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This study examined the effects of mobile money—a recent innovation in Uganda’s financial-sector landscape—on aggregate economic activity and other macroeconomic variables. We first estimated the long-run mobile-money demand function using vector error correction (VEC) techniques, distinguishing between balances and transfers/transactions. We then...
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... corroborate the findings, we reestimated the SVAR using the natural logarithm of the value of mobile money transactions/transfers. The results shown in Fig. 4 were largely unchanged, aside from larger and statistically significant effects on money demand, interest rates, and the index of economic activity. This indicates that the transactional value of mobile money has stronger macroeconomic effects than its savings ...
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Citations
... This is because these innovations have promoted alternative channels through which economic agents can demand cash for the purpose of carrying out economic activities. For instance, the proliferation of mobile money, internet or online banking has improved economic activities, especially in Kenya (Hove and Dubus, 2019), Ghana (Wiafe et al., 2022), Uganda (Mawejje and Lakuma, 2019), and Nigeria (Anthony-Orji et al., 2019b;Anthony-Orj et al., 2022;Ujunwa et al., 2022;Asogwa et al., 2023;Oyadeyi, 2023aOyadeyi, , 2023b. Furthermore, the introduction of POS merchants, alongside ATMs and other mobile and internet services in many other African countries has also improved the swiftness and convenience of carrying out economic transactions (Domeher et al., 2022;Ahmad et al., 2020;Dunne and Kasekende, 2018;Beck et al., 2015). ...
... Perhaps, these innovations may not have improved the number of people who are financially excluded. On the other hand, Mawejje and Lakuma (2019) in their study on Uganda, using the structural vector autoregressive approach found that mobile money technology strengthens the currency demand function as well as other macroeconomic variables. ...
... This indicates that increased availability, use, and penetration of financial services has little effect on currency demand in these nations. This result was not in line with previous studies on this nexus such as Mlambo and Msosa (2020) in selected African countries, Mawejje and Lakuma (2019) in Uganda et al. (2021) in Indonesia, and Sidik et al. (2018) for several developed and developing countries. The findings may not be in line with Msosa (2020) due to the time frame considered and the selection of countries used in establishing this nexus. ...
The paper explored the role of financial inclusion in the nexus
between the demand for money and financial innovation. Previous studies ignored the role of financial inclusion within this nexus and the paper contributes to the literature in this regard. Annual data from 2004 to 2021 on 26 African countries were selected using the Two-Step System GMM method. The findings show that financial inclusion does not mediate the relationship between financial innovation and money demand. Since financial inclusion
does not change the nexus between financial innovation and money demand, the research suggests using financial innovation on a huge scale to increase financial access, financial usage, and financial penetration – proxies for financial inclusion – to integrate the unbanked and underbanked into the formal economy. If these developments are to increase money demand, they must be accompanied by the wider availability of financial services at reduced transaction costs and improved service offerings.
... This suggests that the ability of FinTech to penetrate rural areas undesired by traditional financial institutions is creating an opportunity for less carbon and energy consumption activities. For example, most rural folks are no longer going to migrate or travel from point A to point B to access financial services (Asongu, 2018;Bukari and Koomson, 2020;Mawejje and Lakuma, 2019). Consequently, this study suggests the optimal design of future FinTech products and services to focus on less carbon-emitting (Ren et al., 2020;Saeed Meo and Karim, 2022), the growing Fintech landscape of Africa should be developed to harness the power of technology and finance toward the funding of environmentally sustainable projects. ...
Purpose
The impact of FinTech in sub-Saharan Africa has primarily been limited to financial inclusion. Contrarily, this study aims to deviate from this norm to estimate how FinTech affects carbon emissions in the subregion. This provides policy recommendations for FinTech regulators, service providers and practitioners to consider optimal products and services that reduce carbon emissions.
Design/methodology/approach
A balanced panel data set from 2009 to 2020 is used and estimated with the fully modified ordinary least squares estimator after checking for cross-sectional dependence, unit root, stationarity and cointegration.
Findings
Results from the estimation suggest a negatively significant relationship between financial technology and carbon emissions in these countries. However, domestic credit to the private sector revealed a statistically insignificant relationship with carbon emissions for the same period. Further, foreign direct investment reduces carbon emissions but gross domestic product and trade openness increase carbon emissions in these countries.
Originality/value
The impact of FinTech in sub-Saharan Africa has primarily been limited to financial inclusion. Contrarily, this study deviates from this norm and estimates how FinTech affects carbon emissions in the subregion.
... Across the East African region, Uganda has, on average, the highest adoption of mobile money services that have rapidly evolved in the country over the last decade [1]. The growing use of mobile phones has boosted the uptake of mobile money services, particularly in rural areas where access to banking services is limited. ...
Mobile money has gained a lot of acceptance in the Ugandan financial sector since its inception a decade ago. This is due to high mobile phone usage, especially in rural areas where branch banking is rare. The financial sector's adoption of mobile money has enhanced financial inclusion by providing banking services to individuals previously excluded from the financial sector. Mobile money services offer a variety of financial transactions, including payment, saving, credit, and insurance, without the need to visit a banking hall. These are poverty reduction, job creation, GDP, and the development of a sound financial sector. However, despite the increased use and growth of mobile money in Uganda, it has presented the following challenges: Some of the problems undermining the future of this innovation include regulatory barriers, cybersecurity threats, compatibility questions, and consumer scepticism about digital financial services. Solving these challenges calls for cooperation between mobile money operators, regulators, policymakers, and other interested parties to foster innovation, competition, and consumer protection while enhancing the access and usage of financial services and products. This review examines mobile money adoption in Uganda. We used available data from many reputable databases, spanning the time period from 2010 to 2024. Findings suggest that in the future, mobile money in Uganda has bright prospects in terms of future trends, new uses, and improved connections with other electronic systems. New technologies like biometric identification, artificial intelligence, machine learning, and blockchain will enhance security, user experience, and other conditions that are necessary to fulfil user needs. Communication with mobile money providers, regulators, and stakeholders is a necessary step to fully benefit from these opportunities and manage the remaining challenges. Lastly, measures such as the promotion of consumer protection, availability of financial products and services, investment in technology, and constant public sensitization would go a long way towards tapping the full potential of mobile money in Uganda, as this fuels positive social and economic change in the country.
... It should be noted that digital payment systems also entail risks related to privacy, consumer protection, fraud, network failure, and others (Levitin, 2018). On the other hand, there is emerging but inconclusive evidence suggesting that digital payments strengthen the effectiveness of monetary policy by increasing its transmission to retail interest rates (Erel at al., 2023) or to mobile money deposit balances as one study found in Uganda (Mawejje, & Lakuma, 2019). ...
... These are not as relevant in SSA where mobile money dominates. Third, the few studies in SSA that have assessed the impact of financial technology on the demand for cash have addressed the issue from a macro-level perspective (Mlambo, & Msosa 2020;Kombe et al., 2020;Mawejje, & Lakuma 2019). None has conducted the empirical analysis from a micro-level perspective using survey data. ...
The debate about the future of cash has recently intensified as technology innovations in the financial sector accelerate digital payments and the creation of new, digital forms of money. Several countries have embraced initiatives towards cashless or cash-light payments. In Sub-Saharan Africa (SSA), mobile money has dominated the list of digital payment innovations. These innovations hold the potential to alter individuals’ behaviour towards cash. Will mobile money render cash less dominant in Africa? Can it promote financial inclusion? We address these questions by exploring individual-level data for Uganda, a country in an African region that pioneered the mobile money revolution in the world. We use the Propensity Score Matching method to robustly compare mobile money users and non-users across various indicators that capture individuals’ perceptions about cash, and the extent to which they remit, save, and borrow money. We present the first evidence that mobile money users, compared to non-users, are more likely to perceive cash as risky and less likely to prefer carrying large amounts of cash. We also confirm that mobile money users are more likely to receive and send remittances, save, and borrow. They also save and borrow larger amounts. The estimation methodology used in the paper, robustness analysis, and a falsification test help reduce potential concerns about selection bias and reverse causality. Two implications emerge from the findings. First, the rapid expansion of fintech technologies in Africa is likely to reduce, although slowly, the demand for and usage of cash over time. Second, the expansion of fintech technologies could help promote financial inclusion in Africa
... These security challenges not only jeopardize the safety of agents but also erode trust and confidence among customers, deterring them from utilizing agency banking services. Addressing theft and security issues requires the implementation of stringent security protocols, such as deploying secure cash handling practices, installing surveillance systems, and conducting regular risk assessments to identify and mitigate potential threats (Mawejje & Lakuma, 2019). ...
Agency banking has emerged as a promising solution to enhance financial inclusion in Uganda, offering convenient access to basic banking services in underserved areas through a network of retail agents. However, the successful implementation of agency banking in Uganda faces multifaceted challenges that impede its effectiveness and sustainability. This article examines the primary challenges confronting agency banking in Uganda, including regulatory hurdles, inadequate infrastructure, sustainability concerns, and security issues. This examination involved a comprehensive review of online literature and academic papers focusing on the challenges encountered in the implementation of agency banking in Uganda. The review encompassed studies, reports, and policy documents from various stakeholders, including financial institutions, regulators, government agencies, and international organizations. The analysis synthesized findings from diverse sources to provide a holistic understanding of the challenges facing agency banking in Uganda. The study revealed various existing regulatory challenges stemming from the complex regulatory landscape governing financial services, requiring clarity and alignment to facilitate the smooth operation of agency banking. Inadequate infrastructure, particularly limited network coverage and unreliable electricity supply, hampers the accessibility and reliability of agency banking services, particularly in rural areas. Sustainability concerns encompass agent liquidity management, profitability, and agent churn rates, necessitating innovative business models and adequate incentives to sustain agent participation. Additionally, security challenges, such as theft and fraud incidents, pose significant risks to agents and undermine customer trust and confidence in agency banking services. Therefore, there is need to implement innovative business models and incentives to enhance agent sustainability. This could involve exploring alternative revenue streams for agents, such as offering additional services beyond traditional banking transactions, like mobile money transfers, bill payments, or micro-insurance sales. Additionally, financial institutions could consider providing agents with performance-based incentives or bonuses tied to customer acquisition, transaction volumes, or customer retention rates. By incentivizing agents and enhancing their profitability, it can help mitigate agent churn rates and ensure the continued availability of agency banking services, especially in remote and underserved areas.
Keywords: Agency banking, financial inclusion, Uganda, regulatory challenges,
infrastructure, sustainability, security issues, theft, fraud.
... Mobile money promotes financial inclusion (Donovan, 2012), promotes economic growth and has a significant impact on macro outcomes, such as interest rate and inflation (Mawejje & Lakuma, 2019). For the micro-economy, mobile money facilitates the safe storage and transfer of money, makes it easy for people to pay for goods and services, and facilitates trade (Jack & Suri, 2011). ...
Purpose: The research was conducted to determine the role of the attitudes of Vietnamese consumers towards the intention to use mobile money to make recommendations for solutions to improve the effectiveness of this activity.
Design/methodology/ approach: It analyzed 307 surveys from consumers living and working in Vietnam. A research model was built that was based on the theory of technology acceptance model (TAM) and the theory of planned behavior (TPB). The author considered six constructs, including self-efficacy, perceived ease-of-use, technology anxiety, perceived usefulness, attitude toward mobile money, and intention to use mobile money. The data is analyzed with a partial least squares structural equation model (PLS-SEM) using SmartPLS 3.0 software.
Findings: The result indicated that self-efficacy (SE) significantly and directly affects the perceived ease of use (PEOU), indirectly affects the attitude toward mobile money (AT), and intention to use mobile money of Vietnamese consumers (IU). The PEOU and perceived usefulness (PU) significantly and directly affect the AT, and indirectly affect IU. In contrast, technology anxiety (TA) showed no effect on the PU. In addition, the AT has a strong effect on the IU.
Research limitation/ implications: This paper presents significant implications, particularly for the digital economy, which is currently permeating every facet of human existence. The article also suggested future research directions, including expand the scope of the research, the sample size, and the addition of other factors to supplement and complete the model.
Originality/value: The article closes a perceived gap in the mobile money literature by using model measurement to demonstrate the mobile money intention of Vietnamese consumers.
... Generally, the cost of mobile money transactions has been decreasing since its inception. The impact has seen a rise in money held in less liquid form and generally increasing overall money demand in the economy impacting macroeconomic variables (Mawejje & Lakuma, 2019;Asongu & Salahodjaev, 2022;GSMA, 2022). The study findings agree with previous studies namely Mwangi (2014) in Kenya, Nakamya (2014) in Uganda, Kasekende and Nikolaidou (2018) in Kenya and Wahyunda (2021) in Indonesia. ...
The unprecedented growth of mobile phones to make transactions has become a dependable form of payment for low-income earners living in rural and urban Kenya, increasing demand for goods and services and stimulating demand for money. However, its effect on money demand and subsequent effect on monetary policy is inconclusive as observed from past empirical studies. Furthermore, the rapid adoption of mobile money has generated new data needs and growing interest in understanding its contribution to the money demand function. It is against this background that time series data and ordinary least squares technique are applied to review the effect of mobile money on the demand for money in Kenya for the period from 2007 to 2020. The results of the regression model indicate that an increase in mobile money leads to an increase in demand for money in the economy. The study has established that mobile money has a substantial influence on money demand growth in Kenya attributed to the low transaction cost and payment habits of Kenyans, they are more convenient than carrying cash and business people feel safe managing cash flow. The empirical estimates of this study imply that the central bank and the financial stakeholders need to put in place policies such as providing affordable smartphones, cheap mobile internet services, licensing new mobile operators and reducing tax on transaction costs to increase money transfer through money mobile systems.
... This is because these innovations have promoted alternative channels through which economic agents can demand cash for the purpose of carrying out economic activities. For instance, the proliferation of mobile money, internet or online banking has improved economic activities, especially in Kenya (Hove and Dubus, 2019), Ghana (Wiafe et al., 2022), Uganda (Mawejje and Lakuma, 2019), and Nigeria (Anthony-Orji et al., 2019b;Anthony-Orj et al., 2022;Ujunwa et al., 2022;Asogwa et al., 2023;Oyadeyi, 2023aOyadeyi, , 2023b. Furthermore, the introduction of POS merchants, alongside ATMs and other mobile and internet services in many other African countries has also improved the swiftness and convenience of carrying out economic transactions (Domeher et al., 2022;Ahmad et al., 2020;Dunne and Kasekende, 2018;Beck et al., 2015). ...
... Perhaps, these innovations may not have improved the number of people who are financially excluded. On the other hand, Mawejje and Lakuma (2019) in their study on Uganda, using the structural vector autoregressive approach found that mobile money technology strengthens the currency demand function as well as other macroeconomic variables. ...
... This indicates that increased availability, use, and penetration of financial services has little effect on currency demand in these nations. This result was not in line with previous studies on this nexus such as Mlambo and Msosa (2020) in selected African countries, Mawejje and Lakuma (2019) in Uganda et al. (2021) in Indonesia, and Sidik et al. (2018) for several developed and developing countries. The findings may not be in line with Msosa (2020) due to the time frame considered and the selection of countries used in establishing this nexus. ...
... All estimations and analysis of the data were done using the STATA version 14 computer software. The analysis was done in three stages involving the pre-estimation analysis, estimation analysis, and post-estimation analysis [19][20][21][22]. ...
This study investigates the effects of digital currency on monetary policy in Tanzania., The main variables of the study included BTC and MBT as the independent variables and M3 as a dependent variable. The quantitative methodology used involved the applications of econometrics analysis as the estimation methods. The quarterly time series data (2014q1 – 2021q4) used were obtained from both the Bank of Tanzania, the Tanzania National Bureau of Statistics and the online data from www.blockchain.com. The main variables of the study included BTC and MBT as the independent variables and M3 as a dependent variable. The Vector Error Correction Model (VECM) was used to estimate the empirical regression model, while STATA software 14 was used to analyse the data. The results indicate of the VECM indicated that there was a significant negative relationship between BTC and M3 variables on the one the one hand, and a significant positive relationship between MBT and M3 variables in Tanzania. The study concluded that there was a significant effect of the digital currency on monetary policy in the country. The study recommended that the government should education the people on how the digital currency operates, it should strengthen monetary policy practices, and try to learn from others countries that use the digital currency. This would help the country to officially allow or reject the use of digital currency in the country.
... It should be noted that digital payment systems also entail risks related to privacy, consumer protection, fraud, network failure, and others (Levitin, 2018). On the other hand, there is emerging but inconclusive evidence suggesting that digital payments strengthen the effectiveness of monetary policy by increasing its transmission to retail interest rates (Erel at al., 2023) or to mobile money deposit balances as one study found in Uganda (Mawejje and Lakuma, 2019). ...
... Third, the few studies in SSA that have assessed the impact of financial technology on the demand for cash have addressed the issue from a macro-level perspective (eg. Mlambo and Msosa 2020;Kombe et al. 2020;Mawejje and Lakuma 2019). None has conducted the empirical analysis from a micro-level perspective using survey data. ...
