Mobile Money Services as a Panacea to Financial Inclusion in Sub-Saharan Africa: The Case of Uganda

Background

After the 1970s, a number of Sub-Saharan African countries have been enjoying an extended period of strong economic growth (Mlachila, 2013). The mid 1980s saw sweeping reforms in the financial section in many Sub-Saharan countries as part of the World Bank Structural Adjustment Policies, popularly known as SAP. These sweeping reforms were aimed at restructuring and privatizing state-controlled banks and other government parastatals. SAP was accompanied by supplementary policies that eased entry and exit restrictions, interest and capital controls, as well as the overhaul of supervisory and regulatory frameworks in the banking sector (Nyantakyi & Sy, 2015). While SAP registered some success, it is evident that the overall economic benefits of the program in Sub-Saharan countries continues to be debated among experts (Nyantakyi & Sy, 2015). This strong economic performance as a result of SAP has not necessarily caused a significant decrease in poverty levels or substantial improvement in the majority of livelihoods. Falling living standards and macroeconomic instability is still evident in many Sub-Saharan African Countries (Ryan & Tsunemine, 2016; Mlachila, 2013). For economic growth and development to be stable, it has to be socially and politically viable, meaning- it has to be inclusive of all (Ryan & Tsunemine, 2016). One of the most important components for an inclusive sustainable economic growth and development is access to financial services, or commonly referred to as financial inclusion (Ryan & Tsunemine, 2016). Financial experts observe that universal access to financial services (financial inclusion) is integral to the economic and social development, and that financial exclusion is a leading cause of extreme poverty and a key barrier to growth (Ryan & Tsunemine, 2016; Nyantakyi & Sy, 2015). Financial inclusion can be understood as the population’s access to financial services such as savings and credit, it is an extremely important factor for an all-inclusive economic growth and development (Paelo, 2016; GSMA, 2015).