Adoption and use of mobile banking by low‐income individuals in Senegal

• Author: Al‐Mouksit Akim,Luis Orozco,François Seck Fall
• DOI: http://doi.org/10.1111/rode.12658
• Published date: 01 May 2020
• Date: 01 May 2020

Rev Dev Econ. 2020;24:569–588. wileyonlinelibrary.com/journal/rode

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569

© 2020 John Wiley & Sons Ltd

DOI: 10.1111/rode.12658

REGULAR ARTICLE

Adoption and use of mobile banking by low-income

individuals in Senegal

François SeckFall1

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LuisOrozco1

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Al-MouksitAkim2,3,4

1LEREPS, Université de Toulouse,

Toulouse, France

2World Bank, Washington, DC, USA

3IRD, LEDa, UMR [225], DIAL, Paris,

France

4CARDES, Ouagadougou, Burkina Faso

Correspondence

Luis Orozco, LEREPS, Université de

Toulouse, UT2J, 21 allée de Brienne,

31042 Toulouse, France.

Email: luis.orozco@univ-tlse2.fr

Funding information

SIRCA, Nanyang Technology University

Abstract

The wide use of mobile phones increases low-income in-

dividuals’ access to a large range of services. One of these

services is mobile banking (m-banking). Today, m-banking

represents a key vector of financial inclusion in many coun-

tries in sub-Saharan Africa, especially Senegal. Based on

technology adoption theories applied to households in de-

veloping countries, this paper studies the determinants of

the adoption and use of m-banking. We distinguish between

possession or adoption and actual use of m-banking and ex-

amine the interdependence between these two decisions by

using the Heckman sample selection model, through a sam-

ple of 1,052 individuals in the suburbs of Dakar. Our main

results are that the two decisions (adoption and use) are not

independent of each other. Individual characteristics, such

as education, possession of a bank account, and family net-

work effects, are determinants of the adoption, and age,

gender, and being a member of a tontine are determinants of

the use. A major result of this study concerns women’s low

propensity to adopt m-banking because of their low levels

of education. However, compared with men, when women

adopt m-banking, they have a stronger propensity to use it.

KEYWORDS

financial inclusion, individual characteristics, mobile banking, mobile

technologies, Senegal, technology adoption

JEL CLASSIFICATION

C83; D14; O12; O33; O55

570

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FALL et AL.

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INTRODUCTION

The rapid growth and adoption rate of mobile phones in developing countries, especially Africa,

has resulted in an exponential increase in mobile services (Aker, Boumnijel, Mcclelland, & Tierney,

2016; Baptista & Oliveira, 2016; Demirgüç-Kunt, Klapper, Singer, & Van Oudheusden, 2015;

Donner, 2008; Suri & Jack, 2016; Van Der Boor, Oliveira, & Veloso, 2014). Developing countries

have experienced different diffusion paths of mobile phones, which are considered a leapfrogging

technology (Antonelli, 1991; James, 2009; Rama & Wilkinson, 2013; Steinmueller, 2001). The

adoption rate of mobile phones among the population in sub-Saharan Africa in 2015 was 76.1%

(99.9% in Senegal) compared with 19% of Internet users (21.7%) and 1% of fixed telephone sub-

scribers (2.2%).1

In addition, approximately 14% of the population in sub-Saharan Africa and 6% of

that in Senegal use mobile banking (m-banking). Formal accounts in financial institutions are held

by 29% of the population in sub-Saharan Africa, and the rate is 11.9% in Senegal2

(see Figures A1

and A2 in Appendix A).

The wide use of mobile phones increases low-income households’ access to a large range of ser-

vices (Aker et al., 2016; Mishra & Bisht, 2013; Warren, 2007). One of these services is m-banking.

Today, m-banking represents a key vector of financial inclusion in many countries in sub-Saharan

Africa (Baptista & Oliveira, 2015; Chaix & Torre, 2015; Fall, Ky, & Birba, 2015; Jack & Suri, 2014;

Mishra & Bisht, 2013; Shem, Odongo, & Were, 2017). Academic researchers have just started to an-

alyze the role of m-banking in today’s economy. For example, there is no consensus in the definition

of m-banking between the North and the South. In industrialized countries, m-banking refers to an

extension of banking and financial services provided on mobile phones by financial institutions (H.

Lee, Harindranath, Oh, & Kim, 2015; Shaikh, Karjaluoto, & Chinje, 2015), By contrast, in develop-

ing countries, m-banking is a broader form of banking that includes, for example, payment services

called m-payments (mobile remote payments), transfer of funds, and deposits (Fall et al., 2015; Jack

& Suri, 2011). In this paper, we define m-banking as a platform accessed by mobile phones to make

payments, transfer funds, make deposits (withdrawals are unnecessary), and borrow money (over-

draft allowed).

In Senegal, as in many sub-Saharan countries, mobile/telecom operators are the main drivers

of m-banking. The most used m-banking service in Senegal is Orange Money, which is a product

of Sonatel-Orange, the largest mobile operator in the country. Based on M-Pesa in Kenya, Orange

Money is essentially dedicated to making payments, transferring funds, and charging phone credit,

but is increasingly related to financial services such as savings and credit. Orange Money is avail-

able only to customers of Orange, who can make deposits, withdrawals, and transfers with and

between other Orange Money customers, and payments for services such as telephone, water, and

electricity.3

The other major m-banking platform is Yoban’tel, which was introduced in 2010,

sometime after Orange Money. This second platform was introduced by SGBS Bank (Société

Générale de Banques du Sénégal) in collaboration with CMS (Crédit Mutuel du Sénégal), one of

the largest microfinance networks in the country, and Tigo, the second-largest mobile operator

in Senegal. Unlike Orange Money, all customers can access Yoban’tel regardless of the mobile

operator they use.4

This paper explores the determinants of the adoption and use of m-banking in Senegal and con-

tributes to m-banking literature by filling some of its gaps. First, we investigate adoption because col-

lecting detailed data on the adoption process is difficult. This difficulty is why most researchers have

implicitly assumed that adoption refers to use. We distinguish between adoption (opening an m-bank-

ing account) from actual use (making payments, transferring funds, saving or borrowing money). Such

differences have been studied in the information and communications technology (ICT) literature