The Use of Mobile Money Application and Smallholder Farmer Market Participation: Evidence form Cote d Ivoire and Tanzania

With the growing food security concerns market participation of smallholder farmers has regained the attention of policy makers and agricultural development community. The widespread adoption of information and communication technologies in Sub-Saharan Africa over the last decade have paved the way for the introduction of digital solutions such as mobile money that have a potential to enhance access to input and output markets. Using a conceptual framework based on the Transaction Cost Economics theory, we propose a hypothesis that the ability to make quick and low-cost money transfers through mobile money application can lower the transaction costs associated with hold-up risks of participating in distant markets. This hypothesis is tested using the data from the CGAP survey in Cote d Ivoire and Tanzania. The methods include Heckman Probit model to account for sample selection bias. The findings indicate that the stallholder farmers who use the mobile money for receiving payments from buyers are more likely to sell their product in city and regional markets versus farm gate options such as middleman and village markets. Key words: market participation, mobile money, transaction costs, Sub-Saharan Africa Acknowledgement :