An investigation into the impact of mobile money transactions on economic growth in Zambia

Abstract

Motivation: The study investigates the impact of mobile money onZambia's economic growth, noting its widespread use in sub-SaharanAfrica. It seeks to clarify whether mobile money directly influencesgross domestic product (GDP) or whether other factors are moresignificant.Purpose: This study investigates how mobile money paymentsaffect Zambia's GDP growth from 2012 to 2024, including keymacroeconomic variables for a comprehensive view.Approach and Methods: It uses a quantitative time-series approachwith annual data from 2012 to 2024 (N = 13 observations) sourcedfrom the World Bank World Development Indicators (World Bank,n.d.) and Bank of Zambia Payment Systems Statistics. Analysis wasconducted using Stata software employing Prais–Winsten regressionto address autocorrelation in the small-N dataset.Findings: The findings show that mobile money payments, despiteincreasing use, had no impact on GDP growth. Direct credits supportedgrowth by aiding investment and business, whereas direct debits hurtgrowth, probably due to lower disposable income or money leavingthe economy. Inflation hampers growth by reducing purchasing powerand investment. The labour-force participation rate also negativelyaffects GDP, indicating challenges in Zambia's labour market. Theseresults, while robust to diagnostic tests, are interpreted cautiouslydue to the implications for statistical power of the small sample size.Policy Implications: The findings emphasize the need for policies topromote mobile money payments, improve credit systems, and curbinflation. For mobile money to foster growth, its expansion requiresinstitutional, regulatory, and infrastructure development.