East Africa mobile money forum

Mobile money is revolutionising retail banking in East Africa. In Kenya, nine out of ten adults now have a mobile money account, whereas a few years ago the bulk of the population had no access to formal financial services or a bank account. Because mobile money transactions now amount to a nearly a third of GDP, this financial innovation raises serious macroeconomic questions. For instance, is it likely that the increase in financial intermediation will raise economic growth? Will inflation dynamics be affected by a change in the velocity of money due to this new technology? Are there structural economic implications from the close linking of the financial and telecommunications sectors? In addition to increasing financial inclusion, mobile money is re-shaping the banking and telecommunications markets. Given the truly novel nature of these services and their rapid expansion, the impact of mobile money on the economy is only starting to be understood. Macroeconomic management, financial stability, industrial organization and regulatory policy will all have to adjust in the face of mobile money’s rise.

The objective of this workshop was to provide an integrated perspective on the impact of mobile money on the macro economy. Leading academics and industry practitioners met in Kampala to discuss the impact of mobile money on the economy. The impetus for this event came from Bill & Melinda Gates Foundation funding for research in the macroeconomics of mobile money. The morning session surveyed the literature and presented micro-level studies, which reflected much of the work that has been done in the field. The second session focused on macroeconomic and monetary policy topics. After work on the impact of mobile money on inflation was investigated, a paper on the general equilibrium effects of mobile money in a small open economy was presented. Here as before, two presentations were followed by a discussant’s remarks as well as questions and answers.

Around 100 attendees attended from relevant government institutions, the private sector and academia.