Proceedings of the 5th International Conference on Advanced Research in Management, Economics and Accounting
Year: 2023
DOI:
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Economic inequality and Mobile Money use in Mozambique
Moisés Siúta and Fernando Lichucha
ABSTRACT:
The paper examines the impact of economic inequality on the Mobile Money services usage in Mozambique based on 2017 population census and 2019/20 IOF data. The study revealed three main findings. Firstly, it explores the influence of economic inequality on Mobile Money usage across 155 districts. Employing quantile regression analysis reveals the study shows that economic inequality, as measured by the Gini of the average asset ownership index and access to basic services, significantly affects the use of Mobile Money services. Higher levels of inequality are linked to reduced usage of Mobile Money services, with a 1% increase in the Gini index of the average asset ownership index corresponding to a 1.73% decrease in the district’s Mobile Money usage rate. Secondly, the application of quantile regression analysis, also shows that the relationship between economic inequality and Mobile Money usage remains consistent across all quartiles of Mobile Money usage rates. Quantile regression coefficients are not statistically different from those in the Ordinary Least Squares (OLS) regression. The estimates also underscore the significance of access to electricity and literacy rates of the districts, both of which positively explain Mobile Money usage rates. A 1% increase in access to electricity through the public grid is associated to a 0.32% rise in the district’s mobile money usage rate, while the increase in literacy rate is associated to an increase of 1.4%. Thirdly, at the individual level, the study employs probit and linear probability models to analyse the determinants of Mobile Money usage. The results indicate that factors such as asset ownership, access to basic services, gender, and residential location play significant roles in explaining the probability of individuals using Mobile Money services. Owning a mobile phone significantly increases the marginal probability of using Mobile Money usage by 15%, in contrast to not having one. Moreover, completing secondary school education increases the probability by 9%, compared to individuals with no educational attainment. Residing in rural areas reduces the probability by 0.3% compared to individuals in urban areas. The policy implications of the findings emphasize the need to addressing inequality beyond the financial sector to achieve successful financial inclusion efforts. Policymakers should also prioritize efforts to reduce inequality in areas such as education and electricity access, as these sectors seem to have positive association with increased Mobile Money usage.
keywords: Economic inequality, Mobile money, financial inclusion