Factors affecting adoption of mobile money by farming households in Lomahasha Inkundla of the Lubombo Region, Eswatini

Abstract

The conventional banking system has not been meeting the needs of the mass market in Eswatini, which is mostly made of unserved and underserved farmers in rural areas. Mobile money and other recent innovations in fintech present a 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 sought to determine the factors that 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 held bank accounts, whilst 40% were members of 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 believe 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 transfers.

The study developed a set of 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 a 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 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 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, this improves to 80% when we account for active mobile money accounts. 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. SACCOs, ASCAs and ROSCAs. However, it’s imperative to approach this with caution so to avoid any over-formalization which might threaten the existence of the informal financial sector in the rural areas.

Keywords: Adoption, binary logistic, branchless banking, Eswatini, financial inclusion, fintech, mobile money