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2024 | OriginalPaper | Chapter

21. Micro- and Macro-economic Factors of Mobile Money Adoption in the Middle East and North Africa

Author : Dimitrios Reppas

Published in: Financial Inclusion

Publisher: Springer Nature Switzerland

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Abstract

For the past decade, Mobile Money (MM) systems have become very popular in low- and middle-income countries, particularly in sub-Saharan Africa, and have transformed millions of lives by advancing financial inclusion, as required by SDG 8.10. Adoption continues upward within the Middle East and North Africa region (MENA), possibly due to the recent COVID-19 pandemic. Overall, the MM industry has shown remarkable recent growth in MENA, with the fastest global growth in 2021. Nevertheless, adoption rates remain low compared to other regions globally and vary considerably across MENA countries. This chapter sheds novel and much-needed light on a relatively understudied topic: the micro- and macroeconomic determinants for adopting MM systems in the MENA region. To do so, it summarizes the main findings from the existing theoretical and empirical literature, most of which have focused on African countries. This systematic literature review aims to assist researchers in designing future quantitative studies on MM.

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previous chapter Nexus Between Financial Inclusion and Economic Activity: A Study About Traditional and Non-Traditional Financial Service Indicators Determining Financial Outreach

next chapter UN SDG Indicators 8.10 for Measuring Financial Inclusion: An Assessment

Nevertheless, contrary to the practice of the formal banking system, interest is paid on deposits or savings of e-money. Also, payment services linked to a traditional banking product or credit card (such as Apple Pay, Google Pay, and Samsung Pay) are not considered MM transactions.

GSMA (https://www.gsma.com/) is an industry organization that represents the interests of MNOs worldwide.

Accessible from https://data.imf.org/?sk=E5DCAB7E-A5CA-4892-A6EA-598B5463A34C

Also, a similar picture emerges by comparing IMF’s data referring to “active” accounts rather than “registered” accounts (“Active” means that the account has been used to perform at least one transaction during the 90 days prior to the end of December for the year indicated).

Note that Fig. 21.4 does not even include Africa’s “big players” (such as Kenya, Uganda, and Zambia). If the latter were included, the differences (with the MENA countries) would have been even more significant: Kenya and Zambia fall in the region of 50 K transactions, while Uganda is well above 100 K!

Similarly, for other indicators of the formal banking system, such as “the number of ATMs per 100 K adults.”

Most refugees in Jordan are not allowed to open a bank account; nevertheless, they can get a Jordanian SIM card (and therefore access to MM services) through their passport or some other residency permit (GSMA, 2020c).

Info is available from: https://www.centerforfinancialinclusion.org/mobile-money-in-times-of-crisis-an-unlikely-hero

For instance, Economides and Jeziorski (2017) find that MM has succeeded in areas with high criminality, that is, where holding cash is risky and mainstream banking services are unavailable.

https://www.gsma.com/mobilefordevelopment/resources/the-mobile-money-regulatory-index-2/

http://info.worldbank.org/governance/wgi/

https://www.heritage.org/index/

For instance, new 5G networks were launched (in 2020) in Oman (Ooredoo), Bahrain (Zain), and Israel (Pelephone). Additionally, Ooredoo reported that its 5G mobile network coverage had expanded to more than 90% of the country’s populated areas in Qatar; Zain in Saudi Arabia has increased its 5G footprint to 38 cities; Etisalat in the UAE stated that it anticipates having 5G networks in place throughout the entire nation by the end of 2025 (GSMA, 2020a); and 5G activities should pick up in MENA nations outside of the GCC (where they are currently in a trial phase in Egypt, Iran, and Morocco).

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GSMA. (2020a). The mobile economy in the Middle East and North Africa 2020. Available from: https://www.gsma.com/mobileeconomy/wp-content/uploads/2020/11/GSMA_MobileEconomy2020_MENA.pdf

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GSMA. (2020c). Humanitarian cash and voucher assistance in Jordan: A gateway to mobile financial services. Available from: https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2020/01/Jordan_Mobile_Money_CVA_Case_Study_Web_Spreads.pdf

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Title: Micro- and Macro-economic Factors of Mobile Money Adoption in the Middle East and North Africa
Author: Dimitrios Reppas
Publisher: Springer Nature Switzerland
Book: Financial Inclusion
Print ISBN: 978-3-031-68802-7

Electronic ISBN: 978-3-031-68803-4

Copyright Year: 2024
DOI: https://doi.org/10.1007/978-3-031-68803-4_21

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