The Effect of Mobile Money Services on Household Savings in Sub-Saharan Africa: A Case Study of Kenya and Ghana

Abstract

Financial inclusion is a critical driver of economic development. This paper examines the impact of mobile money services on household savings behavior in Sub-Saharan Africa, focusing on Kenya and Ghana. Using a difference-in-differences methodology on panel data from the World Bank's Global Findex database, the study analyzes savings patterns of households with and without access to mobile money accounts. The findings indicate a significant positive correlation between mobile money adoption and increased formal savings. The effect is more pronounced among low-income and rural households, who often lack access to traditional banking infrastructure. The research also finds that mobile money facilitates informal savings by providing a secure and convenient platform, reducing the temptation for immediate consumption. The study concludes that promoting mobile money ecosystems can be a powerful tool for poverty reduction and economic empowerment. It recommends that policymakers focus on reducing transaction costs and enhancing digital literacy to maximize these benefits.