Mobile Technology and Access to Financial Services in Karamoja, Uganda

Abstract

Access to financial services for the rural poor around the world has become a large development issue, recognized by institutions such as the UN and the World Bank. Having access to financial services such as savings accounts and cheap money transfers has proven to improve the economy of households as well as their ability to cope with emergencies and different kinds of shocks. The mobile phone is increasingly used as a tool for accessing basic financial services, especially in sub-Saharan Africa, and is believed to be a tool for bringing access to finance for the poor and remote populations. This paper investigates the extent of mobile financial services usage, barriers to mobile financial services adoption as well as the perception of mobile financial services usefulness in three sites in Karamoja region, which is one of the least developed and most marginalised parts of Uganda. The aim is to assess whether mobile financial services can be a viable means for financial inclusion in Karamoja, Uganda, by comparing the usage between different geographical settings as well as among people with different social characteristics and backgrounds. The results show that the mobile financial services was to a high extent adopted and found useful in urban and semi-urban locations while the adoption was low in the rural location due to economic, geographical and educational barriers as well as the fact that mobile financial services was still an unknown phenomenon to many. The results point to the limitations of mobile financial services in providing the most remotely located and low-income populations with access to finance, however findings also indicate that there is a future potential for its spread due to an interest in acquiring phones and mobile financial services use.