THE ROLE OF MOBILE MONEY PLATFORMS ON LOW-INCOME EARNERS’

FINANCIAL INCLUSION IN TANZANIA

The Case of Ilala Municipal Council

RESEARCH PROPOSAL

By
Baraka R. Ntomollah

Master of Business Administration Dissertation

University of Dar es Salaam
March 2021
 LIST OF ABBREVIATIONS

BCG Boston Consulting Group

FI Financial Inclusion
FII Financial Inclusion Insight
FINCA Foundation for International Community Assistance
MC Municipal Council
MFIs Microfinance Institutions
MFS Mobile Financial Services
MM Mobile Money
MNO Mobile Network Operators
OECD Organization for Economic Co-operation and Development
SME Small and Medium Enterprises
TAM Technology Acceptance Model
TCRA Tanzania Communication Regulatory Authority
TTCL Tanzania Telecommunications Company Limited
TZS Tanzania Shilling
URT United Republic of Tanzania
USD United States Dollar
WAEMU West African Economic and Monetary Union
WB World Bank

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 Table of Contents
Table of Contents .......................................................................................................................... 3
CHAPTER ONE ............................................................................................................................. 5
INTRODUCTION .......................................................................................................................... 5
1.1 Background of the Study .......................................................................................................... 5
1.2 Statement of the Problem .......................................................................................................... 9
1.3 Objectives of the Study ........................................................................................................... 10
1.3.1 Main Objective..................................................................................................................... 10
1.3.2 Specific Objectives .............................................................................................................. 10
1.3.3 Research Questions .............................................................................................................. 10
1.4 Significance of the Study ........................................................................................................ 10
1.5 Scope of the study ................................................................................................................... 11
CHAPTER TWO .......................................................................................................................... 12
LITERATURE REVIEW ............................................................................................................. 12
2.0 Overview ................................................................................................................................. 12
2.1 Definition of Key Terms ......................................................................................................... 12
2.1.1 Financial Inclusion ............................................................................................................... 12
2.1.2 Mobile Money...................................................................................................................... 12
2.1.3 Mobile Network Operators (MNOs) .................................................................................... 13
2.1.4 Low-Income Earners ............................................................................................................ 13
2.2 Empirical Review.................................................................................................................... 13
2.3 Research Gap .......................................................................................................................... 17
2.4 Theoretical Framework ........................................................................................................... 18
2.4.1 Technology Acceptance Model (TAM) ............................................................................... 18
2.4.2 The vulnerable group theory of financial inclusion ............................................................. 18
2.5 Conceptual Framework ........................................................................................................... 19
CHAPTER THREE ...................................................................................................................... 20
RESEARCH METHODOLOGY.................................................................................................. 20
3.0 Overview ................................................................................................................................. 20
3.1 Research Design...................................................................................................................... 20

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3.2 Target Population .................................................................................................................... 20
3.3 Sampling ................................................................................................................................. 20
3.4 Sample Size............................................................................................................................. 21
3.5 Data Collection Instrument ..................................................................................................... 21
3.5.1 Format of the Survey Questionnaire .................................................................................... 22
3.6 Research Quality ..................................................................................................................... 22
3.6.1 Reliability of Data ................................................................................................................ 22
3.6.2 Data Validity ........................................................................................................................ 22
3.7 Data Analysis .......................................................................................................................... 23
3.8 Ethical Issues .......................................................................................................................... 23
REFERENCES ............................................................................................................................. 25
RESEARCH QUESTIONNAIRE ................................................................................................ 29

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 CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Mobile payments technology is becoming increasingly significant, especially in the context of

developing economies, where many low-income households and micro-enterprises do not have
ready access to financial services. Mobile money payment offers great potential for financial
integration and facilitates financial inclusion (Kapoor et., 2013). Financial inclusion means that
adults have access to and can effectively use a range of appropriate financial services. At its most
basic level, financial inclusion starts with having a deposit or transaction account at a bank or
other financial institution or through a mobile money service provider, which can be used to
make and receive payments and to store or save money (Demirguc-kunt, 2017). In other words,
financial inclusion means individuals and businesses have access to useful and affordable
financial products and services that meet their needs i.e. savings, payments, transactions, credit,
and insurance delivered responsibly and sustainably (World Bank, 2020).

Financial inclusion is a key enabler to reducing poverty and boosting prosperity (World Bank,
2020). It plays an important role in stimulating development through formal and informal
financial institutions and arrangements, mobile banking being one of the recent ones (URT,
2017). To the people living in the poorest household financial inclusion can prevent them from
falling into poverty by making it possible to invest in business and education (Waweru, 2017);
Financial inclusion is a bridge between economic opportunity and outcome (Ouma, 2017).
Access to financial services opens doors for families, allowing them to smooth out consumption
and invest in their futures through education and health. Access to credit also enables businesses
to expand, creating jobs and reducing inequality (Furusawa, 2016). Financial inclusion not only
helps individuals to manage financial risks but also access to formal financial services allows
people to make financial transactions more efficiently and safely. To society, financial inclusion
benefits enable a shift of payments from cash into accounts that allows for more efficient and
more transparent payments (Demirguc-kunt, 2017).

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Through financial inclusion, the underserved individuals, entrepreneurs, and SME business
owners benefit from being incorporated into the formal economy whereas banks and
governments benefit from incorporating the underserved into the formal economy. To
individuals, financial inclusion helps improve income and increase savings thus enabling
investment in necessities such as education, healthcare, food, and growing business. FI brings
entrepreneurs and their businesses into the formal financial sector which builds a better-
connected financial market and ultimately global markets. It allows those operating in mature
markets who have the capital to connect with the next generation of young entrepreneurs in
emerging markets who need capital. Banks also can expand their scale and creates brand equity
for new customer segments and reach new, previously underserved customers through financial
inclusion. Governments also benefit when all citizens are connected, the velocity of money and
economic activity is increased, and transmission mechanisms efficiently execute monetary
policy. Decreasing the size of the informal economy provides greater transparency into financial
transactions by increasing security and regulatory oversight. Financial inclusion and account
ownership help reduce corruption, discourage tax evasion, and allow for more effective subsidy
payouts (Adams, 2018).

Many critical challenges surround financial inclusion and mobile money services adoption
worldwide (Mahmoud, 2019). The majority population of people who lacks access to basic
financial services is concentrated in developing countries (Shalini et al., 2019). Such a notable
disparity in financial inclusion between the developed and developing world is driven by, among
others, the inability of financial service providers to expand outreach to the poor at an affordable
price due to the high cost of establishing and running “brick and mortar” branches (Trust, 2016).
Other barriers to financial inclusion as highlighted by BCG include; physical-geographical
isolation or inaccessibility, perceived high cost of operating an account; inadequate and low
incomes of the people; deficient infrastructure, financial illiteracy, and inadequate supportive
regulatory environment (BCG, 2019). The non-supportive regulatory environment is also
highlighted by Ondiege (2015) who’s study revealed that some African countries do not have
effective regulators and laws that would deepen financial reforms including those governing
mobile financial services. This inadequate supportive regulatory environment has led to friction
between MNOs, financial institutions, and the central bank with regards to mobile financial

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services and this negatively impacts MNO's service delivery to the unbanked population
(Ondiege, 2015). Nevertheless, high tariffs associated with financial services have also been
mentioned to contributes to the poor level of financial inclusion in many African countries
(Youtap, 2017).

Two key technologies of mobile phones and digital money are changing the face of banking and
have made a new financial inclusion model possible. Mobile phone penetration is nearly
universal as it reached 95% worldwide as of 2015, and all over the world, people who have never
had access to a bank now have access to a phone (Mifos, 2017). When every person has a mobile
phone and transactions are digital then every phone will be a bank every financial service will be
just a mobile app and every person will have access to the financial system. The mobile money
platforms provided by MNOs allow people with no, or limited, access to formal banking
facilities to use a range of financial services through their mobile phones i.e. to send and receive
payments, pay utility bills, and many more. These mobile money services can be accessed
through the most basic mobile phone, have low transaction costs, and are distributed by vast
networks of agents that provide person-to-person contact and training to those unfamiliar with
the technology (WorldBank, 2017a). The mobile money agents on the other hand enable
customers to use a mobile device to access services such as cash deposits, cash withdrawals, and
digital payments. This business model may be the most viable approach for reaching
communities with limited population size or economic activity (BCG, 2019). Apart from this,
mobile money helps improve productivity by increasing the efficiency and lowering the cost of
transactions, generating new employment opportunities, improving security, and creating a
platform on which other businesses can grow (WorldBank, 2017a).

Mobile money services are growing very fast in developing countries as an important tool for
financial inclusion (Mahmoud, 2019). In Tanzania, the growth of mobile money has been
phenomenal since it was first introduced in the year 2007. During that year the first mobile
money product known as ‘Mobipawa’ was introduced by a local company called E-Fulusi (T)
Ltd. The Mobipawa product however did not live up to expectations and so the company decided
to immediately wind up its operations. In 2008, Vodacom (T) Ltd Introduced its mobile money
product M-Pesa, followed by Millicom (T) Ltd who introduced Tigo Pesa. The move was
followed by Airtel (T) Ltd with Airtel Money in 2009. In 2010 Zantel introduced Ezy Pesa and
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in 2014 two more players joined the market, that is, the Tanzanian Informal Sector Worker
Union introducing DauPesa and Smart Banking Solutions Limited Introducing B-Pesa
(WorldBank, 2017b).

According to telecoms statistics published by the Tanzania Communications Regulatory

Authority (TCRA), the subscriptions to mobile networks reached 48.1 million and that of mobile
money (mobile money accounts) reached 29.6 million in June 2020. During the same period, 272
million mobile money transactions took place, for a total value of TZS 10.6 trillion (USD 4.6
billion) (TCRA, 2020) with the number of agents to support mobile money services throughout
the country estimated to be more than 260,000 by February 2016 (WorldBank, 2017b). Today in
Tanzania, mobile phone owners use digital money services through a competitive landscape of
six providers i.e. Airtel, Halotel, Zantel, Vodacom, Tigo, and TTCL.

In Kenya, two-thirds of all adults use M-PESA for mobile phone-based money transfers and
payments services; and in Bangladesh, one in five people use mobile financial services. In other
parts of the world governments and countries are planning a rapid expansion of digital financial
services for the unbanked. For instance, in 2016 India launched a new system for transferring
money as easily as exchanging e-mail or text messages. Elsewhere, the governments of
Colombia and Uruguay passed a Financial Inclusion Bill that provides a framework for digital
financial services whereas Ethiopia is currently developing a service for electronic payments by
phone, so it can bring millions into the financial services system (Mifos, 2017).

About 1.7 billion adults lack a bank or mobile money account, meaning that 35% of the world’s
adult population relies largely on cash transactions in their daily life BCG (2019). According to
the World Bank (2017a) in many developing countries, more than half of households lack an
account with a financial institution and more than 90% of transactions are executed with cash.
This population will remain excluded from the financial system. Agent networks particularly
those that use mobile technology can provide that critical link (WorldBank, 2017a).

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1.2 Statement of the Problem

Mobile network operators (MNOs), and e-commerce players have invested in mobile money
agent networks to offer basic financial services, and driving further expansion of financial access
(World Bank, 2017). As a result, the ranks of mobile money agents globally have grown from
about 500,000 in 2011 to 5.3 million in 2017 (BCG, 2019). In the Tanzanian context, the number
of mobile money agents to support mobile money services was estimated to be more than
260,000 by February 2016 (WorldBank, 2017b). In addition to that, the number of telecom
subscriptions in the country has grown by 108 percent, from 21 million in 2010 to 48 million in
June 2020 (TCRA, 2015; TCRA, 2020). Despite the increase in the number of financial access
points and telecom subscriptions in Tanzania, there remain financial inclusion gap, particularly
the low-income earners (WB, 2017). According to NFIF (2018), the level of financial exclusion
is still high, at 28%, with the majority of those excluded being low-income earners, people living
in rural areas, youth, and women.

It was expected that the growth of mobile money platforms and telecom subscriptions would
address the limitations of the traditional financial service providers, like banks and microfinance
institutions, especially on accessibility, affordability, and convenience of the financial services
but this has not been the case to some extent. There is also a concern on whether the mobile
money platform is meeting the financial needs in place as required (World Bank, 2017) whereas
the usage of mobile money to facilitate financial inclusion is still questionable in terms of
awareness, accessibility of the service, and adaptability of financial services and products
(TCRA, 2019). Therefore, it is of interest to evaluate the adoptability of the mobile money
services by the low-income earners in Tanzania banking on their awareness and accessibility
point of view.

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1.3 Objectives of the Study

1.3.1 Main Objective

To determine the role of mobile money platforms on low-income earners’ financial inclusion in
Tanzania.

1.3.2 Specific Objectives

1. To analyze the effect of mobile money services awareness on adoptability of financial

services.

2. To examine the role of mobile money services accessibility on the effect of awareness to
adoption of financial services.

1.3.3 Research Questions

1. To what extent does mobile money service awareness influences adoption?

2. To what extent does mobile service accessibility affects the awareness to adoption?

1.4 Significance of the Study

It is relevant to observe how mobile money service has transformed the society especially low
income earners into financial inclusion. This study provides useful insights into the characteristic
factors towards financial inclusion by low income earners. In this regard, the study finding is
expected to serve as an important information to all Mobile Network Operators operating in the
Tanzanian environment. It will shed light towards improvement of mobile money services by
highlighting the current level of mobile money awareness, adoption, and accessibility. The
realization of this aspect will enable MNOs to evaluate the current level of service currently
being provided and modify them to align more with the needs and expectation of customers
especially that of low income earners. To bankers, the study result will provide an important
detail to learn in understanding how to integrate their service to incorporate low income earners
segment. Using the study result, the government through responsible units such as the Central

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Bank and TCRA will get an chance to weigh up the effect of the current policies and regulations
to MNOs and hence low income earners and so come with better plans for improvement. Also,
the study would initiate further discussions to create an effective integration between Mobile
Money Platforms and other financial institutions to smoothen financial services in the region.
Lastly, the academic worth of this study is due to its conceptual and empirical insight stemming
from this study which can be used to develop new knowledge and help broaden and deepen
researcher’s understanding of the impact of MMS on financial inclusion.

1.5 Scope of the study

Generally, the study will focus on assessing the relationship between mobile money platforms
and financial inclusion among low-income earners. Specifically, it will highlight the effect of
mobile service ‘awareness’ and ‘accessibility’ towards adoption of the service. The study will be
limited to Ilala Municipal Council as evidence area and this area is selected due to its diversity in
terms of economic activities which are mainly undertaken by the low-income individuals.
Technically, the study will be limited to three main areas that are; the awareness of low-income
earners on mobile money services and products, the adoption of mobile money services and
products by low-income earners, and the accessibility of mobile transactions enablers and
service. The study will involve the selection of 74 low-income earners (earning less than TZS
6,675 per day) as a sample size and it will be conducted between December 2020 and January
2021.

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 CHAPTER TWO

LITERATURE REVIEW

2.0 Overview

The chapter presents the review of literatures that were conducted by different authors that are
closely related to the underlying study with the aim of building context for the study. The
empirical reviews have discussed recent relevant studies that have been conducted by other
researchers in different areas. A conceptual framework will be generated hereunder.

2.1 Definition of Key Terms

Keywords in this study include; Financial Inclusion, Mobile Money, Mobile Network Operators
(MNOs), and Low-income Earners.

2.1.1 Financial Inclusion

Financial inclusion refers to the delivery of financial services at affordable costs to

disadvantaged and low-income segments of society. These groups are often unbanked or
underbanked (FINCA, 2020).

For the purpose of this study, a person is said to be financially included when he/she has adopted
the financial services by either transacting, saving, taking a credit, insurance cover or by
investing.

2.1.2 Mobile Money

Mobile money is a technology that allows people to receive, store, and spend money using a
mobile phone. It’s sometimes referred to as a 'mobile wallet' or by the name of a specific service
such as M-Pesa, Tigo Pesa, Airtel Money, Ezy Pesa, and many more (WorldRemit, 2020). It can
also be defined as a service in which the mobile phone is used to access financial services
(GSMA, 2010).

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2.1.3 Mobile Network Operators (MNOs)

A mobile network operator (MNO) is a telecommunications service provider organization that

provides wireless voice and data communication for its subscribed mobile users. Mobile network
operators are also known as a mobile phone operator, carrier service providers, or mobile
network carriers(www.technopedia.com).

2.1.4 Low-Income Earners

According to the new World Bank country classifications by income level: 2020-2021; low-
income earners are the people whose earning ranges are below USD 1,036 per year. In the
Tanzania perspective, as of September 20, 2020, the low-income individuals are those with
earning at around TZS 2,403,054 per year, or per month TZS 200,254, or TZS 6,675 per day
(Hamadeh et al., 2020).

2.2 Empirical Review

Ahmad et al., (2020) conducted a study on mobile money and its contribution to promoting
financial inclusion and development, with a focus on sub-Saharan Africa. Taxonomic,
descriptive, and analytical methods were used to evaluate the state of knowledge in the area. The
study analyzed how mobile technology may contribute to economic development and financial
inclusion in theory and in practice. The study also explained the mechanics of mobile money
using Kenya’s M-Pesa as a canonical example; and consider whether the literature has fully
established the potential economic impact of mobile money especially its contribution to
financial inclusion. The study results established the following; i) mobile phones may promote
the growth of financial inclusion, ii) there is a need for policies to ensure that the provision of
finance is balanced between formal and informal institutions; iii) regulatory environment, an
adequate mobile network and well-trained agent network are clearly essential, and iv) tax is
likely to encourage a reversion to cash and therefore will have a disproportionate effect on low-
income earners.

In another study, Waweru (2017) conducted a study on the effect of mobile money on saving and
money transfer practices for low-income earners in Kenya. The study sought to find out whether
the introduction of mobile money has been accompanied by a significant shift in saving and
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money transfer practices used by low-income earners. The study surveyed a total of 750
households across Kenya. The study result found that the introduction of mobile money has been
associated with an increase in the number of low-income earners saving their money with formal
banks and a significant shift away from the practice of saving money by hiding it in the house.
The study further found that the practice of storing wealth in non-monetary forms was however
unaffected by the introduction of mobile money in rural areas while other methods of money
transfer experienced a significant decrease in usage among low-income earners after the
introduction of mobile money.

Sena et al., (2016) conducted a study in Kenya on mobile financial services as a boon for savings
mobilization and financial inclusion. The study examined whether the pervasive use of mobile
telephony to provide financial services is a boon for savings mobilization. The findings of the
study revealed that the availability and usage of mobile phones to provide financial services to
promote the likelihood of saving at the household level. Moreover, the study found that access to
mobile financial services also has a significant impact on the amounts saved due to the
convenience and frequency with which such transactions can be undertaken using a mobile
phone. The study also established that the use of mobile phones promotes both forms of savings,
that is, basic mobile phone savings stored in the phone and bank integrated mobile savings.
Finally, the study recommended that deepening and growing the scope for mobile phone
financial services is an avenue for promoting savings mobilization, especially among the poor
and low-income groups with constrained access to formal financial services.

Another study was conducted in Uganda by Adong & Lwanga (2016) on mobile money and
individual savings as a pathway to financial inclusion. The study provided a micro perspective
on the impact that mobile money services have on an individual’s saving behavior using Uganda
FinScope data. The study results revealed that although saving through mobile phones is not a
common practice in Uganda, being a registered mobile money user increases the likelihood of
saving with mobile money. Also, it was found that using mobile money to save is more prevalent
in urban areas and the central region than in other regions. This trend was explained to be caused
by several factors; first, rural inhabitants on average tend to have lower incomes and therefore
have a lower propensity to save as compared to their urban counterparts. Second, poor
infrastructure in rural areas in terms of poor telecommunication network coverage and the lack of
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electricity limit the use of mobile phones and so the use of mobile money as a saving
mechanism. Overall, the use of mobile money as a saving mechanism was found to be very low,
and this was partly explained by the legal limitations that do not incorporate mobile finance
services into mobile money. The study added that the absence of interest payments on mobile
money savings may also act as a disincentive to save through mobile money.

Ondiege (2015) conducted a study to examines the role of the regulatory environment in the
development of financial inclusion through digital means that use mobile phones to provide
financial services such as payments and deposits. The study focused on mobile money and
banking in four African countries that include; Tanzania, Kenya, Uganda, and Nigeria. The study
examined different regulations that have influenced the development of financial inclusion
through the use of mobile financial services. The study established that MNOs face many
challenges such as deficient infrastructure, inadequate supportive regulatory environment, and
financial illiteracy of the population. All these challenges undermine the growth of financial
inclusion if left unaddressed. The study recommended that MFIs should upgrade their
technology to be able to adopt the emerging mobile banking technology and also seek solutions
that are user-friendly and easy to implement.

A study was conducted by Mfossa (2019) in Cameroon to assess the mobile money-driven
financial inclusion and financial resilience. The paper used the 2017 Global Findex 1,000
representative sample collected to examine how mobile money affects people’s ability to face
negative shocks by coming up with an emergency fund in due time. The study result indicated
that while there has been increasing interest in the economic effects of mobile money in Sub-
Saharan Africa, there is little empirical literature on the role of mobile money in the nexus
between financial inclusion and financial resilience. Whereas the average resilience ability if no
one in the treated and the overall population had access to a mobile money account is
considerably higher when disregarding endogeneity (0.47 vs. 0.37 and 0.62 vs. 0.09
respectively), our results demonstrate that the increase in financial resilience ability due to
mobile money adoption is higher when controlling for endogeneity (0.74 vs. 0.053 and 0.60 vs.
0.07 respectively). Thus, disregarding endogeneity tend to underestimate the positive effect of
this digital financial inclusion tool.

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Coulibaly (2020) also conducted a study on the topic of financial inclusion through mobile
money banking in WAEMU countries. During the study, individual-level data and aggregate-
level data were used according to a multilevel approach to perform probity, Heckman probity,
and multinomial probity estimations. The study results showed that the use of a mobile money
account was higher among the least vulnerable social categories (richer, older, and more
educated people and men) and individuals with easy access to mobile payment outlets. These
results were similar to those who use formal bank accounts. The study recommended that to raise
the level of financial inclusion through mobile money, the governments in WAEMU countries
should promote: the use of mobile money accounts among the working-age population (adults
aged between 25 and 64), the introduction of incentives into the education system which would
encourage higher levels of education, the improvement of individual income level, the
development of incentive policies for the opening and operation of mobile payment outlets.

Another study was conducted by Mahmoud (2019) to analyze the mobile money success factors
from seven developing countries (Tanzania, Kenya, Uganda, Egypt, Ghana, Rwanda, and
Zimbabwe). These mentioned countries were selected for the study because they have a
successful penetration of mobile money services. The study result found that mobile money
adoption is affected by several factors that include country-specific characteristics, regulatory
considerations, and service provision characteristics. During the construction of the study, two
dependent variables were chosen to present the mobile money adoption; these variables include
registered subscribers’ ratio and active subscribers’ ratio. The analysis was based on the data
collected from the seven countries’ central banks' published statistics. The analysis was achieved
using panel data analysis for a sample of the seven (7) listed countries for the period from 2013
to 2017. Data were analyzed using the linear regression model for each dependent variable of the
mobile money adoption using nine (9) explanatory variables. The statistical analysis was done
using Eviews and least square (LS) estimation techniques. The study analysis revealed the
following result; i) there is a significant positive relationship between registered subscribers’
ratio and mobile money distribution network penetration, and the number of the service provider.
ii) a significant negative relationship between registered subscribers’ ratio and the following:
mobile money fees (price), level of education, nominal GDP, and mobile money account limits.
iii) a significant positive relationship between active subscribers’ ratio and the following: mobile

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money distribution network penetration, crime Index, banking penetration, level of education,
regulation index. iv) a significant negative relationship between active subscribers’ ratio and the
following: nominal GDP, number of the service provider. However, there was no significant
relationship between active subscriber’s ratio and the following: mobile money fees, and mobile
money account limits.

2.3 Research Gap

The review of literatures has brought important lessons, the first; scholars used a variety of
variables when explaining the influence of mobile money services on financial inclusion. These
variables are enacted policies, regulatory environment, an adequate mobile network, taxes, agent
network training, income level, propensity to save, poor infrastructure, lack of electricity, interest
payments on mobile money transactions, financial illiteracy, registered subscribers’ ratio, and
active subscribers’ ratio. Secondly, the methodology used by majority researchers have been
survey, with frequency distributions reported as data analysis technique (Ahmad et al., 2020;
Waweru, 2017; Sena et al., 2016; Adong & Lwanga, 2016; Ondiege, 2015; Mfossa, 2019;
Coulibaly, 2020; Mahmoud, 2019). Moreover, among the researchers, different data analysis
techniques such as regression analysis, E views and least square (LS) estimation were used but
no study was found to have used Ordinary Least Squares (OLS) estimation technique analytical
framework. Also, no study was found to be studying the issue of financial inclusion specifically
regarding low-income earners.

Nevertheless, the reviewed studies have yielded different results based on the explored variables.
Ahmad et al., (2020) found that mobile phones promote the growth of financial inclusion, but
also policies and regulatory environment are needed to ensure that the provision of finance is
balanced between formal and informal institutions. Also, tax is likely to encourage a reversion to
cash and therefore will have a disproportionate effect on low-income earners. Sena et al., (2016)
reported that the use of mobile phones promotes savings. Adong & Lwanga (2016) concluded
that although saving through mobile phones is not a common practice, being a registered mobile
money user increases the likelihood of saving with mobile money. The study added that, poor
infrastructure in rural areas in terms of poor telecommunication network coverage and the lack of
electricity limit the use of mobile phones and so the use of mobile money as a saving
mechanism. Overall, the use of mobile money as a saving mechanism was found to be very low,
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and this was partly explained by the legal limitations that do not incorporate mobile finance
services into mobile money. A study by Mfossa (2019) indicated that while there has been
increasing interest in the economic effects of mobile money, there is little empirical literature on
the role of mobile money in the nexus between financial inclusion and financial resilience.
Therefore, all these resulted into a need to explore the role of mobile money services in
influencing financial inclusion especially to low income earners.

2.4 Theoretical Framework

The theoretical review will cover several theories that are related to Mobile Money and Financial
Inclusion. These theories include the Technology Acceptance Model (TAM) and Vulnerable
group theory of financial inclusion.

2.4.1 Technology Acceptance Model (TAM)

The TAM model was developed by Davis (1986, 1989). It explains users’ acceptance and use of
a particular technology or aspects relevant to it. The model is one of the strongest in explaining
and predicts users’ adoption of new technologies. According to the theory, two main factors
influence users’ attitudes about adopting and implementing technologies; perceived ease of use
and perceived usefulness. Perceived usefulness refers to the extent to which the individual finds
the technology useful in performing work. On the other hand, the perceived ease of use refers to
the extent to which individuals can learn the technology without investing much effort. The
model has been widely tested in a variety of contexts and found to be robust (Davis, F., &
Venkatesh, 1996). Hence, from the model, the behavior of mobile subscribers (customers) in
using technology (mobile money) are predicted to be dependable on the perceived usefulness of
the technology and the perceived ease of use of it that will bring forward the intention to use the
perceived technology. The model is used to explain objective one in the study i.e.to analyze the
effect of awareness of mobile money services on the adopt ability

2.4.2 The vulnerable group theory of financial inclusion

According to Ozili, P. K, (2020). The vulnerable group theory of financial inclusion argues that
financial inclusion activities or programs in a country should be directed to the vulnerable
members of society such as poor people, young people, women, and old aged people who suffer
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the most from economic hardship and crises. Vulnerable people are often the most affected by
financial crises and economic recession, therefore, it makes sense to bring these vulnerable
people into the formal financial sector. One way to achieve this is through government to-person
(G2P) social cash transfers into the formal account of vulnerable people it can make vulnerable
people feel that they are being compensated for the current income inequality that affect them,
which gives them an opportunity to catch up with the other segments of society. The model is
used to explain both objectives in the study i.e.to analyze the effect of awareness of mobile
money services on the adopt ability and to examine the role of mobile money services
accessibility on the effect of awareness to adoption.

2.5 Conceptual Framework

Drawing from reviewed studies, this study conceptualizes that the adopt ability of mobile money
services is influenced by the awareness of the service. However, the strength of this relationship
is influenced by mobile money service accessibility by the low income earners as can be seen in
Figure 1.

Fig 1: A Conceptual Framework

Accessibility
 Presence of Mobile Money Centers/Agents
 Mobile Network Availability and Strength
 All day availability of mobile money services
 Float capacity by Mobile Money Centers/Agents

Awareness
 Mobile phone support Adoptability
the service
 MNOs provide services  Transactions
 Advertisement of  Credit
services  Insurance
 Education/Training on  Investment
the services  Saving
 Benefits of the services

Source: Developed from the literature review

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 CHAPTER THREE

RESEARCH METHODOLOGY

3.0 Overview

This chapter discusses the methodology that will be adopted by the researcher when conducting
the study. The chapter consists of the research design that will be adopted by the researcher, the
target population for the study, sampling technique in the selection of the sample, sample size,
data collection method and instrument, data analysis technique, data quality assurance, and
ethical considerations.

3.1 Research Design

The research is quantitative study, which will follow the cross-section analysis of the information
collected in the field.

3.2 Target Population

The target population for this particular study will be the selected ‘low income’ earners of Ilala
Municipality, located within the city of Dar es Salaam. This area has been selected because of its
diversity in terms of economic activities which are mainly carried out by small entrepreneurs
hence an easy place to obtain the suitable sample, but also it is a convenient area for researcher
due to time and financial limitations.

3.3 Sampling

In this study, the researcher will employ two sampling techniques i.e. cluster sampling will
divide the population into different clusters (wards) and judgmental/purposive sampling
technique will be used to obtain the sample needed for the study. In purposive sampling, the
sample members are chosen only based on the study’s requirement. Among the key criteria
considered when choosing the samples to be included in the study is, earning capacity. This is
because; the study is focused on the financial inclusion of low income earners. The definition of
low-income earners that will be applicable in this case is that used by the World Bank i.e. those

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who earn below TZS 6,675 per day (Hamadeh et al., 2020). The other criteria in the selection of
sample is, the respondent has to have a source of income, either informal or formal, and has to
have a mobile phone.

3.4 Sample Size

For a study to be a good representative of the population, its sample size should not be either too
small or excessively large as a good sample should have an optimum size (Kothari, 2004). The
issue of sample size in research has for quite long time caused a lot of debate and has thus
remained contentious. Gulati (2009) for instance, contend that there is no idea or prescribed
sample size as it all depends on the discipline, anticipated response rate and level of confidence
expected in the answers. However, one rule of- thumb found in quantitative analysis is that
sample size for a study should be at least 50, and more than 8 times the number of variables in
the model (i.e. N ≥ 50+8M), where N = sample size, M= number of predictors or independent
variables (Kothari, 2019). Since this study has 3 independent variables; awareness, adoptability
and accessibility thus the minimum sample size would be (N) greater or equal to 50+ 8*(3) = 74
respondents (Tabachnick & Fidell, 2012).

3.5 Data Collection Instrument

In collecting data from the selected respondents, the researcher will use a closed-ended
structured questionnaire. This questionnaire will be uniform to the selected respondents. The
questionnaires have been used for data collection for the following reasons; a) its potentials in
reaching out to a large number of respondents within a short time, b) able to give the respondents
adequate time to respond to the items, c) offers a sense of security (confidentiality) to the
respondent and d) it is objective method since no bias resulting from the personal characteristics
(as in an interview) (Owens, 2002).

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3.5.1 Format of the Survey Questionnaire

The survey questionnaire is designed according to the objectives of the study. It has a total of 30
questions and among these questions, whereby the first four (4) questions are aimed at obtaining
the information of the profile of the respondents. Question 6 through 10 will generate
information regarding the awareness of low-income earners on mobile money products and
services; Question 11-15 will capture information that analyses the adoption of mobile money
services and products by low-income earners on financial inclusion; Questions 16-20 will
examine the accessibility of mobile transaction enablers towards the adoption of mobile money.
Moreover, questions 21-25 are designed to measure the relationship between mobile money and
financial inclusion.

3.6 Research Quality

3.6.1 Reliability of Data

Reliability is defined as the degree to which a measurement method can be depended upon to
secure consistent results when the application is repeated given the same situation and context
exists (Weiner, 2007). In this study, the internal consistency of respondents’ responses across the
items on a multiple-item measure will be measured using Cronbach’s Alpha Test and for the data
to fit for being used in the study, a reliability value of above 0.7 will be considered acceptable.
Moreover, prior to the main study, a pilot test will be conducted to test data collection
instrument, sample recruitment strategy and other research techniques and it will involve at least
15 individuals.

3.6.2 Data Validity

Validity refers to the extent to which a measure adequately represents the underlying construct
that it is supposed to measure (OER, 2017). In measuring validity for the study, both the
external validity (population generalizability) and content validity (appropriateness of the content
of an instrument) will be considered. To ensure external validity is preserved, a pilot test will be
conducted, but also the sample to be used for the study will be statistically predetermined in

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order to ensure a good representation of the population. To conserve content validity, questions
in the questionnaire are arranged in a way that makes sure a good flow exists.

3.7 Data Analysis

The analysis of the data will include both descriptive and inferential statistics. The descriptive
statistics will be meant to answer objective one of the study where the extent of the low-income
earners awareness on the mobile money services and products is determined. On the other hand,
the descriptive statistics will also show, to what extent is the low-income earners adopt the
services and products provided by MNOs. The moderation model, as specified in equation 1, is
meant to answer objective three, which determines, how much the accessibility of the mobile
products and services influences the relationship of awareness and adoptability of the respective
services and products.

The two models will be analyzed following the OLS estimation technique.

From,

Yi = a + βXi + αZi + ei; …………………………………………………...…. (1)

Where Y = adaptability, X = awareness, Z = control variables (age, sex, and income level)

After introducing the moderation variable, the equation becomes;

Yi = a + βXi + ΣXi*Ai + λAi + αZi + ei; ……..……………………………….(2)

3.8 Ethical Issues

In this study, the researcher will adopt the deontological approach which states that the ends
served by the research can never justify the use of research which is unethical. The researcher
will ensure ethical considerations are taken on board before, during, and after the study. To
ensure this; first, the researcher will state clearly to the respondents that data to be collected will
be used for academic purposes only. Secondly, the researcher will ensure free consent to

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participate in the study is obtained from participants before carryout of the activity. Lastly, the
questionnaire is designed in a way that it cannot disclose or give any lead the true identity of the
respondent.

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 REFERENCES

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Adong, M. M. L. and A. (2016). A Pathway to Financial Inclusion: Mobile Money and

Individual Savings in Uganda.

Ahmad, A. H., Green, C., Jiang, F., & Al, A. E. T. (2020). Mobile Money, Financial Inclusion
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BCG. (2019). How Mobile Money Agents Can Expand Financial Inclusion.

Coulibaly, S. S. (2020). Financial Inclusion through Mobile Money : An Examination of the

Decision to Use Mobile Money Accounts in WAEMU Countries Financial Inclusion through
Mobile Money Banking : An Examination of the Decision to Use Mobile Money Accounts in
WAEMU Countries By . August.

Demirguc-kunt, A. (2017). Financial Inclusion and Inclusive Growth A Review of Recent

Empirical Evidence. April.

Fidell&Tabachnick. (2012). Using Multivariate Statistics 6h Edition, Person Education, Boston.

FINCA. (2020). Financial Inclusion. https://finca.org/our-impact/improved-lives/financial-

inclusion/?gclid=CjwKCAjw2Jb7BRBHEiwAXTR4jbNCGh6wf_R0SuUauLpt2KJw1xOm
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Furusawa, M. (2016). Financial Inclusion: Bridging Economic Opportunities and Outcomes.

International Monetary Fund. Deputy Managing Director Remarks.
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Economic-Opportunities-and-Outcomes

GSMA. (2010). Mobile Money for the Unbanked. Mobile Money Definitions.

Hamadeh, U. S. & N. (2020). New World Bank country classifications by income level: 2020-
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income-level-2020-2021
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Kapoor, A. R. & R. (2013). Financial Inclusion and Integration through Mobile Payments and
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NFIF. (2018). National financial inclusion framework, 2018 - 2022. 2018–2022.

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Www.technopedia.com. (2020). Mobile Network Operator (MNO).
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 RESEARCH QUESTIONNAIRE

Please () on your most appropriate response/column

A. Profile of the Respondent

Male Female

1. Your sex

18-25 26-35 36-45 46-55 Above 55

2. Your age group

Below TZS 600- TZS 1,100- TZS1,600- TZS3,000- TZS 6100-

TZS 500 1,000 1,500 3,000 6,000 and above

3.Income
level per
day

Yes No
4. Do you have a
mobile phone

Yes No
5. Are you having a
mobile line (sim
card) of any mobile
network?

Yes No
6. Can you
recommend mobile
money services to
friends /Family?

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 I. Awareness of mobile money products and services
Key: 1-Strong Agree, 2- Agree, 3- Neutral, 4- Disagree, 5- Strong Disagree
Strong Strong
SN Statements Agree Disagree
1 2 3 4 5
7 My mobile phone support mobile money services
(MPESA, TigoPesa, Halotel Ezy Pesa , Airtel money etc)
8 My mobile phone operator provide platforms for sending
money
9 My mobile phone operator provide platforms for receiving
money
10 My mobile phone operator provide platforms for
withdrawing money
11 My mobile phone operator provide platforms for credits/
short loans
12 My mobile phone operator provides mobile insurance
services
13 My mobile phone operator provides platforms investment
14 My mobile phone operator provides platforms saving
money
15 My mobile phone operator advertise its mobile money
services
16 My mobile phone operator educate/train on the below
17 I know the benefit of using mobile money platforms

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 II. Adoption of mobile money products and services
Key: 1-Strong Agree, 2- Agree, 3- Neutral, 4- Disagree, 5- Strong Disagree
Strong Strong
SN Statements Agree Disagree
1 2 3 4 5
18 I have performed mobile money services in the last six
month
19 I send money through my mobile operator
20 I receive money through my mobile operator
21 I withdraw money through my mobile operator
22 I am saving through my mobile operator
23 I am investing through my mobile operator
24 I use insurance services provided my mobile operator
25 I access credit/short loans through my mobile operator

III. Accessibility of mobile money products and services

Key: 1-Strong Agree, 2- Agree, 3- Neutral, 4- Disagree, 5- Strong Disagree

Strong Strong
SN Statements Agree Disagree
1 2 3 4 5
26 Network is always a challenge when I want to perform
mobile money services
27 There is enough mobile money centers around my
work/residence area
28 The mobile money agents have enough float to suit my
needs
29 I can access and benefit from mobile money services
anytime in a day (even at night hours) through my phone

THANK YOU!
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