Determinants of mobile money technology adoption in rural areas of Africa

Abstract

Adoption of mobile money technology in peripheral regions of Africa where conventional banking services are entirely lacking is very important for financial inclusion. Although the population of mobile money users has recently increased, its adoption in rural areas remains low. This study investigates the determinants of mobile money adoption in rural areas of Africa. Data from Research ICT Africa Access Survey were analysed with the two-part model. The first part involves the adoption of mobile money; second part, how much money was sent or received using mobile money. Relative to other means of sending or receiving money, 88%, 83%, 78%, 80%, and 89% agreed that mobile money is easier, safer, more trustworthy, more convenient, and faster, respectively. Two-part model findings show that age, years of education, unemployment, and ownership of bank accounts explain both the adoption and the amount of money sent using mobile money technology. Conversely, age, bank account ownership, and net monthly income determine both the adoption of mobile money and the amount of money received using mobile money technology. We recommend that mobile money operators target rural dwellers that are young and educated with a net monthly income in their marketing strategies in order to encourage its adoption among the unbanked.

Keywords:

• adoption
• Africa
• mobile money
• technology
• two-part model

PUBLIC INTEREST STATEMENT

Mobile money is fast becoming the technology of choice in ensuring financial among previously unbanked population in rural areas across the world. This is due in part to exponential growth in mobile phone ownership and the ease, convenience, security, speed and cost-effectiveness that accompany mobile money adoption among the poor. This study aims to investigate the factors that explain the usage of mobile money in rural areas of Africa. The study analysed data collected in 10 countries across Africa and used tables and charts to display the results of descriptive statistics and two-part model. Results show that 88%, 83%, 78%, 80% and 89% of respondents agreed that mobile money is easier, safer, more trustworthy, more convenient and faster, respectively, to other means of payment. Findings show that age, marital status, education, employment, bank account and mobile phone ownership determine the adoption of mobile money in rural areas of Africa.

Acknowledgements

The data analysed in this paper was collected by Research ICT Africa and documented and made available by DATAFIRST, University of Cape Town, South Africa. We would like to express our profound gratitude to RIA ICT Africa and DATAFIRST UCT for making the data available for public use. All the views and opinions expressed in this article are that of the authors and do not represent that of the University of Fort Hare, Research ICT Africa and DATAFIRST, UCT, South Africa.

Notes

1. See UNSD (2005) page 119 for a detailed discussion on sampling weights

Additional information

Funding

The authors received no direct funding for this research.

Notes on contributors

Babatope E. Akinyemi

Babatope E. Akinyemi is a Post-Doctoral Research Fellow and a part-time lecturer in the Department of Agricultural Economics and Extension, University of Fort Hare, South Africa. He is an Agricultural and Resource Economist with special interest in Sustainable Agriculture with emphasis on rural households’ food security while safeguarding environmental health.

Abbyssinia Mushunje

Abbyssinia Mushunje is a Professor of Agricultural Economics at the University of Fort Hare South Africa. He is the Head of the Department of Agricultural Economics and Extension at the same university. His recent research focus on land reform, farm efficiency, food security, climate change, ecotourism, and food system.