MOBILE MONEY FINANCIAL SERVICES AND THE EMPOWERMENT OF RURAL HOUSEWIVES IN NKOKONJERU: AN ASSESSMENT
General Introduction
1.0 Introduction
Mobile money services have been designed to help a huge proportion of the population and have received overwhelming up take in Uganda since its introduction in 2009. This success is attributed to the services being affordable and accessible including low income earners. The technological invention is considered easy and efficient and reliable with the potential to extend financial services to unbanked or those preferring cheaper financial services, it is an appropriate technological invention for the rural households that continue to face challenges related to limited affordable and accessible financial services to support business operations. In this dissertation, the researcher focuses on mobile money financial service with a much more focus on how it has contributed to the empowerment of rural housewives in Nkokonjeru done as an assessment.
1.1 Background to the study
Mobile money financial services are services operated and performed from a mobile device such as mobile phone, credit or debit cards (Must and Ludewig, 2010). It is further clarified as the intersection of both banking and telecommunications services (World Bank, 2010). It involves a diverse set of stakeholders from both mobile phone operators and financial service institutions (Bosi, Celly and Joshi, 2011).
Mobile money financial services have been defined as electronic money accounts that can be accessed via mobile phone (Zutt, 2010). Mobile money financial services offers secure and convenient means for banked and unbanked people to send and receive money with mobile phones at home and abroad; anywhere at any time. It contains features such as mobile wallet, mobile transfer, airtime transfers and mobile banking (Porteus, 2006). Mobile wallet enables the subscriber to receive, store, send or pay money anywhere any time. Money transfer options means that one can send money from their mobile money account to a different subscriber anywhere anytime, which is similar to airtime transfer, where one can purchase and send airtime to another subscriber within the same network. Mobile banking works closely with banks to provide banking services to subscribers of mobile money (Bosi, Celly and Joshi, 2011).
According to (Ndiwalana, Morawczynski, & Popov, 2010) described that mobile money financial services are used to loosely refer to money stored using the Subscriber Identity Module (SIM) as an identifier as opposed to an account number in the conventional banking sense. The authors state that a notational equivalent in value is kept on the SIM within the mobile phone, which is also used to transmit payment instructions. Tobbin, (2010) argues mobile money financial services based on their functionality, uses, and ultimate envisioned purpose by observing that it includes all the various initiatives (long-distance remittance, micro-payments, and informal air-time battering schemes) aimed at bringing financial services to the unbanked using mobile technology. By focusing on the gadget utilised, Jenkins, (2008) described mobile money financial services as money that can be accessed and used via mobile phone. Depending on the business model employed by the stakeholders (Donner &Tellez, 2008), the corresponding value is physically held by the MNO such as G-Cash in the Philippines (Ndiwalana & Popov, 2008), a bank such as MTN mobile money, AirtelZap and Uganda Telecom M-Sente in Uganda (MTN, 2010; ZAIN, 2009; UTL, 2010), or another third party.
Use of mobile phone for financial transaction started with introduction of prepaid mobile phone services that targeted low income earners who desired more anonymity than post-paid phone subscribers. Unlike post-paid mobile phone services, prepaid subscribers could simply walk to a shop, purchase small denomination airtime, key in the details and make their desired call (Mbogo, 2010). This segment of mobile phone users soon became large enough to be a target for micro-payment features since majority had little or absolutely no interaction with banks. The main reason this segment came into focus and the need to develop financial services that target them was outlined by Wishart (2006) as part of the drive towards a cashless transaction environment that presents advantages such as: reduction of fraud, reduction of untraceable criminal activities, reduction of cash handling costs, and less reliance on cash-in-hand when a need arose.
Must and Ludewig (2010) trace the rise of mobile money financial services to the rapid and worldwide penetration of mobile phones back to 1999. However, mobile phone enabled commerce (m-commerce) or services may have started as early as 1997 when mobile phone enabled Coco Cola vending machines and mobile phone banking services were introduced in Finland. Earlier documented mobile commercial services include a Philippine mobile operator’s launch of SMART money in 1999. By the year 2000, mobile money technology had started to spread to include several other countries. Later GLOBE Telecom launched G-cash in 2004 (Wishart, 2006). Bharti Airtel launched their mobile money transfer pilot project in India in 2007 (Bosi, Celly and Joshi, 2011).
The uptake of mobile money financial services benefits in various ways primarily by moving toward cashless communities (Wishart, 2006). Mobile money is particularly attractive to rural communities because the services are considered far cheaper than the current alternatives such as Western Union when transferring money from one person to another (Omwansa, 2009). World Bank (2012) declares that mobile money financial services are considered liquid enough to allow for easy, fast conversion. This is aided by convenient access to agents in various locations to aid in transactions.
The speed and safety of mobile money financial services has enabled quick and easy transfer of money. This has sparked the growth of various economic activities, especially in the rural areas, through increased money circulation boosting local consumption (Zutt 2010). It is likely that reduced costs and increased efficiently and reliability of the systems have enabled more people to send money to the rural areas increasing economic activities in those places. For example, it is possible for a farmer to receive money to purchase seeds without unnecessary travel during planting season.
Mobile money services have the potential (a) to improve households’ income and thus to facilitate safe savings and human capital investments; (b) to formalize the informal cash economy by facilitating trade; and (c) to be a funding platform of development projects (Batista & Vicente, 2012). The reduction of remittances’ costs would increase the frequency and magnitude of remittances and thus affect households’ incomes. This could increase household’s savings since mobile money financial services provide safe storage mechanisms. Based on the evidence collected in Kenya (GSMA, 2013), it is known that many consumers often use their mobile wallets to save funds at least for short periods of time and are more likely to be able to have the cash needed in case of weather emergencies for instances. Besides, mobile money financial services would also encourage human capital and physical investments. For instance, through cheaper transfers across distances, households are more likely to send their members to distant locations and to invest in skills that are likely to earn a return.
Afful (2012) adds that by making it easier for people to pay for, and to receive payment for goods and services, mobile money financial services give more visibility to money flows as remittances move from informal channels to formal channels. Indeed, the use of mobile money financial services may encourage the formalization of the informal cash economy which, adequately channelled, can in turn have an impact on economic development by making local markets more dynamic (diversification of goods and production). In the long run, mobile money financial services can facilitate and contribute to improvements in payment of taxes and utilities, which could in turn strengthen governance and infrastructure, and foster international trading through an increased offer of financial services (Scott et al., 2004).
The use of mobile money financial services is creating new forms of social and communal life (Kusimba et al., 2013). On one hand, sending and receiving mobile money is part of a culture of entrustment (Shipton, 1989): most users in African countries use mobile money as a social and economic tool through which they create relationships by sending funds, airtime gifts and vouchers to family or friends. A wide range of mobile money services includes social gifting, assisting friends and relatives, organizing savings groups, and contributing to ceremonies and rituals. “New forms of social interaction around mobile money recast long-standing traditions of reciprocity and are subject to cultural rules” (Kusimba et al., 2013). On the other hand, mobile money transfers can have particular impacts on familial bonds and relationships. With the option to send remittances electronically, immediately and affordably, their frequency may increase; yet as the funds do not need to be delivered in person, working persons earning salaries may return less often to their home villages.
Mobile money financial services may also have a particular impact on social and family structures. For instance, through altering bargaining power, mobile money services may have the unintentional consequence of empowering rural women by increasing their financial autonomy: “Especially among poorer segments of the population, remittances and transfers received (and sent) via M-Pesa are less visible than those transmitted by other means, such as delivery by a friend or relative [hence] the use of M-Pesa could allow women to thwart the complete control of finances by male family members”(Morawczynski, 2009). Women could be able to preserve a greater portion of received transfers, which could positively affect the “allocation of household spending” (Jack and Suri, 2010). While these potential benefits of mobile money to women have been analyzed, there is still limited information with regard to access and use of mobile money financial service by rural housewives and how it is empowering them. Some studies were done by Munyegera et al. (2014) and Kikulwe et al. (2014) but they do not clearly bring out the picture of rural housewives because the main focus is on rural households and how mobile money has impacted on their welfare. In this study the research will carry out an assessment on mobile money financial service and the empowerment of rural housewives in Nkokonjeru to add to the existing literature.
1.2 Statement of the problem
The increase in the growth of mobile money expertise in Uganda is a phenomenon that has been particularly remarkable and welcomed by both the urban and rural users largely because of the prepaid service model. As a result, almost classes of society now have access to financial services as people become increasingly familiar with a mobile-money service system (Okello, 2015). Despite the research done on how women have access to and use mobile phones and mobile money financial services by Komunte et al. (2012) in Uganda and Kenya, Wandibba et al (2014) in Machakos, Kenya, Munyegera et al. (2014) in Uganda, Kikulwe (2014) in Kenya and Bhandari (2015) in Uganda, their research has focused more on women in businesses both big and medium size and in other cases, the research has generalized findings to rural women without basis.
For instance, Munyegera et al (2014) and Kikulwe et al. (2014) generalize since their studies do not focus on rural housewives but rather rural households and small holder farm households that receive mobile remittances in Uganda and Kenya respectively. As result not much is known of how rural housewives are benefiting from mobile money financial services especially in empowering themselves and the people around them. Since Uganda is aspiring to become a middle income country by 2020 with women being part of this vision, this research will be important for Bank of Uganda, MMSPs, partnering financial institutions like Banks, and mobile money agents with the aim of providing innovative ideas that will partly speed up the process towards the attainment of the vision. Therefore the purpose of this research will be to assess how mobile money financial service is empowering rural house wives in Nkokonjeru with a view of adding to the existing literature and making appropriate recommendations to the concerned stakeholders.
1.3 Objectives of the Study
1.3.1 Major Objective
To assess how Mobile Money Financial Services is economically empowering rural housewives in Nkokonjeru.
1.3.2 Specific Objectives
- i) To analyze the influence of mobile money financial service on rural housewives’ savings
- ii) To examine the influence of mobile money financial service on the consumption patterns of rural housewives
- iii) To investigate the influence of mobile money financial service on the control of finances by rural households.
1.4 Research Questions
- i) What is the influence of mobile money financial service on rural housewives’ savings?
- ii) What is the influence of mobile money financial service on the consumption patterns of rural housewives?
- iii) What is the influence of mobile money financial service on the control of finances by rural households?
1.5 Scope of Study
The study will be carried out in Nkokonjeru, Buikwe district and it will concentrate on rural housewives within this area who are registered and active users of the mobile money financial service. Nkokonjeru is a municipality in Buikwe District in the Central Region of Uganda. The town’s name means “White Chicken” in English. Nkokonjeru is approximately 23 kilometers (14 mi), by road, southwest of Buikwe, the site of the district headquarters. The town is approximately 46 kilometers (29 mi), by road, southwest of Njeru, the largest urban centre in the district. This is approximately 50 kilometers (31 mi), by road, southeast of Kampala, the capital and largest city of Uganda. Nkokonjeru was the location of a traditional shrine where the Baganda used to sacrifice white chicken prior to 1890. In 1891, the Mill Hill Fathers established a Catholic Parish in the area. When lightning felled the sacrifice tree, the missionaries used the wood to burn bricks and build the Parish Church. Subsequently, they built schools, a hospital and a teacher’s college. The 2002 national census enumerated the population of Nkokonjeru at 11,095 and in 2010, the Uganda Bureau of Statistics (UBOS) estimated the population at 13,700 while in 2011, UBOS estimated the mid-year population at 14,000 (wikipedia.org retrieved on 7th/02; 11: 39 am). Nkokonjeru is a town in the Buikwe District of Central Uganda, where both rural and urban life can be experienced because of presence of both developed and under developed infrastructure apart from the on-going road construction of Mukono-Kyetume-Katosi-Nyenga that is passing through the middle of the trading center and nothing like a formal financial institution except the savings and cooperative groups and BRAC which is operating in the area to extend financial assistance to rural women. Nkokonjeru is also a mixture of Bantu speaking people from central, eastern and southern parts of Uganda in addition to a range of economic activities especially business, fishing and agriculture (coffee).
The study will concentrate on the period between 2009 when mobile money financial service was first introduced in Uganda BY MTN according to Uganda Communications Commission-UCC (cited in Munyegera and Matsumoto 2014) till date with a purpose of tracking the number of women who have subscribed to the service and how it has been impacting on their lives since then throughout.
1.6 Justification of Study
In Uganda, mobile money financial service is gaining momentum in that under six years since its establishment in 2009, the penetration of mobile payment of registered mobile account holders stood at 17.6 million by 2015 indicating Sh24 trillion money transacted out of mobile money and by the end of the December, 2015, the amount increased to Sh32.5 trillion, according to the interview of Director Financial Stability Department Bank of Uganda, Dr. Abuka Charles with Daily Monitor. Additionally, the statistics of Bank of Uganda indicate that the number of registered customers has been phenomenal with an increase from 0.6 million in 2009 to 21.1 million in 2015 and currently, the number is exceeding half of Uganda’s population (Ssettimba BoU, 2016), although the number and percentage of women and men having a mobile money account is not indicated in this report.
In the same way, Okello (2015) argues that Mobile money transfer in Uganda has grown at an astounding rate and continues to follow a steep trend. Services through mobile money transactions have continued to be utilized and opted for by different social groups – rich, middle and poor; young and older persons; state and non-state actors especially in person-to-person transfer of money; purchase of goods and services from business individuals and companies (ibid). Given that earlier research has focused mainly on women in business and in other cases it has generalized rural households (ibid), this state of affairs has inspired the researcher to carry out an assessment on how this phenomenal growth of mobile money financial service has empowered rural housewives economically to support and transform their lives.
1.7 Significance of Study
The study is expected in the first place to add to the existing literature about the role of mobile money financial services in enhancing the economic empowerment of women especially rural housewives in Uganda.
The study is also expected to pave a way forward for policy makers and service providers in expanding the potentials of mobile money as a tool for service delivery and fighting poverty in rural areas of Uganda. At the end of the research, the researcher will provide appropriate recommendations to the concerned stakeholders especially the mobile money service providers and operators on how to improve on service delivery if they are to make a much bigger impact on the life of rural housewives and women in all aspects.
The study is also expected to inform formal financial service providers on how they can tap into the rural areas and raise financial inclusion especially at the lower end of the social spectrum while reducing the cost of access and use of basic financial services. This is because according to Munyegera et al. (2014), recent developments in the mobile banking arena have made it possible for users to access their bank accounts using their mobile phones without having to physically visit their bank branches due to the partnership that exist between MNOs and banks. Therefore this study serves to inform Banks on how they can extend their services through mobile banking to the lower communities especially women given the penetration of mobile money in rural areas.
1.8 Conceptual Framework
This section proposes a conceptual framework within which the concept, academic excellence is treated in this work. It is arrived at basing on the System’s theory Input-Output model advanced by Ludwig Von Bertalanffy in 1956. The selection of the model is based on the belief that, the quality of input invariably affects quality of output in this case academic excellence. (Acato 2006)
Figure 1.1 showing the conceptual framework for this study
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Independent variable Dependent variable
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Extraneous variables
Source: Adopted from Koontz and Weihrich (1988:12).
Figure 1.1 above shows the linkage between mobile money financial services and empowerment of rural housewives. It shows that empowerment of rural housewives as a dependent variable is directly influenced by the independent variable (mobile money financial services). If mobile money financial services which include; sending money, receiving money, saving, loans, airtime buying, bill payments are effectively utilized by rural housewives, then their empowerment is likely to be high and if the services are poorly utilised, then empowerment of rural housewives may be low. This argument is supported by Afful (2012), whose study showed that mobile money financial services enhance the empowerment of rural dwellers.
The independent variable in the above conceptual framework (mobile money financial services) influences the dependent variable (empowerment of rural housewives) in the following ways; mobile money increases financial accessibility for the banked and the unbanked, the lack of financial services means that the poor cannot efficiently save or borrow money (Erickson, 2010). This access allows rural housewives to save which translates into poverty reduction or increased productivity. Increased savings, even via mobile money services increases the potential for the rural housewives to secure financing that contributes to economic empowerment of rural housewives.
The researcher also identified some extraneous variables, which may affect empowerment of rural housewives. These include, regulatory and mobile operator support, market conditions among many. These variables are part of the input and process explained in the Ludwig’s Input-Output model. They play a role in bringing out the output, which is empowerment of rural housewives. If these variables are not controlled, they may interfere with the results of the study. The researcher will control the effect of the extraneous variables by randomly selecting students because randomization according to Amin (2005) is one of the ways to attempt to control many extraneous variables at the same time.
