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Mobile Money, Financial Inclusion, and Unmet Opportunities: Evidence from Uganda

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  • Jana S. Hamdan
  • Katharina Lehmann-Uschner
  • Lukas Menkhoff

Abstract

Mobile money is an important instrument to improve the degree of financial inclusion, especially in developing countries. However, having a mobile money account does not imply that this account is actually used. In our sample, 86% of microentrepreneurs own a mobile money account, but only 49% actively use it – the resulting gap indicates unmet opportunities. We estimate that mobile money reaches up to 40% of those without prior access to (semi-)formal financial services, still leaving a substantial group behind in which women and the most disadvantaged are overrepresented. A choice experiment shows that high fees hinder mobile money usage for a substantial number of microentrepreneurs. Moreover, insufficient physical infrastructure, i.e. a small number and unfavourable spatial distribution of mobile money agents, also limits access, while a lack of financial education seems to contribute to comparatively low price sensitivity. Based on these results, we suggest policy measures that reduce the remaining barriers limiting the contribution of mobile money to financial inclusion.

Suggested Citation

  • Jana S. Hamdan & Katharina Lehmann-Uschner & Lukas Menkhoff, 2022. "Mobile Money, Financial Inclusion, and Unmet Opportunities: Evidence from Uganda," Journal of Development Studies, Taylor & Francis Journals, vol. 58(4), pages 671-691, April.
    • Handle: RePEc:taf:jdevst:v:58:y:2022:i:4:p:671-691
    DOI: 10.1080/00220388.2021.1988078
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    Cited by:

    1. Jana S. Hamdan & Tim Kaiser & Lukas Menkhoff & Yuanwei Xu, 2024. "Scaling Financial Education Among Micro-Entrepreneurs: A Randomized Saturation Experiment," CESifo Working Paper Series 11431, CESifo.
    2. Kaiser, Tim & Hamdan, Jana & Menkhoff, Lukas & Xu, Yuanwei, 2024. "Scaling up financial education: Evidence from a randomized saturation experiment," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302424, Verein für Socialpolitik / German Economic Association.
    3. Mohammed Hersi Warsame & Yousif Abdelbagi Abdalla, 2024. "Impact of mobile financial services on financial inclusion: empirical insights from Kenya," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 71(3), pages 633-666, September.
    4. Dzandu, Michael D. & Hanu, Charles & Amegbe, Hayford, 2022. "Gamification of mobile money payment for generating customer value in emerging economies: The social impact theory perspective," Technological Forecasting and Social Change, Elsevier, vol. 185(C).

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