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TEOFILO KISANJI UNIVERSITY

CONTRIBUTION OF MOBILE MONEY IN FINANCIAL

SYSTEM INCLUSSION TO RURAL AND POOR URBAN

RESIDENTS IN TANZANIA:

A CASE OF MBEYA REGION

BY:

AMOUR ABDALLA, A

REG. NO TEKU/BAEC/101322

A research proposal to be submitted for the requirement of an award for Bachelor of Arts

Degree in Economics of the Teofilo Kisanji University (TEKU).

2013

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CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The significance of the financial system in the growth and development of any economy has

been a matter no doubt to world economists since the introduction of Sustainable Livelihood

Framework (SLF) theory in the late 20th

and early 21st century which shows that the access

by poor households to the financial services builds up their productive assets and improves

their productivity. It is further explained through the SLF model that the access to financial

services increases and diversify incomes for the poor population, expands their asset base and

increase access to education, health services and enhances food security (Bee 2007).

However, while financial system is comprehensively defined as it ―consists of institutional

units and markets that interact, typically in a complex manner, for the purpose of mobilizing

funds for investment, and providing facilities, including payment systems, for the financing

of commercial activity‖ (IMF 2004), so to mean ―the interaction between the supply of and

the demand for the provision of capital and other finance-related services‖ (Goethe 2003), the

financial system in Tanzania is narrowly defined as, comprised with and dominated by the

commercial banks (IMF 2003).

Alongside other financial intermediaries such as the insurance companies, pension funds and

security firms, the commercial banks have been dominating the financial system in Tanzania

where by the banking institutions had 75% share of the total assets of all financial institutions

by year 2010 (BOT 2010). The functions of these commercial banks remaining to be the

basic traditional three; the accepting of deposit, advancing of money (Saleemi 2007) and

money transfer related activities (Mudida 2003)

Unfortunately enough, the network of financial system is primarily not inclusive in Tanzania.

The IMF‘s Financial Stability Report (June, 2010) shows that in 2009 only 12% of

Tanzanians had an access to formal banking services, 4% had an access to other formal

financial institutions (insurance, social security, etc), other 27% had an access to only

informal financial services and 56% had been totally excluded from the financial system.

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Impliedly, this 56% of the population not only had no access to deposit and borrowing,

which may require a person with relatively high income level, but also sending and receiving

money, which does not require a person to be a high income earner.

The poor population and the rural residents form the major part of the population excluded

from the financial system (56%). Less than 10% of the populations in most part of the rural

areas have an access to financial services in general (IMF 2010). The 2010‘s annual report of

the Directorate of Banking Institution of the BOT shows that as at 31st December, 2010, the

total number of banking institutions being 42 with the total of 473 branches in all over the

country. However, 158 branches (equal to 33.4%) are in Dar-es-salaam only, other 35

branches are in Mwanza only and 34 in Arusha. This makes the sum of 227 branches which

is the same as nearly 48% of all branches to be located in only three major cities of the

country. How unequally distributed! The implication here is to show how the rural residents

and ultimately the poor are left with no access to financial services.

While the rural residents lack of access to financial system is backed by insufficient networks

of the branches in their areas, the urban poor and women do not have bank deposits, neither

do they borrow from banks nor transfer funds, although they are surrounded by bank

branches, because ―financial services may be expensive to provide to the poor who lack

pledge-able collateral, and informal services often charge exorbitant interest rates on credit to

cover the high screening and monitoring costs that are required to keep default low‖ (Pande

et al 2012).

Also, many of these people are not well informed about the usefulness and importance of

financial services through banks. Expensiveness of running the bank accounts and

complexities, bureaucratic procedures as well as avoidance of too much paperwork form the

barriers for having bank accounts (Kunt and Klapper 2012). It also has been known by the

people in Sub Saharan Africa that the banks are only for the rich. The studies show that ―81%

of the adults interviewed in the Sub-Saharan Africa admitted that they don‘t have enough

money to open and maintain an account.‖ (Technology Banker 2012)

Then, the mobile money system was officially launched. In April 2008, Vodacom was the

first mobile phone company to establish the mobile money through its well known M-Pesa

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after that was seen as successful introduction of the mobile money platform in Kenya just a

year earlier (IFC 2010). Currently, the four major cell phone companies are competing for

the market share of the mobile money service provision in Tanzania. These companies are

Vodacom (T) Ltd for M-Pesa, MIC (T) Ltd for TIGO-Pesa, Airtel (T) Ltd for its Airtel

Money and Zantel for its Z-Pesa. (BOT 2011, BOT 2010, Bangens and Soderberg 2011 and

Alexandre and Eisenhart 2013).

Studies show that up to November, 2011 about 93% of Tanzanians are aware of at least one

provider of Mobile Money services and 24% of the Tanzanians are actually using the mobile

money (Audiencescapes 2011). This rapid response to mobile money application in Tanzania

has been a result of the widespread application of mobile phones in the country. Several

studies reveal that 78% of the households own mobile phones and 63% of the individuals

own mobile phones (Audiencescapes 2011:3, Alexandre and Eisenhart 2013).

Now, the base of this study is to examine the extent at which the mobile money has

contributed to the spread of the financial system in Tanzania. There is a need to measure how

much has mobile money contributed to the widespread of the network of the financial

service. The study is therefore grounded on how much the mobile money services reached

and helped to include the rural residents and the urban poor into the financial system.

1.2 STATEMENT OF THE PROBLEM

It is already known that the introduction of mobile money in Tanzania has contributed to

widening the network of the financial system and consequently the financial services among

Tanzanians (Ishengoma 2001), but to what extent and to what kind of people, nobody knows

of yet.

The exact people who are benefited and how do they benefit should be a question of interest

whenever the topic of the spread of the financial system is displayed for public discussion. In

the community formed by the poor and the rich, the rural and the urban, the small and large

businesses, the school and college students, the workers and the jobless, the distribution of

the gain is never equal. However, as impliedly learnt through the preceding discussion all

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these groups, for the purpose of this study, will be classified in to two; the rural residents and

the urban poor residents, since it is the easiest way to classify and identify the financial

system exclusion victims ( Kunt and Klapper 2012, Pande et al 2012).

From which angles these groups do benefit should be a matter of high interest in this

analysis. When we said these groups had been excluded in the financial system we meant

they had no access to deposits and thus nor overdrafts or short term loans and advances,

money transfer (sending and receiving money) and access to doing transactions (purchasing

and selling) via debit and credit cards. There is a need also to measure the easiness of

conducting these financial transactions, if any, brought by the mobile money, specifically to

these groups.

There is, therefore, a need to measure the contribution of mobile money towards the spread

of the financial system network to the special groups who were the victims of the financial

system exclusion in the country. Our problem here, is therefore, not whether the financial

system network has been widened or not, but rather who exactly have been reached and how

do they actually benefit from this development.

The spreading of financial system, for the purpose of this study, therefore means the

accessibility of the financial services to the rural residents and the urban poor dwellers who,

before the introduction of mobile money were in acute problem of poor access to the

financial system (Ishengoma 2001). The specialty of this study is that it will go further to

evaluate how far has the mobile money helped to include these groups in the financial

system, which services are much more applicable to these groups, and if the introduction of

the mobile money has made the transactions conducted by these groups copying up, at least

in relative terms, with the growing technology and the changing business world.

1.3 RESEARCH OBJECTIVE

The general objective of this study is to measure the extent of the contribution of the mobile

money to financial system inclusion to the rural residents and urban poor population.

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1.3.1 The specific objectives of this study are;

1. To find out if the mobile money has been of help to Tanzanians in access to financial

services.

2. To find out the magnitude that the mobile money has reached people in the Tanzania

3. To find out any improvement associated with mobile money usage by Tanzanians.

1.3.2 RESEACH QUESTIONS

The research objectives is sought to answer the following research questions;

1. Has the mobile money helped Tanzanians to gain access to the financial services?

2. To what extent has the mobile money reached Tanzania residents?

3. Is there any improvement associated with the mobile money usage by Tanzanians?

1.4 SIGNIFICANCE OF THE STUDY

The inaccessibility of the financial services to the poor urban and the rural residents is

directly correlated to their poor living standards and vulnerability to poverty (Bee 2007).

Impliedly widening the network of the financial system to the rural areas and increase its

accessibility to the urban poor is taken as a relief and an instrument to break the cycle of

poverty. Mobile money has widened the financial system inclusion as proved by Ishengoma

(2011), but the most vulnerable groups and the mostly injured victims of the financial

exclusion were never directly spoken about.

If the mobile money was to increase the financial inclusion, it should have to directly benefit

these groups. To measure the successfulness of mobile money into spreading financial

system one would have to identify who exactly benefited, and how. It should also be a matter

of interest to find out anything special with the mobile money that would enable the group to

cope with the changing world.

That is where this study is needed. An examination is needed to measure the extent to which

the mobile money has reached and helped the first class victims of the financial exclusion,

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and that is exactly this study is going to do; to measure the significance of the mobile money

to the classes of the poor.

The rationality of this study is directly attached to the policy formulation that will help the

most victims of financial exclusion to get attached to the system and consequently find the

means to get out of the poverty.

The mobile money service providers will take the results of this study as the reflection of

their services widespread. Did they really get to the whole market? This study will not only

provide the answer to this question, it will also analyze the difference they made.

1.5 THE SCOPE OF THE STUDY

Many literatures are already published studying the new innovation into the financial system-

the mobile money- in Africa. Some have described their impulse on the rapid growing and

successfulness of the mobile money in Africa (Ngugi et al 2010), some had to do with the

trucking of the mobile money and its channel of distribution in Tanzania (Audiences capes

2011 IFC 2010), others focused on the laws and regulations and called for legal system

reaction towards mobile money legal requirements (Ally 2012) and some went further to

analyze the way the mobile money increased the mobile inclusion in Tanzania (Ishengoma

2011, Alexandre and Eisenhart 2013).

This study, therefore, will focus to the degree of the financial system inclusion brought by,

and as a result of the mobile money to the poor urban and rural residents. The scope of this

study will go as far as the interests of these two groups is concerned regarding the mobile

money accessibility to them, how has it made easier for them to join the financial system, and

what extra developments that the mobile money brought to them.

Mbeya region is chosen to represent Tanzania in this study. The selection of Mbeya is done

not only because of the logistic reasons concerning the researcher, that is he has his research

center located Mbeya (Teofilo Kisanji University), but also because Mbeya is a growing city,

it also has the districts which are nearby the city but far away in terms of development

services accessibility. Mbeya will make a suitable specimen for the required observation.

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1.6 LIMITATION OF THE STUDY

This study will limit itself and focus only on the accessibility and benefits of the mobile

money to the rural and urban poor residents. There will be no questions on why these groups

did find banking system complicated and expensive because, as briefed earlier, that part is

already covered by several other studies. However, the study will require for the comparison

between the mobile money system and traditional banking system.

This study will also avoid the general analysis of the spread of mobile money network and

will concentrate only on how the two groups got to use and benefit from the mobile money

and so connected to the financial system. However, the study will also look for any special

and extraordinary benefit of mobile money to these groups.

Mbeya region is also very large. Thus the study, obviously, will not cover all districts in the

region. Of course, the ―city‖ itself will be of necessary interests and some districts will be

chosen to provide for the rural area samples.

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CHAPTER TWO

LITERATURE REVIEW

2.1 PREAMBLE

This chapter intends to create the hypothetical framework of the study through, among

other ways, reviewing the literatures already published to analyze the matters related to

the financial system, the financial system inclusion, the financial system spread to the

poor and rural residents and the role of the mobile money to the financial system and the

role it played to development of financial system and financial system inclusion.

It should be recalled that the base of this study is to analyze how and to which extent has

the mobile money reached the rural residents and poor urban dwellers, connected them to

the financial system and helped them participate in the new ways of transaction and

payment systems.

2.2 FINANCIAL SYSTEM IN TANZANIA

2.2.1 Financial System defined

Defining financial system needs a clear pre-thinking and assurance of the discipline and

areas that one needs to study the ‗terminology‘ from. This is because one could find the

same word used in business accounting, computer information system and economics to

fit the discipline. It is important to note that, for the purpose of this study, in general, and

this review, in particular, the world will mean the ‗financial system‘ from the economic

point of view whenever mentioned.

Again, from the economic perspective, the term financial system is rather complicated

such that it is difficult to find the single simple definition of the term. For instance, the

Farlex‘s Free Dictionary (2013) which also derived the definitions from the Great Soviet

Encyclopedia (1979) provides two definitions for the very terminology- broader and

narrow definition of the financial system.

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In the broad sense, it is stated that the financial system means ―the totality of spheres

(components) of financial relations through which, within the framework of a

socioeconomic structure, the creation and use of monetary funds are ensured.‖ (Farlex

2013). It is added that; in the narrower sense, a financial system is the system of financial

institutions in a country that mobilize monetary resources, distribute the resources in the process

of financing and crediting, and exercise financial control. Farlex (2013)

From the point of both the wider and the narrow definitions above, the financial system is

a complicated terminology to state. Some literatures for this reason suggested that a

person is obliged to specify the areas of concern that is needed in the analysis of financial

system (Schmidt and Tyrell 2003). This is due to the reason that the financial system may

be defined differently from different angles and sometimes the financial sector may be

confused with the financial system.

As they foreseen this, Schmidt and Tyrell (2003) defined the financial system as a

broader term which is often confused as a narrow concept of financial sector. They

defined the financial sector narrowly as; …that part – or sector – of an economy which offers

and provides financial services to the other sectors of the economy. It consists of the central bank,

other banks, non-bank financial institutions, organized financial markets and the relevant

regulatory and supervisory institutions (Schmidt and Tyrell 2003).

Again the financial system covers more than that, it is broader and is given as the

interaction between the supply of and the demand for the provision of capital and other

finance-related services (Schmidt and Tyrell 2003).

The OECD and IMF both seem to have the same meaning regarding the financial system. Their

definition is given as; a financial system consists of institutional units and markets that interact,

typically in a complex manner, for the purpose of mobilizing funds for investment, and providing

facilities, including payment systems, for the financing of commercial activity. (OECD 2013 and

IMF 2004)

The definition that may seem more elaborative is the one given by Gupta (2011). Gupta

defines the financial system as ―a set of institutional arrangements through which

financial surpluses (or commands over the real resources) in the economy are mobilized

from the surplus units and transferred to the deficit spenders.‖ (Gupta 2011).

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Fig 2.1 Financial System (Source: Kumar (2013)

This definition is identical to what Kumar (2013) provides diagrammatically, it is

portrayed that the financial system is made up with the two classes of the actors in the

economy – the suppliers and the seekers or demanders of the fund- who exchange to

each other the flow of funds, financial services and claims of incomes and finance.

In his definition Gupta simply states that the financial system as the institutional

arrangements. And he was ready to elaborate the institutional arrangements to include all

conditions and mechanism governing the production, distribution, exchange and holding of

financial assets or instruments of all kinds and the organizations as well as the manner of

operation of financial markets and institutions of all descriptions (Gupta 2011).

It became easier to understand when he explained that in concrete terms, the financial

assets, the financial markets and financial institutions are the main three constituents of

any financial system‖ Gupta (2011). This statement again, can be easily understood with

the help of Kumar‘s diagram as he elaborates the constituents of the financial system.

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Fig 2.2 Constituents of Financial System (Source; Kumar (2013)

Financial assets are ―monetary claims by one party against another party‖ Samuelson et

al (2002). Examples of the frequently spoken about financial assets that one or a family

might own ―include cash, a checking account, stock or bond (Frank and Bernanke 2009).

They may also be explained in terms of money, savings accounts, government securities,

equities, financial derivatives, and pension funds. (Samuelson and Nordhaus 2002)

Financial Markets are defined as the ―dynamic, heterogeneous distribution system

through which the cash-surplus entities provide money to cash deficit entities (Higgins

2009). It is provided that besides the business which are the most prominent players of

the financial market, ―other active participants include national, state and local

governments and agencies, pension funds, endowments, individuals, commercial banks,

insurance companies, and the list goes on and on.(Huggins 2009).

Financial intermediaries are ―institutions or firms that mediate or stand between ultimate

lenders and ultimate borrower or between those with budget surpluses and those who

wish to run budget deficits (Gupta 2011). These include banks, insurance companies,

provident fund, investment companies and unit trusts.

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2.2.2 Tanzania Financial System Structure

Financial system in Tanzania, like that of many African countries, is dominated by

banking institutions. The 2010‘s final report of the Directorate of Banking Institutions

elaborates that, in the Tanzanian financial system, banking institutions are the major

players, accounting for about 75% of total assets of the system (BOT 2010). Alongside

the banking institutions, literatures mention other financial system institutions as pension

funds, insurance firms, security firms, bureau de change, microfinance institutions and

mobile payment system (BOT 2010).

2.2.3 Financial Inclusion in Tanzania

The easiest way to find out who gets excess to financial system, and to what extent, is by

examining the accessibility of the most dominant type of financial institution. For the

case of Tanzania, the rural residents are highly excluded from the system. However the

bank branches are highly increasing; the rural areas are not yet reached by these branches

to the extent that can include the rural residents to the financial system. Up to December,

2010, the totals of 473 branches of banks were at work country wide. Unfortunately, sum

of 158 of these branches are in Dar-es-salaam, 35 are in Mwanza and 34 in Arusha (BOT

2011). You could find that about 48% of the countrywide branches are found only in

three major cities of the country.

Distances from branches are identified as a major reason for inaccessibility of the

financial services to the rural residents. Tanzania has a large share of non-account-

holders who cite distance as a reason for not having an account—47 percent—and also

ranks near the bottom in bank branch penetration, averaging less than 0.5 bank branches

per thousand square kilometers. (Kunt and Klapper 2012)

Again, the BOT (2010)‘s report of Directorate of Banking Supervision summarizes the

accessibility of financial services as 12.40% of the Tanzanian population was served by

formal institutions (banks and financial institutions), 4.30% by semi-formal institutions

(microfinance institutions and SACCOS) and 27.30% by informal village associations

(VSLA/VICOBA), whereas 56.00% had no access to financial services. (BOT 2010)

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To the poor rural residents, the case of inaccessibility to the financial services is

associated not with the availability of the service itself but highly with the ability of the

people to use the services. Tanzania shares this condition with the rest of other poor and

Sub Sahara African countries. Financial services may be expensive to provide to the poor

who lack pledge-able collateral, and informal services often charge exorbitant interest

rates on credit to cover the high screening and monitoring costs that are required to keep

default low (Pande et al 2012).

Regardless the number of bank branches and other formal ways of financial services

surrounding the environment of the rural residents, poor rural residents have been found

in many researches that they use informal means of financial services (Pande et al 2012)

Inadequate access to financial services is widespread in developing countries, with access

as low as 5 percent of the adult population in places like Nicaragua and Tanzania.

Moreover, in many developing countries, the poor have no access, if any, only to

informal financial service, such as moneylenders.

Kunt and Klapper (2012) think that the world wide reason for not using formal financial

system is;

(i) Lack of enough money to use one. They also argue that;

(ii) Having a formal account is not costless in most parts of the world and

may be viewed as unnecessary by a person whose income stream is small

or irregular, and that;

(iii) Banks or accounts are too expensive

2.3 MOBILE MONEY IN TANZANIA

2.3.1 Mobile Money Defined

Mobile money has been defined as the money stored using the SIM (subscriber identity

module) in a mobile phone as an identifier as opposed to an account number in

conventional banking. (UNCTAD 2012).

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Based on its functionality, Lachaal and Zhang (2012) define mobile money as it includes

all the various initiatives (long-distance remittance, micro-payments, and informal air-

time) aimed at bringing financial services to the unbanked, as well as convenience for the

banked, using mobile telephony technology. Generally, it is the system of using the

mobile phone to save, send and receive money, and to pay for and receive payment for

various transactions using mobile phones.

Further, UNCTAD (2012) mentions the players involved in the mobile money system as;

(a) The Mobile Network Operators that provide the mobile network and the customer

base that already use the mobile phones,

(b) A bank or other financial institution with banking license and infrastructure that

enables the exchange of money between different parties,

(c) Regulatory authority,

(d) An agent network of people, automatic teller machines and branches,

(e) Merchants and retailers, who accept mobile money payments in exchange for

different products and services,

(f) Businesses that utilize mobile money as a means to deliver their services,

(g) equipment manufacturers and platform providers include a wide array of stakeholders

like mobile phone makers, network equipment vendors as well as application providers,

and

(h) Mobile money users who are normally subscribers to an MNO are other services.

(UNCTAD 2012)

2.3.2 Mobile Money Services

UNCTAD (2012) declares three main categories of mobile money services being transfer,

mobile payment and mobile financial services.

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a) Mobile Money Transfer; this is also called Person to Person (P2P) transfer. It

involves transfer of money from one person to another without involving any

exchange of goods or services.

b) Mobile Money payments; this involves the mobile transfer of money in exchange of

the goods. This may also be called Person to Business transfer (P2B) and when

involving the business with another business it is called Business to Business (B2B)

transfer.

c) Mobile Financial Services; in this case the mobile money is connected with the bank

account to get the full range of banking and financial services such as saving, credit,

insurance and microfinance through mobile phone.

2.3.3 Mobile Money; the rapid acceptance

The rapid acceptance of the mobile money in East Africa and Tanzania in particular is

not the only wonder that the mobile money has done in the world; it is also known that

the mobile money has more warmly welcomed in Africa than in the West- a traditional

home of changes. ―Welcome to Africa, the home of mobile banking, until the west

catches up‖ writes the October 27th

The Times (2010) to mean and describe that the

mobile money technology has been welcomed with a wider and accelerating market

expansion in Africa more than anywhere else in the world.

The rapid adoption of the mobile money technology in Africa is associated with the rapid

adoption of mobile phones and widespread application of the mobile phones. (Alexandre

and Eisenhart 2013: Audiencescapes 2011). Africa showed quick adoption of the mobile

phones application. In 2000, the continent witnessed the 30% growth in mobile phone

users and up to 2012 it was forecasted that the mobile money subscribers would have

reached 735 million. Lachaal and Zhang (2012).

In Kenya, for example, Vodacom M-Pesa was introduced in April, 2007. Only 14 months

later, M-Pesa recorded 2.7 million users of M-Pesa and 3,000 agents. IFC (2010).

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2.3.4 Mobile Money in Tanzania

Vodacom was the first one to introduce the mobile money services in Tanzania through

the lunch of its M-Pesa in April, 2008 after a successful launch in Kenya a year earlier

(IFC 2010). Then Zantel with Z-Pesa, Tigo with its Tigo-Pesa and Airtel Tanzania with

its Airtel Money came in. (BOT 2011, BOT 2010, Bangens and Soderberg 2011 and

Alexandre and Eisenhart 2013).

Tanzania is not only among the first adopters of mobile money but also showed the quick

acceptance of the services. For example in June 2009, 14 months after the launch of M-

PESA in Tanzania, Vodacom announced that registrations had reached 280,000 users

who were transferring USD 5.5 million per month at about 930 agent locations (IFC

2010). Mobile money in Tanzania is taking shape amid a fast-growing market for mobile

communications in general. The International Telecommunications Union (ITU)

estimates that the number of mobile subscriptions in Tanzania more than doubled

between 2007 and 2009, from 8.3 million (20.2 subscriptions per 100 inhabitants) to 17.5

million (40 subscriptions per 100). Audiencescapes (2010) study also saw that the rate of

increasing of the mobile money application was overwhelmingly high. It was shown that

63% of the respondents answered they had started using mobile money for less than six

months. As at 31st August, 2011, Tanzania had 7 mobile network operators 2 of them

were mobile money platforms and 9.2 million mobile money subscribers which is equal

to 43.4% of all mobile money subscribers (UNCTAD 2012).

2.4 CONCEPTUAL FRAMEWORK.

While the access to banking services is determined by the accessibility of the banks

themselves, the income level of individual, education level and knowledge an individual

have on the importance and application of banks (Kunt and Klapper 2012), Pande et al

(2012)-things that that 56% of Tanzanians do not have (BOT 2010), mobile money

application is highly determined by access to mobile phones and Income often [is] not a

factor in usage of MM [mobile money] applications (Audience Scapes 2011).

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Access to mobile phones to rural and poor urban residents seems to be no problem in

Tanzania. Poverty did not hinder 78% of households and specifically 63% of individuals

to own mobile phones (Alexandre and Eisenhart 2013), it is shown that 55% of the

sample mobile phone adopters earn less than two US dollars a day and 20% earn between

2 and 4 US dollars a day at Purchasing Power Parity (Audience Scapes 2010).

Neither did the rural residence deny the population to access the mobile phones. It is

evidenced that 54% of the rural households have access to mobile phones, 54% use

mobile phones at least weekly and 53% own their own mobile phones (Audience Scapes

2010). Have the same trend been followed by the mobile money adoption? That could be

a different question to answer.

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CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Research Design

This study is about the contribution of mobile money into financial inclusion to the rural

and poor urban residents. Therefore, it is intended that, the data will be collected from the

rural residents, the urban dwellers, the mobile money service providers including agents

and the business operators.

The design for this study is induction. The researcher will empirically study the subject in

some districts of Mbeya region and generalize the outcomes for Tanzania as a whole.

3.2 Research Techniques

This is a social science study, so it is natural that, it will use a great deal of quantitative

techniques. However, due to the nature of the study itself, the qualitative technique will

also be applied.

3.2.1 Quantitative Techniques

The researcher intends to use the quantitative technique to measure all the empirical data

which is intended to be collected. The data will be collected in forms of questionnaires

and interviews to be analyzed and presented in the research report later.

3.2.2 Qualitative Technique

This approach will be used for information which cannot be mathematically presented.

The researcher expects to collects some observable information which the comparison

and sound judgment approach will be used to decide on them.

3.3 Population

This study focuses on two major groups that the researcher wants to measure the

contribution of mobile money into financial inclusion to them-the poor urban dwellers

and the rural residents. The population of this study therefore covers all rural residents

and poor urban residents in Mbeya region.

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3.3.1 Area of Study

The area of this study is divided into two. One, Mbeya urban areas whereby Mbeya City

will be used to represent all the urban areas in the region, and two, the rural areas

whereby one village will be used in each of the two Districts- Mbarali and Rungwe as

study area to cover for all Mbeya region‘s rural.

3.3.2 Unit of Inquiry

Persons will form a major unit of inquiry of this study. The urban poor persons and the

rural residents will be used as the correspondents of this study. Also, the representatives

of mobile money services providers and their agents along with some business enterprises

will form another part of the respondents.

3.4 Sampling Techniques.

For the population of this study is large and diverse, the specific sample will be taken to

represent the population. And for the comprehensiveness of the study and the divergence

of the area of study and its unit of inquiry, this study will not base on only one sample

technique and method. The sampling methods and size are explained in following

sections.

3.4.1 Sample Size

The whole study will have 100 people as sample of the rural and poor urban residents.

From the rural sides 50 persons will be used as a sample for all rural residents and from

the urban poor dwellers 50 persons will be used as a sample for poor urban dwellers.

The study will also need information from the mobile money platforms representatives.

For that case the study will choose four mobile money platform branches in Mbeya City,

and two in each of the two districts Mbarali and Rungwe- to have a sum of 8 platform

branches.

The study will need information from the mobile money agents. The sum of 16 agents

will be a sample, 10 in Mbeya City and 3 in each of Mbarali and Rungwe‘s chosen

villages to cover for agents who serve for rural areas.

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Business enterprises will be also needed. The sum of 16 business enterprises will be

needed as a sample for all Mbeya regional enterprises, 10 in Mbeya city and 3 in each of

Mbarali and Rungwe‘s chosen villages.

3.4.2 Sampling methods

The study will randomly choose 50 respondents in the two randomly chosen villages. The

random sampling is used in this method because this part focuses on the rural residents

and intends to avoid the complications of gender, age and income levels.

To get the respondents from the urban poor population the researcher will need to

identify the income status of the respondent-which is complicated task, to avoid that the

study will randomly choose the people from the poor working groups of the rural

dwellers. Therefore, the study will choose its 50 urban poor dwellers respondents

randomly from the groups of street worker and street peddlers who are easily accessible

and nobody will raise a question about how poor they are.

Regarding the business enterprises, the study will specifically choose those which accept

mobile money payments in both rural and urban areas. The mobile money services

argents will be randomly chosen everywhere. The researcher will choose four different

Main branches of the mobile money platforms in Mbeya City and the same thing will be

done to the other four in Mbarali and Rungwe although will be randomly selected.

3.5 Types of Data collected

The study requires both primary and secondary data, for that reason the researcher

intends to use both types for the data.

3.5.1 Primary Data

Primary data will be collected in forms of questionnaires from the 100 rural and poor

urban respondents. Observations and interviews will be used for the managers of the

business enterprises, and the mobile money agents.

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3.5.2 Secondary Data

Secondary data will be obtained from the reports, manuals and any other literatures found

with and recommended by the mobile platform branches, the agents and business

enterprises, the agents from mobile money services and the correspondents in the mobile

money platform branches.

5.6 Data Management and Analysis

Again, this is a social science study. The data collected will be empirically analyzed. The

Statistical Package for Social Science (SPSS) will be used to analyze and present the data

in standard scientific form.