Mobile money, traditional financial services and firm productivity in Africa

M. Konte*, G.K. Tetteh

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review


Despite the successful adoption of mobile money in sub-Saharan Africa, there is limited empirical evidence on how mobile money interacts with traditional financial services and the implications of this interaction for firm performance. In this paper, we investigate the effects of mobile money use and access to traditional financial services on labour productivity and test whether mobile money can accentuate the impact of traditional financial services on productivity. Using firm-level data from the World Bank Enterprise Survey across 14 sub-Saharan African countries, we find a significant effect of access to traditional financial services on firm labour productivity but no robust significant direct effect of mobile money use on labour productivity. However, when access to traditional financial services, particularly access to bank capital, is combined with mobile money, there is a productivity improvement. We find similar evidence in the sample of small and medium-sized enterprises. The productivity gain from combining mobile money use with traditional financial service is also found within firms from East Africa and especially firms from other regions where mobile money is emerging, but uptake is relatively low. Overall, the evidence suggests that mobile money can heighten the effects of traditional finance, and we attribute this effect to a reduction in transaction costs. The findings in this paper support that both mobile money and traditional financial services should be promoted at the firm level.Plain English Summary Mobile money heightens the effect of traditional finance on firm performance. Based on firm-level data across 14 countries in sub-Saharan Africa, we find that mobile money has no statistically significant effect on labour productivity, but when it is used in combination with traditional financial services such as bank capital and accounts, then there is a productivity improvement, including in countries where mobile money adoption is relatively low. The evidence implies that mobile money can help formal firms derive maximum benefits from traditional financial services due to its potential to reduce transaction costs. Therefore, the use of both mobile money and traditional financial services should be encouraged among formal firms.
Original languageEnglish
Pages (from-to)745-769
Number of pages25
JournalSmall Business Economics
Issue number2
Early online date11 Apr 2022
Publication statusPublished - Feb 2023


  • Mobile money
  • Financial innovation
  • Traditional finance
  • Labour productivity
  • Africa


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