Agent liquidity: A catalyst for mobile money banking among the unbanked poor population in rural sub-Saharan Africa

Abstract

A large body of research shows that mobile money through its agent networks can potentially increase financial inclusion, especially in the unbanked rural regions of the developing world. This study intends to establish whether agent liquidity has a significant moderating effect in the relationship between mobile money services and financial inclusion of the unbanked poor population in rural sub-Saharan Africa. The data were collected from mobile money users through a cross-sectional approach using a semi-structured quantitative questionnaire and Analysis of Moment Structures was used to test for the moderating effect of agent liquidity between mobile money services and financial inclusion. The results revealed a significant moderating effect of agent liquidity in the relationship between mobile money services and financial inclusion of the unbanked poor population in rural sub-Saharan Africa with data collected from rural Uganda. Agent liquidity enhances access to and usage of mobile money services by 27 percentage points to spur financial inclusion among the unbanked rural poor population. Similarly, agent liquidity has a direct significant effect on access to and usage of mobile money services among the unbanked rural poor population. Overall, the results showed that agent liquidity plays a significant and positive moderating role between mobile money services and financial inclusion. The findings from this study can help mobile money providers to increase the amounts of float to boost agent liquidity to meet instant cash-in and cash-out demands of customers. Besides, regulations on mobile money agents should be loosen to allow more village “dukas” (small village shops) to offer mobile money financial services to crowd-in more unbanked rural poor population into the digital financial system.

Keywords:

• mobile money agents
• financial inclusion
• unbanked rural population
• Uganda
• agent liquidity
• floats

Public Interest Statement

Globally, while mobile money has registered great strides in promoting financial inclusion by providing digital financial services, it’s success could be thwarted by insufficient stock of liquid cash to meet the daily transaction needs of potential unbanked customers. Thus, mobile money operators should ensure that mobile money agents have enough floats to meet instant cash-in and cash-out needs of customers. Indeed, maintaining sufficient float levels by mobile money agents to provide storage and withdrawals value can increase access to and use of digital financial services without the need for a bank account. This can significantly increase financial inclusion of the unbanked rural poor customers to enable them to move out of poverty.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

George Okello Candiya Bongomin

George Okello Candiya Bongomin holds a PhD in Finance, MSc (Accounting & Finance) and Bachelor’s degree in Commerce Accounting from Makerere University, Kampala, Uganda. He is a Research Fellow at the Faculty of Graduate Studies and Research, Makerere University Business School, Kampala, Uganda, and an international financial inclusion scholar. Currently, he is a Visiting Professor and Scholar at Laboratory for Financial Engineering at Laval University, State University of New York, and a member of Centre for Global Finance at SOAS University of London. He is a Principal Investigator on MUBS and Bank of Uganda Joint Research Collaboration on Digital Financial Services and Financial Inclusion in Uganda. His research interests are in financial inclusion, artificial intelligence/machine learning and financial services, digital financial services, microfinance, behavioural finance, banking and finance practice, institutional economics, financial consumer protection, and business psychology. George Okello Candiya Bongomin is the corresponding author and can be contacted at [email protected].