The Mobile phone banking idea was initially born out of the intention to reach the unbanked rural poor. However, there still existed mobile phone money service divide, highly skewed against the rural poor population. This paper was therefore seeking to explore challenges facing mobile phone money services. Qualitative research technique was used. Further, both primary and secondary data was used. The study was conducted in Homa Bay region in Kenya, using ethnography research design. The study established that mobile phone money use and adoption had numerous challenges that had hindered it. Most affected by the challenges were the mobile phone money users and potential users from the rural poor communities. Some of the challenges included lack of national ID cards by potential users, few mobile phone money agents, inadequate cash and e-floats by the agents, awareness and lack of information on how to access and operate certain features in mobile money platform, as well as language barrier.

A pathway to financial inclusion: mobile money and individual Savings in Uganda

This study provides a micro perspective on the impact that mobile money services have on an individual’s saving behavior using 2013 Uganda FinScope data. The results show that although saving through mobile phones is not a common practice in Uganda, being a registered mobile money user increases the likelihood of saving with mobile money. Using mobile money to save is more prevalent in urban areas and in the central region than in other regions. This can be explained by several factors. First, rural dwellers on average tend to have lower incomes and thus have a lower propensity to save compared with their urban counterparts. Second, poor infrastructure in rural areas in terms of the lack of electricity and poor telecommunication network coverage may limit the use of mobile phones and consequently the use of mobile money as a saving mechanism. Overall, the use of mobile money as a saving mechanism is still very low, which could be partly explained by legal limitations that do not incorporate mobile finance services into mobile money. The absence of interest payments on mobile money savings may also act as a disincentive to save through this mechanism. Given the emerging mobile banking services, there is need to create greater awareness and to enhance synergies between telecoms companies and commercial banks.

Anti-Money Laundering Regulations and the Effective use of Mobile Money in South Africa – Part 1

Mobile financial services, specifically mobile money, has the potential to expand access to financial services to millions of unbanked people in South Africa. As such, it looks very promising in terms of financial inclusion. However, concerns exist that mobile money can be detrimental to financial integrity since there are several proven risk factors linked to mobile financial services. These risk factors make mobile money very susceptible to money laundering. The potential for abuse and the need for appropriate controls is therefore something which cannot be ignored. While the South African legislator has made provision for comprehensive anti-money laundering preventative measures by means of the Financial Intelligence Centre Act 38 of 2001, there exists no South African legislation explicitly concerned with mobile money. It is therefore difficult to determine what the regulatory stance is in terms of mobile money in South Africa. The Financial Action Task Force (FATF) is, however, currently focusing attention on the effect which mobile money may have on financial integrity. The latest FATF Recommendations make provision for several anti-money laundering controls which are specifically applicable to mobile money, including controls regarding money or value transfer services and new technologies. While it is always difficult to balance financial integrity and financial inclusion, the risk-based approach makes it possible for governments to implement effective antimoney laundering measures, thereby preserving financial integrity, without the need to compromise on financial inclusion objectives. The fact that South Africa has not fully adopted a risk-based approach is a problem which needs to be addressed if mobile money is to deliver on its promises for financial inclusion, without being detrimental to financial integrity.

Anti-Money Laundering Regulations and the Effective Use of Mobile Money in South Africa – Part 2

Mobile financial services, specifically mobile money, has the potential to expand access to financial services to millions of unbanked people in South Africa. As such, it looks very promising in terms of financial inclusion. However, concerns exist that mobile money can be detrimental to financial integrity since there are several proven risk factors linked to mobile financial services. These risk factors make mobile money very susceptible to money laundering. The potential for abuse and the need for appropriate controls is therefore something which cannot be ignored. While the South African legislator has made provision for comprehensive anti-money laundering preventative measures by means of the Financial Intelligence Centre Act 38 of 2001, there exists no South African legislation explicitly concerned with mobile money. It is therefore difficult to determine what the regulatory stance is in terms of mobile money in South Africa. The Financial Action Task Force (FATF) is, however, currently focusing attention on the effect which mobile money may have on financial integrity. The latest FATF Recommendations make provision for several anti-money laundering controls which are specifically applicable to mobile money, including controls regarding money or value transfer services and new technologies. While it is always difficult to balance financial integrity and financial inclusion, the risk-based approach makes it possible for governments to implement effective antimoney laundering measures, thereby preserving financial integrity, without the need to compromise on financial inclusion objectives. The fact that South Africa has not fully adopted a risk-based approach is a problem which needs to be addressed if mobile money is to deliver on its promises for financial inclusion, without being detrimental to financial integrity.
 

Mobile Money, Trade Credit and Economic Development: Theory and Evidence

Using a novel enterprise survey from Kenya (FinAccess Business), we document a strong positive association between the use of mobile money as a method to pay suppliers and access to trade credit. We develop a dynamic general equilibrium model with heterogeneous entrepreneurs, imperfect credit markets and the risk of theft to account for this empirical pattern. Mobile money dominates fiat money as a medium of exchange in its capacity to avoid theft, but comes with higher transaction costs. The interaction between risk of theft and limited access to trade credit generates demand for mobile money as a payment method with suppliers and the use of mobile money in turn raises the value of a credit relationship and hence the willingness to apply for trade credit. Calibrating the stationary equilibrium to match a set of moments that we observe in Kenyan FinAcces enterprise survey data and quantifying the importance of the endogenous interactions between mobile money and trade credit on entrepreneurial performance and macroeconomic development, we find that the availability of the mobile money technology increases GDP by 0.33-0.47%.

The Financialization of Everyday Life: Mobile Money and (In)Formal Activity in a Developing Context

This paper contributes to the literature on the financialization of everyday life by studying the relationship between mobile money products and financialized practices in Kenya. We first outline a theoretical approach to studying financialization in developing countries that is consistent with research in developed countries but accommodates the differing motivations and operationalizations of financialized practices in the Global South. In part, this is accomplished by drawing explicit parallels to research on formal financial sector inclusion in developing countries. We extend research by considering how mobile money products may facilitate shifts toward financialized behaviors for individuals in the informal sector. Using nationally representative cross-sectional survey data measuring all financial products and practices used by 13,000 Kenyans, we find that mobile money use is positively related to increased inclusion in the formal financial sector, and formal sector inclusion is also related to the direct measures of financialized behaviors of saving for future needs and investing in productive assets. Additionally, we find that mobile money is also positively related to these financialized behaviors for Kenyans operating entirely in the informal sector. Additionally, we find that women and rural residents are less likely to pair mobile money with formal sector financial products but are no less likely to engage in savings and investment practices. Causal pathways to our correlational results are discussed. Beyond our specific findings, we advocate for an expanded research program on financialization in developing contexts and financialization in the informal sector.

Mobile Money's Impact on Tanzanian Agriculture

Software has enabled the use of mobile money by farmers and significantly benefited Tanzanian agriculture.

Mobile money, smallholder farmers, and household welfare in Kenya.

The use of mobile phones has increased rapidly in many developing countries, including in rural areas. Besides reducing the costs of communication and improving access to information, mobile phones are an enabling technology for other innovations. One important example are mobile phone based money transfers, which could be very relevant for the rural poor, who are often underserved by the formal banking system. We analyze impacts of mobile money technology on the welfare of smallholder farm households in Kenya. Using panel survey data and regression models we show that mobile money use has a positive impact on household income. One important pathway is through remittances received from relatives and friends. Such remittances contribute to income directly, but they also help to reduce risk and liquidity constraints, thus promoting agricultural commercialization. Mobile money users apply more purchased farm inputs, market a larger proportion of their output, and have higher profits than non-users of this technology. These results suggest that mobile money can help to overcome some of the important smallholder market access constraints that obstruct rural development and poverty reduction.

The Role of Contextual Factors in the Uptake and Continuance of Mobile Money Usage in Kenya

AbstractThe use of mobile money, mobile payments and other related mobile financial transactions in Africa vary from one country to another. This can be attributed to the level of technology maturity, a country's level of social‐economic development and the financial transactions ecosystem. The study investigates usage patterns and adoption of mobile money in day‐to‐day person‐to‐person money transfers using mobile telephone, mobile payments and integration of mobile money in financial services in Kenya. The study explores the underlying contextual social and economic factors influencing successful use of mobile money in Kenya by probing the pre‐usage (before mobile money) transfer of funds and the innovation attributes of mobile money that could have positively influenced this rapid uptake and continuance intentions. The study employs a survey questionnaire and two focus groups to collect data from mobile money users. The study result indicates that pre‐usage methods of money transfers significantly influenced initial uptake of mobile money in Kenya while its technical attributes have sustained a positive influence on continuance intentions. Implications for research and practice are discussed.

A qualitative investigation of use and adoption of mobile money in Kenya: a domestication approach

The paper introduces original research findings and conclusions from a qualitative analysis of use and adoption of mobile money in Kenya using the domestication approach. We applied the dimension of domestication as an analytic tool to explain the acquisition, incorporation and conversion of the mobile money technology into the everyday life of its users. The data gathered include a series of focus group discussions, semi-structured interviews and participatory observations with members of the Machakos District in Kenya. It identifies satisfaction as an important mediator between the incorporation and conversion phases of the domestication process. Further, it presents findings that provide empirical support that adoption can be best explained as a process, which includes an initial appropriation, consumption and adoption and shows the influence of social networks, daily practices and norms, on all phases of the adoption process.