FINANCIAL INCLUSION IN SUB-SAHARAN AFRICA: THE CASE OF MOBILE

MONEY

ABSTRACT
Financial inclusion is a mechanism that provide accessibility and application of formal financial system at an
affordable cost. Mobile money as a financial service allows value to be exchanged and stored in mobile money
accounts as this facilitates economic development, expand investment opportunities, increase consumer spending,
encourage entrepreneurship, and boost economic growth. Mobile money appears to be a good solution for
accelerating financial inclusion.
Research objective: This research aims to assess how mobile money can improve financial inclusion in sub-
Saharan Africa.

Design/Methodology/Approach: This study utilizes secondary data from international organizations, specifically
the IMF Financial Access Survey (FAS) and World Development Indicators by the World Bank. The sample
consists of 17 sub-Saharan African countries from 2010 to 2021. Financial inclusion is measured using an index
developed, with data sourced from the FAS (2019) database, while mobile money usage data is also derived from
the same database. To evaluate the impact of mobile money on financial inclusion, a dynamic panel model is
utilized, estimated using the systemic generalized method of moments (Sys-GMM), drawing on methodology’s
framework for robust estimation.

Results: The results confirm the central hypothesis, according to which the use of mobile money improves financial
inclusion in sub-Saharan Africa. It is therefore up to States and mobile network operators to intensify the use of
mobile money. This intensification would be possible thanks to the development of mobile money, the regulation
and security of mobile money services.

Originality / Value / Practical implications: This research contributes novel insights into the role of mobile money
as a transformative tool for financial inclusion in sub-Saharan Africa. It distinguishes between registered and active
mobile money accounts, assessing their effectiveness in facilitating access to traditional banking services such as
loans, bill payments, savings, and overdrafts. By understanding user behaviours and engagement, this study provides
a nuanced perspective on the impact of mobile money on the financial landscape of the region.

Implication: The results enable the formulation of strategic recommendations for policymakers aimed at advancing
economic policies that foster the growth and utilization of mobile money services. These policies may include
fostering partnerships between governments and mobile operators, enhancing digital literacy programs for users, and
implementing regulatory frameworks that protect user interests while promoting innovation within the mobile
money sector.

Keywords: digital economy, inclusive economic development, financial inclusion, mobile money accounts, Sys-
GMM
JEL codes: G29, O5
Introduction
Financial inclusion has gained significant attention in both academic and policy-making circles as a
pivotal factor for economic growth and poverty alleviation. Defined as the provision of accessible,
affordable, and appropriate financial services to all segments of society, financial inclusion aims to
empower individuals by integrating them into the formal financial system (Demirgüç-Kunt et al., 2018).
The creation of microfinance establishments is aimed at providing better access to financial services to
people mostly those excluded from the traditional financial sector. In this article, the issue of financial
inclusion and its indicator is discussed and understood in the sense of Sama and Pais (2011) as a
mechanism that promotes access, use and availability of financial services. The metric and indicators
commonly used to measure financial inclusion, such as the number of adults with bank accounts, enables
researchers and policymakers to gauge the health of financial systems and the progress of initiatives
aimed at reducing exclusion (Global Findex, 2021).

Although access to banking facilities has improved over the years, reports indicate that only about 24% of
adults in sub-Saharan Africa hold an account at a formal financial institution, contrasting sharply with
over 90% in developed regions (World Bank, 2021). The pronounced gap highlights the urgent need for
innovative financial solutions that can bridge this divide and promote inclusive economic growth. The
issue of financial inclusion is very vital in sub-Saharan Africa financial service, as majority of the
population in sub-Saharan Africa remain largely excluded from the traditional banking sector. The share
of the population over 15 years old having opened a bank account in a formal financial institution in sub-
Saharan Africa amounts to 24% and it remains less than 10% in the franc zone (Guérineau and Jacolin,
2014). Central Africa has a rate of 28.4% of the population aged over 15 having opened an account in a
formal financial institution, as this act as an indicator of the value of mobile money on economic growth
and development. This proportion is 32.5% in West Africa and 34.3% in East Africa, on the other hand in
Europe more than 90% of the population aged over 15 has an account with a formal financial institution
(Global Findex 2020). Furthermore, SME loans provided by commercial banks represent only 2.9% of
GDP and deposits 4.6% of GDP (European Investment Bank, 2020). Additionally, 15% of the population
aged over 15 report having saved and 7% report having borrowed from a formal financial institution in
sub-Saharan Africa (Global Findex, 2017).

In terms of infrastructure, the banking system in sub-Saharan Africa is very underdeveloped compared to
other regions. In the CEMAC zone for example, the banking system is made up of 54 banks, with an
average distribution of two bank branches per 1000 km2 and three branches per 100,000 adults. In the
UEMOA sub-region, the banking system is made up of 128 commercial banks, or 1.75 branches per 1000
km2 and four branches per 100,000 adults. In East Africa, the banking system is made up of 217
commercial banks, or 4 bank branches per 1,000 km2 and four branches per 100,000 adults (FAS 2019).
Furthermore, banks are concentrated in large urban centres to the detriment of rural areas which are more
like banking deserts (Avom and Eyeffa Ekomo, 2007). This makes financial inclusion very necessary via
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mobile money. It is therefore clear that the banking system alone cannot offer financial services to poor
populations and those in remote areas. This situation is different in western countries (i.e. in Europe,
America and Asia) where banking system and financial institution as a whole, including mobile money is
far more advanced, made available and have been in use for many years now.

The advent of mobile telephony offers another dimension of financial innovation in Africa namely
electronic money. The first modality of electronic money, mobile banking, is a real innovation in the
financial sector, but it does not solve the problem of financial inclusion to the extent that one may not
require having a bank account.

In recent years, mobile money has emerged as a transformative force in enhancing financial inclusion
across developing nations, particularly within Africa. Mobile money services allow users to perform
various financial transactions via mobile devices without the necessity of a traditional bank account,
effectively breaking down barriers to entry for populations residing in remote or underserved areas (Mbiti
& Weil, 2013). It is therefore a social innovation ensuring the expansion of financial services that give
opportunity for financial inclusion to those excluded from the traditional banking system (Saifullahi and
Harunan, 2020). The arrival of mobile money in sub-Saharan Africa dates back to 2007 in Kenya under
the name M-Pesa. It quickly spread to become, in 2010, the first successful mobile financial service in
developing countries. After Kenya, other dynamic hubs have developed, notably Tanzania, Uganda,
Ghana, Rwanda, Zimbabwe, Nigeria, (GSMA, 2019). By 2014, there were already 255 mobile money
services around the world, 55% of which were in sub-Saharan Africa. As of early 2019, there were 395.7
million active mobile money accounts in Sub-Saharan Africa, increasing drastically the level of financial
inclusion in the region. In fact, this region has almost half of the world's total mobile money accounts
(GSMA, 2019). This surge in mobile money usage has facilitated a notable increase in the financial
inclusion index, demonstrating its effectiveness in fostering economic empowerment among previously
unbanked populations.

The economic literature indicates that mobile money significantly contributes to financial inclusion by
offering low-cost and accessible alternatives to conventional banking practices (Jack & Suri, 2011). As an
important factor in improving financial inclusion, notably through the work of: Hasan, Fakhrul (2020),
Joseph, Anna (2021), Ahmad, Hassan (2020), Kimaro, Albert (2021), Monne, Jerome (2021), Nzie et al.
(2018), Okello et al. (2018), Fox and Van Droogenbroeck (2017), Ahmad et al. (2020), Aron (2018),
Katusiime, Lorna (2021), Ranjan, Harshali (2021), Mushtaq and Bruneau (2019), George, Babu and
Ebong (2021), Francky Ngono (2020). Another stream of literature tends to show that mobile money
contributes to reducing the cost of access to financial services (Enock 2022, Apeti and Ablam 2022, Edoh
et al. 2023 and Amegbe, Hayford 2022).

This article is intended to be an additional information of the works cited above, and unlike this work
which considers mobile money as an overall indicator, not distinguishing registered mobile money

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accounts from active accounts, or not considering the effectiveness of the use of mobile money services,
this article addresses these gaps with the main research question: “How do the number of active
mobile money accounts and the volume of mobile money transactions determine financial inclusion
in sub-Saharan Africa?”

The objective of this research aims to study how mobile money can improve financial inclusion in sub-
Saharan Africa.

Theoretical Framework and Hypotheses

The theoretical underpinning of this study is anchored in the premise that mobile money can ameliorate
financial inclusion. To reach this goal, based on prior literature, two key hypotheses have been
formulated:

H 1 : An increase in the value of mobile money transactions improves financial inclusion.

H 2 : An increase in the number of active mobile money accounts improves financial inclusion.

To conduct this study, this study uses secondary data from the IMF's Financial Access Survey database
and data from the World Bank's World Development Indicators. The sample of this study focuses on 17
sub-Saharan African countries over the period 2010-2021. The variable of interest, namely financial
inclusion, is captured by the index developed by Sarma (2008) and the data for its calculation is extracted
from the FAS (2019) database. Data on the exogenous variable, namely mobile money, also come from
the FAS database (2019).

The effect of mobile money use on financial inclusion is highlighted through a dynamic panel model
inspired by Uddin et al. (2017) and estimated by the systemic generalized method of moments (Sys-
GMM) as initially developed by Arellano-Bover ( 1995)/ Blundell-Bond (1998). This research seeks to
quantify the impact of mobile money on financial inclusion, contributing to the broader discourse on
economic development strategies in the region.

LITERATURE REVIEW
Several authors have devoted studies to financial inclusion around the world. Since the advent of mobile
money in the 2000s, much research has focused on studying the contribution of mobile money to
financial inclusion. Part of the literature analyses the determinants of mobile money adoption. It is
interesting to give a brief overview of this literature here before showing how mobile money influences
financial inclusion.

Several theories have been used to address the determinants of adoption and use of mobile money,
namely: acceptance theory and diffusion theory. It was first developed by Davis (1989), aimed at
predicting the acceptance and use of any information technology for mobile money. The second which is
the theory of diffusion of innovations proposed by Rogers (1995) which advances the communication and
adoption of new ideas and technologies, the unified theory of acceptance and use of technologies
4
(UTAUT) of Venkatesh et al. (2003) seek to explain users' intentions to adopt an information system and
their subsequent usage behaviours. Generally speaking, these theories retain socio-economic, cultural
factors and product attributes (Lai, 2016) as explanatory factors for adoption and use. Several studies
have been carried out in this direction.

Ngono (2020), carried out an empirical study on countries in Africa. It focuses on the financial inclusion
index by introducing mobile money into the calculation of this index. It appears that mobile money has a
significant effect on the financial inclusion index. However, he notes that his study is limited by the
absence of data on certain indicators of this index. Ngono’s claim for the absence of data is that Africa is
just a newcomer in this financial service, so getting data is a near impossibility. Unlike Europe and the
Americas that for decades now enjoyed various financial services including mobile money, this makes it
easier to gather data for research. In the same vein, Amegnaglo and Zounmenou (2020) carried out a
study on financial inclusion promoted by mobile money in southern Benin. Using primary and secondary
data, they reached the conclusion that the use of electronic money account services especially mobile
money contributes to financial inclusion.

Tatsing (2024), study in the CEMAC zone (Economic and Monetary Community of Central Africa) on
the role of mobile money in financial inclusion, based on panel data over the period of 2011 -2020, reveal
that if mobile money promotes financial inclusion, then women remain the most excluded from the
financial system.

Fall and Birba (2019) show in their study that gender, education level, employment, literacy and opening
a bank account increase the probability of mobile money adoption. Mbiti and Weil (2011) show that age,
education level and social status significantly influence the adoption of M-Pesa in Kenya. Bankolé et al.
(2011) use culture as a factor in mobile money adoption in Nigeria. Bidiasse and Mvogo (2019) study on
the determinants of mobile money adoption in Cameroon, they generally believe that the benefits offered,
the information available on how mobile money works, and the proximity of the service are significant
variables in the adoption and use of mobile money.

Narteh et al. (2017), in a study conducted in Ghana, found that mobile money services are mainly used to
limit waiting time and receive money transfers. Paying your bills and managing your savings are used
less often. For Aker and Wilson (2013), the decision to use mobile money depends on its use by members
of the immediate entourage. Mbiti and Weil (2011), in a study conducted in Kenya, identify age,
education level, standard of living and area of residence as determinants of mobile money adoption.
Sayid, Echchabi and Abdul Aziz (2012) study in Somalia show that mobile money adoption is strongly
influenced by communication, testability, risk perception, ease of use, usefulness, security and social
factors.

Timite and Skalli (2023), study on the financial inclusion strategy of West Africa (UEMOA). In this
study, the authors constructed a financial inclusion index using the principal component analysis (PCA)
5
method and estimated a dynamic panel model. The results show that the financial inclusion strategy of
this region is effective for financial inclusion. In addition, the mobile money variables introduced in the
financial inclusion index are also likely to promote financial inclusion in this region.

Ndouma and Nanfosso (2023), conducted a very interesting study on the effect of financial inclusion on
the formality of small and medium-sized businesses in Cameroon. This study is all the more interesting
given the economic weight of SMEs in Cameroon and the level of informality of these companies. The
authors demonstrate that financial inclusion measured by access to bank credit and the creation of bank
accounts lead to the formalization of SMEs, they nevertheless find that mobile money does not promote
this formality. This simply mean mobile money is very instrumental in SME in Cameroon.

For Kounouwewa and Hounkou (2024) their article is on the impact of mobile payment on the financial
inclusion of unbanked population. In this regard, a survey was carried out among 240 people through a
questionnaire using the convenience method. The data thus collected was analysed using the Smart PLS 4
software. The results of this study highlight several important points. First, it reveals that individual
differences as well as system characteristics have a positive and significant impact on mobile payment
usage. Additionally, the study highlights that certain factor such as innovation and knowledge in mobile
payment, as well as system characteristics such as mobility, ease of access, compatibility and
convenience, play a role in determining the ability of individuals to adopt this payment method and adapt
to it

As for the contribution of mobile money to financial inclusion, several studies have looked into it. Mobile
money is designed to provide unbanked population with easy access to financial services, particularly
population in emerging and developing countries whose banking infrastructure in terms of accessibility
remains poor (Maurer, 2012). The main objective of mobile money is the financial inclusion of people
excluded from basic banking services. Mobile money is based on offering simple financial services to
customers. Mobile money gives customers the ability to access e-money accounts where they can deposit
money up to a certain limit, withdraw money and make e-money transfers. Access and subscription to
these accounts and associated services are generally made possible by possession of a national identity
card. Opening, crediting and managing accounts are free (only money transfers are taxed). Mobile money
services allow subscribers to send or receive money from/to subscribers using the same service, or banked
customers (domestic and/or international transfers) and/or enable bill payment. Users of mobile money
services can count on a growing network of service provider employees and retail business partners, who
enable them to deposit and withdraw money.

Mfossa (2019) study show that although there has been some level of growing interest in the economic
effects of mobile money in Sub-Saharan Africa, there is little empirical literature on the role of mobile
money and the link between financial inclusion and financial resilience. This article uses the 2017 Global
index in which 1,000 representative sample was collected in Cameroon to examine how mobile money

6
affects people's ability to cope with negative shocks by creating an emergency fund in a timely manner.
The results show that access to this financial inclusion tool increases the average capacity for resilience in
the event of an economic emergency, but the magnitude of this effect depends on whether the treatment
effects model is implemented to control for the endogeneity of mobile money adoption.

Many lives, especially those of poor rural households, have been transformed by the mobile phone
revolution, which has enabled not only communication but also access to basic financial services through
the transfer and storage of money through telephone (Donner and Tellez (2008); Demombynes and
Thegeya (2012) seized the opportunity offered by mobile phones to develop mobile money services.
Medhi et al (2009) showed in their work that the total number of mobile phone users is greater than the
total number of people owning a mobile phone.
However, from the review it is clear that mobile money is a key driver of financial inclusion in sub
Saharan Africa; with some major factors such as culture, ease of accessibility and use, compatibility,
convenience, risk perception, testability, security, age, education, proximity, and a host of others, greatly
influencing the acceptance and use of mobile money as a means of financial inclusion in sub Saharan
Africa.
In conclusion, the literature underscores mobile money's pivotal role as a driver of financial inclusion in
sub-Saharan Africa, facilitating access to financial services for populations traditionally excluded from
formal banking systems. It highlights the innovative capacity of mobile money to adapt to the socio-
economic conditions of the region, but also points to the importance of addressing persistent gender
disparities and ensuring equitable access for all demographics. Despite its benefits, there are calls for
further research to explore the potential negative implications of mobile money use. Overall, mobile
money is recognized as a key driver of financial inclusion, essential for economic development in the
region.

RESEARCH METHODOLOGY
The research method applied in this article covers research design, area of study, population of the study
and the sampling size. In this article, the work of Sarma (2008) is used to capture financial inclusion in
Sub-Saharan Africa which is the area of this study. Thus;
- The number of loan accounts with commercial banks per 1,000 adults is less than 20 percent
- The number of commercial bank branches per 100,000 adults is below 30 percent
- The number of ATMs per 100,000 adults is below 35 percent
- Outstanding deposits with commercial banks (as a % of GDP)
- Outstanding commercial bank loans (as a % of GDP).
In the same way that financial inclusion is capture using certain dimensions, Mobile money
measurement can be analysed using three dimensions: accessibility, availability and use, as follows;

 The accessibility dimension: cited here without being exhaustive

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 - The number of mobile money accounts opened per 1,000 adults
- The number of mobile money accounts opened for populations aged over 15
- The number of active mobile money accounts
 The availability dimension : in this dimension also, we can cite without exhaustiveness
- The number of registered mobile money agents per 100,000 adults
- The number of active mobile money agents per 100,000 adults
- The number of mobile money agents per 1,000 km 2
 The use dimension which includes
- The number of mobile money transactions
- The value of mobile money transactions as a percentage of GDP
- The number of mobile money transactions
- The value of mobile money transactions as a percentage of GDP.
Several empirical studies have used these variables for discourse on mobile money. Sekantsi and Motelle
(2016) conducted a study in Lesotho to see if mobile money is a solution to financial inclusion. Ngono
(2020) assesses the role of mobile money in financing women's entrepreneurship in sub-Saharan Africa. It
captures mobile money across nine variables, including number of active mobile money accounts per
1,000 adults, active mobile money account balances as a percentage of GDP, mobile money transaction
volume as a percentage of GDP and the number of transactions per 1,000 adults. This article also makes
use of Control variables. The use of mobile money is not the only factor explaining financial inclusion.
In the article, several control variables commonly used in the literature are retained: the real interest rate,
education spending, unemployment, GDP per capita, inflation, gender and age represented here by the
variables women aged 30 to 34, men aged 30 to 34 years old, women 40 to 44 years old and men 40 to 44
years old. Data are obtained from the IMF Access to Financial Services Survey (2019) and World Bank
World Development Indicators (2020). A sample of 17 sub-Saharan African countries is used, with the
same region being the area of focus for the study. Meanwhile, this article is also arranged in Model for
more understanding. The empirical model defined below is inspired by the work of Ajim Uddin and
Mohammad Ashraful (2017) on the determinants of financial inclusion.

IF i ,t =ni + β 0 IIF i ,t −1+ β 1 NAA i ,t + β 2 Ntran i ,t + β3 Vtrani , t + β 4 Ir i , t + β 5 Edui , t + β 6 Unei , t + β 7 GDPi ,t + β8 Inf i , t + β 9 W
(1)

With i = 1,…,17 and t = 2010,….,2021; nt denotes time fixed effects, ni individual fixed effects and ε i ,t the
error term.

IIF is the financial inclusion index from the work of Sama (2008); NAA is the number of active mobile
money accounts; Ntran : is the number of mobile money transactions; Vtran is the value of mobile money
transactions; IR: real interest rate; EDU: represents education expenditure; UNE: the unemployment rate;

8
GDP: is GDP per capita; INF is the inflation rate, and W: Woman, M: Man, W30-34, M30-34, W40-44,
M40-44: Demographic variables.

RESEARCH RESULTS AND RECOMMENDATIONS

N Applying GMM to equation (1) provides the results recorded in Tables 1, 2 and 3 below. Overall, it
appears that these estimates are interesting from a statistical point of view. Indeed, all models provide an
overall causality test that is significant at the 5% threshold. The reason for this is because each
explanatory variable has a fixed intercept on the regression line. Model 1-4 are used in this article mainly
because the author wants to find out which model can best represent the observation, and the sense in
these models is that the models are explanatory variables showing financial inclusiveness in sub-Saharan
Africa via mobile money. The explanation/discussion of the tables can be seen below it.

Table 1: result of estimation on education (source: Construction by the authors, using STATA software)

MODEL1 MODEL 2 MODEL 3

Financial inclusion 0.958*** 0.906*** 0.984***
(0.0385) (0.0903) (0.0481)
Education spending 0.0102* 0.00738 0.0172**
(0.00544) (0.00753) (0.00605)
Unemployment -0.00290* -0.000685 -0.00205
(0.00158) (0.00126) (0.00201)
Value of transactions via mobile money 0.000902***
(0.000272)
Value of transactions via mobile money 0.00142
(0.00445)
Active mobile money accounts 1.82e-06***
(1.37e-07)
AGAINST 0.0249) -0.0155 -0.0735**
(0.0683) (0.0248)
comments 26 25 25
Country 11 11 11
Fisherman 0.000 0.000 0.000
AR( 1) 0.031 0.09 0.027
AR( 2) 0.248 0.261 0.288
Sargan 0.251 0.147 0.520
Hansen 0.275 0.254 0.322
AR( 2) 0.248 0.261 0.288
GMM instruments for levels
Hansen test outside group 0.199 0.798 0.226
Difference (zero H = exogenous) 0.321 0.164 0.358
iv (year, eq(diff)
Hansen test outside group 0.414 0.163 0.403
Difference (zero H = exogenous) 0.122 0.829 0.178

9
 Instruments ten ten ten

Notes: estimated standard deviations in parentheses. ***p<0.01; **p<0.05; *p<0.1.

Table 1 presents the results of a dynamic panel model examining the impact of education spending on the
Financial Inclusion Index. It includes coefficients for various models that assess the relationship between
education and financial inclusion, as well as control variables like unemployment and the value of mobile
money transactions. The value of mobile money transactions and education level are positively and
significantly related to financial inclusion.

Table 2: estimation result on the economic situation (source: Construction by the authors, using STATA
software)
MODEL 1 MODEL 2 MODEL 3 MODEL 4 MODEL 5 MODEL6 MODEL 7 MODEL 8 MODEL 9
Financial 1,227*** 1,238*** 1,320*** 0.900*** 0.939*** 0.933*** 0.999*** 1,006*** 0.975***
inclusion (0.0820) (0.0660) (0.0684) (0.0396) (0.0772) (0.0214) (0.0597) (0.0189) (0.0316)
VTRAN 6.48e-06 0.00115 0.000942*
(0.000463) (0.000838) (0.000459)
Unemployme -0.0261*** - -0.00879*** -0.00529** -0.000586 0.000417 0.0138 - 0.00296
nt (0.00571) 0.00760** (0.00249) (0.00220) (0.00253) (0.00101) (0.00805) 0.00277*** (0.00289
* (0.000164)
(0.00188)
GDP per 0.116** 0.0373** -0.0782
capita (0.0439) (0.0126) (0.0794)
Inflation 0.00110 -0.00325***
(0.00137) (0.00104)
Real interest 0.00299 0.00198* 0.00169 0.00376*
rate (0.00201) (0.00107) (0.00116) (0.00197)
NTRAN -0.00169 -0.000488 -0.00224
(0.00250) (0.00399) (0.00169)
ACCOUNTS 0.000172** -1.06e-05 4.23e-05
(5.91e-05) (4.22e-05) (3.95e-05)
AGAINST -0.704** -0.0234 -0.0461* -0.185** 0.0322 0.0214 0.441 0.0162 -0.0367
(0.276) (0.0357) (0.0226) (0.0746) (0.0543) (0.0203) (0.497) (0.0157) (0.0296)
comments 40 39 37 39 38 36 34 31 31
Country 14 13 13 14 13 13 12 11 11
Fisherman 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
AR( 1) 0.026 0.024 0.019 0.023 0.014 0.045 0.009 0.054 0.008
AR( 2) 0.961 0.305 0.469 0.299 0.601 0.337 0.290 0.837 0.373
Sargan 0.328 0.185 0.449 0.014 0.116 0.018 0.980 0.004 0.030
Hansen 0.591 0.389 0.532 0.0297 0.328 0.706 0.974 0.298 0.561
Country 14 13 13 14 13 13 12 11 11
GMM instruments for levels
Hansen test 0.158 0.375 0.522 0.167 0.203 0.432 0.761 0.140 0.481
outside group
Difference 0.787 0.350 0.447 0.381 0.384 0.797 0.944 0.506 0.492
(zero H =
exogenous)
Iv( year, eq (diff)
outside the 0.792 0.267 0.395 0.241 0.247 0.603 0.986 0.153 0.318
group

10
Difference 0.155 0.881 0.844 0.436 0.546 0.954 0.479 0.757 0.924
(zero H =
exogenous)
Instruments ten ten ten ten ten 13 ten 11 11

Notes: estimated standard deviations in parentheses. ***p<0.01; **p<0.05; *p<0.1. VTRAN = value of mobile
money transactions as a percentage of GDP; NTRAN = Number of transactions via mobile money; ACCOUNTS =
Number of active accounts per 1,000 adults
Table 2 details the estimation results across several models to examine how different economic indicators
affect financial inclusion, incorporating variables such as GDP per capita, inflation rate, and employment.
GDP per capita is positively and significantly linked to financial inclusion whereas unemployment and
inflation are negatively and significantly linked to financial inclusion, which would mean that when the
inflation rate increases, financial inclusion decreases

Table 3: estimation results on age and gender (sources: authors' construction, using STATA software)
MODEL 1 MODEL2 MODEL3 MODEL4
Financial inclusion 1,018*** 0.970*** 0.836*** 0.930***
(0.0346) (0.0415) (0.0689) (0.0220
Women 30-34 years old -0.00175 -0.0437* -0.00941***
(0.00910) (0.0211) (0.00279)
Women 40-44 years old 0.00943 0.0556* 0.0560***
(0.0185) (0.0258) (0.00854)
Men 30-34 years old 0.00445 0.00987 0.0563**
(0.00919) (0.0218) (0.0252)
Men 40-44 years old -0.0189 0.000506 -0.0238
(0.0256) (0.0250) (0.0226)
Active mobile money 1.82e-06***
accounts (1.37e-07)

Value of transactions via 0.000457** -0.0155 0.000422***

mobile money (0.000200) (0.0683) (0.000133)
Number of transactions via 0.0108*** -1.50e-05
mobile money (0.00317) (0.00175)
AGAINST 0.0157 -0.0760 -0.235** -0.158***
(0.0146) (0.0610) (0.104) (0.0401)
comments 40 39 39 40
Country 14 14 14 14
Fisherman 0.000 0.000 0.000 0.000
AR( 1) 0.024 0.022 0.007 0.022
AR( 2) 0.220 0.212 0.459 0.250
Sargan 0.019 0.329 0.051 0.127
Hansen 0.192 0.562 0.218 0.575
GMM instruments for levels
Hansen test outside group 0.453 0.135 0.434 0.341
Difference(zeroH=exogenous 0.154 0.734 0.170 0.748
)
iv (year, eq(diff)

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 Hansen test outside group 0.127 0.449 0.134 0.477
Difference(zeroH=exogenous 0.976 0.845 0.975 0.855
)
Instruments 14 14 Ten 14
Notes: estimated standard deviations in parentheses. ***p<0.01; **p<0.05; *p<0.1.
Table 3 evaluates the influence of demographic factors, specifically age and gender, on the Financial
Inclusion Index, presenting separate models for active mobile money accounts and other relevant
financial behaviours. The number of active mobile money accounts is positively and significantly related
to financial inclusion. The variable woman 30-34 years old is negatively and significantly linked to
financial inclusion whereas the variable woman aged 40 to 44 is positive and significantly related to
financial inclusion.

The analysis in the tables detail the regressions, confirming the positive and significant impact of mobile
money transactions and active accounts on financial inclusion. Education, GDP per capita, and
demographic factors also positively correlate with financial inclusion, while unemployment and inflation
have negative effects. That is, an increase in the value of mobile money transactions improves financial
inclusion, so the first hypothesis cannot be rejected. Furthermore, these tables also show that the number
of active mobile money accounts is positively and significantly related to financial inclusion. This would
mean that an increase in the number of active mobile money accounts would lead to an increase in
financial inclusion. The second hypothesis cannot therefore be rejected.

Table 1 shows that education level is positive and significantly related to financial inclusion. Therefore,
an increase in education level improves financial inclusion, as education is a considerable factor in the
acceptance and use of mobile money in sub-Saharan Africa.

The economic situation analysis in table 2, show by its results that unemployment is negatively and
significantly linked to financial inclusion. Which means that an increase in the rate unemployment
increases financial exclusion. Furthermore, with regard to the income captured by GDP per capita, the
estimation results show that the latter is positively and significantly linked to financial inclusion. This
means that an upward trend in GDP per capita leads to an increase in the level of financial inclusion.
Concerning inflation, it appears that inflation is negative and very significant, which would mean that
when the inflation rate increases, financial inclusion decreases. As for the interest rate, it is positive and
very weakly significant. This means that an increase in the interest rate leads to a slight increase in
financial inclusion.

Concerning the gender and age factors from table3, we can note that the variable woman 30-34 years old
is negatively and significantly linked to financial inclusion. This means that an increase in the number of
women aged 30 to 34 reduces financial inclusion. In contrast, the variable woman aged 40 to 44 is
positive and significantly related to financial inclusion, thus an increase in the number of women aged 40
to 44 leads to an increase in financial inclusion. The same result appears for men in the same age group.
12
Given that the econometric validity is satisfied, the estimation results show that the coefficients
associated with the variables of interest (number of mobile money transactions and number of active
mobile money accounts) are all significant with a positive sign. These results reflect the fact that an
increase in the value of mobile money transactions as well as an increase in the number of active mobile
money accounts contributes to improving the level of financial inclusion in sub-Saharan Africa. This
result confirms the central hypothesis according to which the use of mobile money improves financial
inclusion in sub-Saharan Africa.

The following recommendations were made by the authors, taking into account the analysis carried out
about:
The development of mobile money. An increase in the value of mobile money transactions improves
financial inclusion therefore mobile money players must carry out operations to widen network
coverage of mobile operators, better customer education improving financial inclusion; and the
proliferation of partnerships between mobile network operators (MNOs) and commercial banks and even
other financial institutions with the aim of strengthening interoperability.
Democratize and popularize mobile money services. An increase in the number of active mobile
money accounts would lead to an increase in financial inclusion . The objective here is to give citizens the
opportunity to carry out the majority of their financial transactions via mobile money. That is by allowing
students to pay their university fees via mobile money, to encourage various payments/spending via
mobile money and lift restrictions on monthly transaction quotas.
Regulate and secure mobile money services. Governments should put in place legislation to protect
users of mobile money services. Indeed, it very often happens that during a transaction the initiator has
the wrong recipient. The law should allow mobile money users to get back money they send by mistake.
Regulatory authorities across sub-Saharan African states should ensure that transaction fees are set at an
affordable price to encourage populations initially excluded from basic financial services to use mobile
money services.
CONCLUSION

The issues of cybersecurity and consumer protection are similarly prominent in both contexts. In Sub-
Saharan Africa, there is an urgent need to establish robust regulatory frameworks to tackle fraud and
build consumer confidence in mobile money systems (Aker & Mbiti, 2010). In Lithuania and the EU,
efforts are concentrated on enhancing data security and implementing stringent regulations to protect
consumers from data breaches and scams, showcasing a proactive approach to mitigating risks associated
with digital finance.

This article aims to show the role of mobile money on financial inclusion. In other words, the question is
whether the innovation of mobile money resulting from the development of mobile telephony promoted
wider access to financial services in sub-Saharan Africa. The results of econometric estimations show that
in general, the value of mobile money transactions and the number of active mobile accounts are
13
determining factors that improve financial inclusion. This has led to the acceptance of the central
hypothesis that the use of mobile money promotes financial inclusion in sub-Saharan Africa. The
integration of mobile money into financial systems represents a critical advancement for promoting
financial inclusion. In Sub-Saharan Africa, mobile money solutions have gained prominence as a means
to democratize access to financial services for underserved populations in contrast, the discourse
surrounding financial inclusion in Lithuania and the broader European Union (EU) reflects a different set
of priorities and established frameworks. Studies have consistently shown that the introduction and
expansion of mobile money platforms significantly enhance financial inclusion by allowing users to
perform transactions, save, and access credit without needing a traditional bank account (Mas &
Radcliffe, 2010). This situation highlights how mobile money can bridge the financial gap in areas with
limited banking infrastructure and foster economic participation.

Research published in the Ekonomika journal indicates that while access to financial services is already
high in Lithuania and the EU at large, the focus has shifted toward enhancing the quality and security of
financial services offered through digital platforms. For example, Krištopaitis & Žukauskaitė (2022)
emphasize the importance of financial literacy in promoting effective use of mobile and digital financial
services. Their findings indicate that improving financial literacy among users can lead to better
engagement with available financial tools, thus maximizing the benefits of existing systems.

Additionally, the EU's broader regulatory focus aims to ensure a secure and inclusive digital financial
landscape. The EU has implemented various directives aimed at improving consumer protection and
fostering digital finance adoption, ensuring that all citizens can benefit from advancements in financial
technologies (European Commission, 2020). Kvedaras & Rupeikytė (2021) illustrate how these
regulatory frameworks are essential in developing trust in digital financial services, which is crucial for
increasing user adoption and engagement in member states like Lithuania.

In addition, other factors were found to be very important in explaining financial inclusion. Education
level has positive effects on financial inclusion, consistent with the findings of Demirgüc - Kunt et al.
(2013), Allen et al. (2016). Age and gender were also positively related to financial inclusion, as
evidenced by men using financial services more than women and older people using financial services
less than younger people. Unemployment and inflation have had negative and significant effects on
financial inclusion. Interest rates in sub-Saharan Africa are not very attractive when it comes to deposits
with banking institutions. In view of these results, it is recommended that States and mobile telephone
operators continue to develop mobile money. Also, much research has been carried out on the use and
importance (significance) of mobile money in sub-Saharan Africa.

In summary, while mobile money serves as a transformative tool for financial inclusion in Sub-Saharan
Africa, Lithuania and the EU are more focused on refining existing financial infrastructures, enhancing
digital literacy, and ensuring robust consumer protections. This divergence reflects the differing stages of

14
financial inclusion and the unique challenges each region faces, as highlighted in recent Ekonomika
publications. However, very little has been done in terms of research on the negative aspects of mobile
money use as a means of financial inclusion in sub-Saharan Africa, as further research should be targeted
towards this socio-economic area and possibly political effects of mobile money on sub-Saharan Africa.

15
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