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Mobile Money Services: An Enabler of Development Processes in Africa

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  • James Okrah
  • Alexander N. Nepp

Abstract

Access to finance has been a major constraint in a lot of developing countries, especially in Africa. This research seeks to explore the role of mobile money in the development of the financial sector and its role in enforcing financial inclusiveness by making banking easily accessible and convenient. We look at data of сountries which operate mobile money credit facilities. Looking closely at how these loan services are increasing financial accessibility and the intensity of entrepreneurship, we hypothesize that mobile money positively influences entrepreneurship and domestic saving by providing an avenue for financial inclusiveness. To explore our objectives, we use panel data consisting of developing countries. With repeated observations of enough cross-sections, panel data analysis permits us to study the dynamics of change with time series. Our data consists of 28 developing countries from the year 2010 to 2018. Our results indicated a positive effect of mobile money registered accounts on new business density and positive effect of transactional volume on domestic savings. We realized that the mobile money system has increased people's confidence in saving and investment since their money is easily accessible with just a click away. People now feel much safer, and this system is educating more people rapidly in developing the culture of saving. This improves how banks treat their clients in rural communities and it also creates employment for young graduates. Access to loans has become much easier by replacing the collateral system with the credit score system. We also realized that since there are no regulations regarding access to loans, mobile money operators seem to take advantage of the people by taking interest rates of more than 10% per month.

Suggested Citation

  • James Okrah & Alexander N. Nepp, 2022. "Mobile Money Services: An Enabler of Development Processes in Africa," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 21(4), pages 659-662.
    • Handle: RePEc:aiy:jnjaer:v:21:y:2022:i:4:p:659-662
    DOI: http://dx.doi.org/10.15826/vestnik.2022.21.4.022
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    References listed on IDEAS

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    Cited by:

    1. Nepp, A., 2024. "Are there any prospects for a long-term savings program for citizens? The role of political stability, corruption and confidence in the future," Journal of the New Economic Association, New Economic Association, vol. 65(4), pages 156-176.

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    More about this item

    Keywords

    Mobile Money; entrepreneurship; developing economies; development; financial inclusion; digital financial service.;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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