Macroeconomic effects of Mobile money: evidence from Uganda

Abstract

This study examined the effects of mobile money-a recent innovation in Uganda's financial-sector landscape-on aggregate economic activity and other macroeconomic variables. We first estimated the long-run mobile-money demand function using vector error correction (VEC) techniques, distinguishing between balances and transfers/ transactions. We then estimated the short-run effects of mobile money on selected macroeconomic variables using structural vector autoregressive (SVAR) methods. The results showed that mobile money had moderate positive effects on monetary aggregates, consumer price index, private-sector credit, and aggregate economic activity. Mobile money balances responded to changes in monetary policy instruments, signaling possible ameliorating effects for the conduct of monetary policy. Finally, the results showed that transactional motives related to mobile money had stronger macroeconomic effects than savings motives.

What we know and don't know about the socioeconomic impacts of mobile money in Sub‐Saharan Africa: A systematic literature review

“…Bank of Ghana (2017) documented the explosive growth of MM transactions, suggesting reduced demand for real money and increased accumulation of loanable deposits. In a similar vein, a positive relation between MM balances and private sector credit was established in Uganda (Mawejje & Lakuma, 2017). Adding weight to these findings, Nampewo et al (2016) found that MM balances led to private sector credit growth in the long run, suggesting the expansion of financial depth.…”

“…Research at the country level, however, focuses mainly on economic growth. The introduction of MM has been found to be associated with GDP growth in Uganda (Mawejje & Lakuma, 2017) and with per capita income growth in Kenya (Beck et al, 2018; Beck, Ramrattan, Pamuk, & Uras, 2016). In his cross‐country study, Nan (2019) established the relation between MM diffusion and economic growth and further showed that the positive effect increased over time as MM spread on a massive scale.…”

Mobile Money Use: The Impact of Macroeconomic Policy and Regulation

“…The macroeconomic policy context also plays a critical role in the success of mobile money systems. A few studies investigate the impact of mobile money on macroeconomic policy variables (See for instance (Kipkemboi and Bahia 2019;Mawejje and Lakuma 2019)). However, there is a paucity of empirical studies on the impact of macroeconomic policy variables on mobile money.…”

“…Like many developing countries, the financial sector in Uganda has undergone rapid transformation over the last two and half decades (Mawejje and Lakuma 2019;Whitworth and Williamson 2010). This growth has been possible due to reforms that enabled the development of market-based institutions, particularly in the financial sector.…”

Analytical approach to digital channel performance optimization of mobile money transactions in emerging markets

“…For a mobile phone user who wishes to withdraw cash from the mobile wallet, the user will need to go to a mobile money agent outlet. However, due to the rapid growth of the money space, there is a lot of integration and collaboration within the ecosystem (Chauhan, 2015;Mawejje & Lakuma, 2017). As a result of cooperation and inclusion within the ecosystem, mobile phone users can now collect money from their mobile wallets through the Automated Teller Machine (ATM) in some developing markets.…”