Mobile money and financial inclusion in Sub-Saharan Africa

Type Working Paper - FIT IN Initiative Working Papers
Title Mobile money and financial inclusion in Sub-Saharan Africa
Volume 5
Publication (Day/Month/Year) 2023
Page numbers 1-43
In this paper, we use survey data of 12,735 individuals from nine Sub-Saharan African countries conducted in 2017. We use the geo-location of respondents to combine the survey data with information on the proximity of mobile network towers and banking facilities. We estimate a two-stage model, where in the first stage consumers decide to adopt a feature phone or a smartphone, and in the second stage, they decide whether to use mobile money services. We find that individuals who live within a 2km radius from GSM, UMTS and LTE towers are more likely to adopt both a feature phone and a smartphone, with a greater impact on the latter. In counterfactual simulations, we consider that the whole population lives within 2km from towers of any of these networks and find that the adoption of smartphones would increase by 12-32percent depending on the country. We also find that overall there is less mobile money usage in areas that are less developed economically, while a greater distance to banking facilities increases the incentives to use mobile money. Furthermore, individuals who live in less developed areas are less likely to send money, but this is not the case with respect to receiving money. Thus, mobile money services enable transfers from richer to
poorer areas, which contributes to a reduction in income inequality.

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