Digital Financial Services in Africa
Saturday, Jan. 4, 2020 2:30 PM - 4:30 PM (PDT)
- Chair: Tavneet Suri, Massachusetts Institute of Technology
Migration, Money Transfers and Mobile Money: Evidence from Niger
AbstractInternal and regional migration serves as an income source for millions of households in West Africa. Despite substantial volumes of remittances, the cost of cross-border payments in the West African Economic and Monetary Union (WAEMU) is estimated to be one of the highest in the world. The introduction of digital financial services – primarily mobile money – offers new opportunities for reducing the transaction costs associated with remittances. Nevertheless, the adoption of such services in West Africa remains low, and a majority of households are still highly dependent upon informal money transfer systems. Using survey data in Niger from an eight-year period, we estimate the value of remittances from migrants from Niger, as well as the relative cost of money transfers. We find that mobile money adoption remains low in Niger, despite the fact that it is less costly as compared with informal mechanisms and mobile phone ownership is high. Yet there is relatively high willingness-to-pay amongst rural households, measured at or above the market price for mobile money transfers. Willingness-to-pay seems to be relatively higher in areas with greater access to mobile money agents, despite similar rates of migration. This suggest that one of the primary barriers to mobile money adoption could be access to the necessary infrastructure.
Is Mobile Money Changing Rural Africa? Evidence from a Field Experiment
AbstractWhat is the economic impact of newly introducing mobile money in rural areas underserved by financial services? This study is the first to use a randomized controlled trial to answer this research question. Following a sample of rural communities in Southern Mozambique, our experimental results show that the availability of mobile money translated into clear adoption of these services, measured through administrative data on mobile money transactions. We find that mobile money improved consumption smoothing by treated households, i.e., they became less vulnerable to adverse weather and self-reported shocks. However, we also observe that mobile money led to reduced investment, especially in agriculture. We document increases in the number of migrants in a household and in the migrant remittances received by rural households particularly in presence of adverse shocks, while there are no clear effects on savings. We interpret these results as evidence that, by drastically reducing the transaction costs associated with migrant remittances, mobile money acted as a facilitator of migration from rural to urban areas.
Cashing In (and Out): Experimental Evidence on the Effects of Mobile Money in Malawi
AbstractWe present results from a randomized control trial on mobile money access in an experiment with 480 entrepreneurs in Malawi. Treated individuals received account opening assistance and basic training on mobile money, and were encouraged to save. Withdrawal fees were waived. Seventy-three percent of treatment respondents made at least one deposit and 53% made at least 5. Treatment respondents reallocated labor from business to agriculture, and we find some evidence for an increase in expenditures. Evidence suggests that treatment effects were driven in large part by entrepreneurs using the accounts for savings.
- O1 - Economic Development