Factors affecting adoption of mobile money by farming households in Lomahasha Inkundla of the Lubombo Region, Eswatini
Date
2023
Authors
Dlamini, Theophilus Lusito
Journal Title
Journal ISSN
Volume Title
Publisher
African Economic Research Consortium
Abstract
The conventional banking system has not been meeting the needs of the mass market in
Eswatini, which is mostly made of the unserved and underserved farmers in rural areas. Mobile
money and other recent innovations in fintech present the potential to address the financial
exclusion amongst financially marginalised groups in Eswatini. Only 44% of adult Emaswati
are formally banked. In a mission to improve financial inclusion, Eswatini MTN introduced
mobile money to provide formal financial services for financially excluded groups. This study
was carried out to determine the factors which influence mobile money’s adoption by farming
households in rural areas of Eswatini. Knowledge of such factors is crucial in formulating
policies geared towards financial inclusion in the country.
The study used survey data collected from 160 randomly selected rural farmers from the
Lomahasha Inkundla in the Lubombo region of Eswatini. The results of the descriptive
statistics show that 93.1% of sampled farmers have knowledge of mobile money, 80% were
registered mobile money users, whilst 67% of the non-registered farmers indicated a positive
intention to open a mobile money account. A majority (61.3%) of respondents were male. The
typical farmer’s age was 43 years old. Farmers without formal education accounted for 16.9%
of the sample. About 58.8% of respondents owned bank accounts, whilst 40% were members
of a Savings and Credit and Cooperatives (SACCOs). Trust as an informal institution against
moral hazard is quite strong across the mobile money value chain. Most farmers trust that the
system is safe and secure. Interpersonal trust between agents and customers is very strong.
Users perceive the financial service to be useful, with a majority of the registered users utilizing
mobile money for settling utility bills and executing peer to peer transactions.
The study uses the binary logistic regression models to determine the factors that significantly
influence the decisions of farmers to adopt mobile money. Evidence from the results show that,
socioeconomic characteristics of farmers have significant influence on the decisions for
adoption of mobile money. Gender, Education, Ownership of a formal bank account and
farming experience were found to significantly influence the decisions for mobile money
adoption. The odds of mobile money adoption were higher for female farmers than male
farmers. The odds for mobile money adoption were also found to be higher for farmers with
formal education beyond Primary school. So were the banked farmers as compared to
unbanked farmers.
The mobile money innovation has evidently shown some prospects to significantly improve
the level of financial inclusion in Eswatini. In the study sample, the overall result of financial
inclusion was 61.3% before accounting for mobile money adoption, thisimprovesto 80% when
we account for mobile money. The results also show that the fintech is complementary to the
conventional banking system. The study recommends that the Mobile Network Operator
(MNO) incorporates financial literacy training in their strategy to capacitate mobile money
users and prospective adopters. It is also recommended that formal financial institutions
leverage potential linkages with informal finance organisations and self-help groups i.e.
SACCO’s, ASCA’s and ROSCA’s. However, it’s imperative to approach this with caution and
avoid any over-formalization would threaten the existence of the informal sector.
Description
Keywords
Adoption, binary logistic, branchless banking, Eswatini, financial inclusion, fintech, mobile money