The Effect of Mobile Money Uses on Rudimentary Financial Literacy in Tanzania

Abstract

Understanding the relationship between mobile money financial services and rudimentary financial literacy could greatly inform strategies towards the improvement of financial services. This paper examines the effect of mobile money financial services on the rudimentary financial literacy of household members in Mbeya and Dodoma regions.  The study specifically intended to jointly model the prevalence of mobile money financial services and rudimentary financial literacy by employing the bivariate probit regression model. A questionnaire was used to obtain data from 384 household members aged at least 18 years who were engaged in economic activities in 2018. The results show that age, education and distance to the mobile money financial service providers are among the factors that explain the joint relationship between the use of mobile money financial services and rudimentary financial literacy. Rudimentary financial illiteracy on the use of mobile money was found to be higher in rural compared to urban areas. The results further revealed that people with active mobile money accounts had a greater chance of being financially literate than those with dormant mobile money accounts. It is recommended that more education should be provided to wake up people’s minds because what they know about mobile money financial services is not enough to make them financially literate on mobile money use as to facilitate their economic activities.