Panel 26

Mobile Money and Digitization of Financial Transactions in sub-Saharan Africa (SSA): A Pathway out of Poverty through Financial Inclusion

Conference Sub-Theme: The changing flows of resources and capital

Panel organiser: Franklyn Lisk, Centre for the Study of Globalisation and Regionalisation, Politics and International Studies Department and Africa Lead - Global Research Priority on International Development, University of Warwick, UK.


There are good reasons to believe that Africa should take advantage of the digital revolution sweeping through the continent to promote financial inclusion as a pathway out of poverty for the estimated 330 million “unbanked” Africans – about 80 per cent of the region’s working-age population – who presently use no formal or informal financial services. The widespread and still increasing use of mobile phones in SSA has resulted in the rapid digitization of commercial and financial transactions across all countries in the region. This trend is now paving the way for ‘de-cashing’ of national economies,  in the sense of the gradual phasing out of the use of currency in circulation and its replacement by mobile money and various forms of digitized convertible bank transfers. Available evidence from the contemporary African scene indicates a variety of digital payment and money transfer systems like the M-Pesa which originated in Kenya a decade ago in 2007, EcoCash, and local versions of E-Wallet mobile money account.

The panel invites papers that will address various aspects of how the increasing use of mobile and digital money in financial and commercial transactions in Africa impacts on the reduction of poverty and inequality, through financial inclusion (i.e. bringing hundreds of millions of hitherto financially excluded Africans into profitable and active participation in different sectors and levels of national and regional economies). Additionally, the panel  seeks contributions on   how the drive towards a cashless or ‘cash-lite’ society, resulting from mobile money  and  digitization, can curb corruption through reducing the incidence of illicit financial flows and ‘black economy’ transactions (which tend to thrive on unrecorded cash transactions) and boosting state revenue collection.

Approved abstracts panel 26

1. Profiling Mobile Money Usage In The Business Enterprise Sector In West Africa: A Cross-Country Analysis

Author: Love Odion Idahosa, College of Business and Economics, University of Johannesburg.

The Mobile money revolution on the African continent has generated a lot of discourse on its innovativeness as a market device for financial inclusion. The adoption of Mobile money has however extended beyond person-to-person transitions to adoption by private enterprises to facilitate money transferrers and payments. This trend promises to improve the ease of doing business, possibly lower the cost of financial transactions, and could pave the way for the ‘de-cashing’ of private sector transactions in these developing economies. The upscaling of mobile money adoption in the private sector also has the potential reducing the prevalence of illicit financial flows thereby stifling corruption associated with the cash transactions, especially in the ‘black economy’. This study critically evaluates the use of mobile money in the manufacturing and services sector in nine (9) West-African Countries (Guinea, Togo, Mali, Cote d’ Ivoire, Benin, Cameroon, Niger, and Sierra Leone) with a view to profiling mobile money usage and non-usage as the first step in understanding the requirements for widespread adoption. Making use of descriptive and inferential statistical analysis, this study analyses the World Bank Enterprise data for 2016 and 2017 to profile Mobile money usage amongst businesses in the nine countries. It focuses on ascertaining the nature and characteristics of mobile money users and non-users and understanding the motivations for and challenges involved in using mobile money. Based on this, the potential for using mobile money to ease financial transactions in the business sector is assessed with a view to making recommendations to improve mobile money usage by private enterprises. The findings will be relevant for state policy makers as well as commercial finance investors looking to leverage the unbanked population for inclusivity and/or profitability.

 Key words: Mobile Money, Business Enterprise Sector, West Africa

2. ‘Financial Inclusion via Social Cash Transfers: The Case of South Africa’

Author: Lena Sophia Gronbach, Human Economy Programme, University of Pretoria, South Africa.;

In recent years, two separate but potentially complementary trends have emerged in the global South: the emergence of digital payment technologies with their enormous potential to boost financial inclusion, and the extension of social cash transfer programmes as a means to address poverty and inequality. Increasingly, these two developments are being translated into a single headline objective: to replace cash-based payments with digital transfers into ‘financially inclusive’ accounts, thus promoting financial inclusion among the recipients of social cash transfers. According to the proponents of this strategy, this will create a ‘triple-win scenario’, benefitting the state, private financial companies, and the poor alike.

South Africa, which boasts the largest social cash transfer system on the continent, has assumed a pioneering role in implementing this ‘G2P approach’. In light of the growing interest among African policymakers in implementing similar programmes, the South African case thus holds valuable lessons for other developing countries. Yet, the case has not been without controversy and has revealed a number of important issues with regard to the use of digital G2P payments as a means to promote financial inclusion. Moreover, the South African government has failed to reap the potentially large benefits of ‘mobile money’ technologies, relying instead on the traditional banking infrastructure.

This paper outlines how South Africa used its rapidly expanding social grant system to ‘bank the unbanked’ and discusses the main issues that emerged in this process. These include the protection of beneficiary data, the harshly-criticized practice of cross-selling financial services to grant recipients, debit deductions from beneficiaries’ bank accounts, the relationship between the state and its financial contractor, and the considerable cost of the current system. The paper argues that, despite its potential to act as a catalyst for financial inclusion, the ‘G2P approach’ in its current form requires considerable fine-tuning in order to work for instead of against the poor.

3. Factors Determining the Intension to Use Mobile Banking Services in Nigeria

Author: Kemi Ogunsola, Africa Regional Centre for Information Science, University of Ibadan, Nigeria.

Mobile banking has become one of the easiest means through which many people, in the Sub-Sahara Africa, especially in Nigeria transact businesses, as well as fund such businesses. This is because the rate of adoption and use of mobile phones in this region is rapid and high. Consequently, the use of mobile banking services via mobile technologies is the latest paying alternatives that diversify opportunities for business organisations to offer quality services to customers. Services such as electronic fund transfer, payment of utility bills, payment for products and services, checking of account balances and access to other informational services. Despite the usefulness of mobile banking, there is a range of factors which determines the use of mobile banking especially by adult population in Nigeria. Therefore, this study which is part of an ongoing study, investigated the influence of the factors such as; demographic variables, income, privacy and security of mobile banking, perceived usefulness and perceived ease of use of mobile banking, trust in the technology and responsiveness, and the computer self efficacy of the customers, on use of mobile banking services in Nigeria. The study adopted a survey design approach, used an online questionnaire administered to 360 respondents. Convenience sampling technique was adopted for the study. Data collected were analysed using Statistical Package for Social Sciences, version 20. The study provided answers to four research questions. Frequencies, mean, Pearson Moment Correlations, as well as multiple linear regression analysis were used for the analysis. Findings from the study showed that perceived ease of use and perceived usefulness of mobile banking, attitude towards use of mobile banking, and social norm are the major determinants of the intention to use mobile banking in Nigeria. Recommendations were made based on the research findings.

4. Gizmos of connection or disconnection? Mobile phones and young urban entrepreneurs in Harare, Zimbabwe

Authors: Stanley Tsarwe, University of Zimbabwe, Department of English and Media Studies, Harare & Admire Mare, Namibia University of Science and Technology, Department of Communication.

This paper examines the everyday uses of mobile phones in urban spaces by Zimbabwean youths engaged in different forms of informal trading on the streets of Harare. It focuses on new frontiers of economic activity associated with informal businesses in emerging African markets, and the role played by mobile phones in facilitating socio-economic exchanges as well as urban mobilities in specific contexts. Through informal field observations and in-depth interviews with young street vendors in Central Harare, our study demonstrates the localized appropriation of mobile phones in a context where both “quiet” and “direct” encroachment have become normalized. Viewing the market as socio-cultural and technological spaces which are constituted in both virtual and non-virtual worlds, we provide new evidence of thriving mobile payments, marketing, surveillance and distribution networks in Harare. We argue that mobile phones are not just enablers of digital market placers but they are market makers. They are instrumental for social and market-place interactions, and interestingly, the socio-technical interactions reflect high technological ingenuity. We argue that mobile phones have spawned new forms of social interaction and mobility which are reconfiguring the vending, marketing, payment and banking practices of young entrepreneurs.

1. To what extent do mobile phones improve smallholder farmers financial inclusion in Ghana?

Author: Adam Salifu, Research and Consultancy Centre, University of Professional Studies, Accra, Ghana.

Like many developing countries in Sub-Saharan Africa (SSA), efforts to transform smallholder agriculture remain crucial for Ghana’s economic growth, food security and poverty alleviation, as the majority of the country’s population (about 54%) are directly involved in agriculture of which about 80% of them are smallholder farmers. While a variety of strategies are used to improve smallholder agriculture, the last decade has witnessed significant increase in the use of information and communication technology such as mobile phones to improve smallholder farmers’ access to extension services, the credit and market. Recent studies conducted in Kenya, Zambia, South Africa and the Philippines have emphasized in particular the important roles mobile phone can play to facilitate farmers access to agricultural information, financial credit and the market.  While Ghana has witnessed significant increase in mobile subscription particularly in rural areas in the last decade, very little research has been undertaken to understand the extent to which mobiles phones have contributed to improving the financial inclusion of smallholder farmers. Using survey data from a cross-section of smallholder farmers and credit data from micro-financial institutions in Ghana, this paper explores the relationship between mobile owners and smallholder farmer access to financial services and the agricultural market. The paper demonstrates that while mobile phones (through mobile money) have improved agribusiness among smallholder farmers, they have not significantly improved their access to agricultural credit.

Key words: Access, Credit, Financial inclusion, Ghana and Smallholder farmers  


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