📈 economics

The Role of Mobile Money Services in Enhancing Financial Inclusion Among Low-Income Communities in Mogadishu, Somalia

Despite widespread usage in Mogadishu, this quantitative study finds that mobile money services alone do not significantly enhance financial inclusion among low-income communities, suggesting that structural and behavioral factors like financial literacy, trust, and income stability are more critical drivers.

Original authors: Ali Abdi Yusuf, Abdisamad Yusuf Mohamud

Published 2026-07-14

📖 4 min read☕ Coffee break read

CC BY 4.0

Original authors: Ali Abdi Yusuf, Abdisamad Yusuf Mohamud

Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). ✨ This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer

Imagine you're trying to unlock a treasure chest full of financial freedom. For a long time, people in Mogadishu, Somalia, thought the key to this chest was a magical phone app called "Mobile Money." The idea was simple: if you could just make the app easy to find (accessibility), cheap to use (affordability), and always working without crashing (reliability), then everyone, especially the low-income folks, would suddenly be financially included and thriving.

But here's the plot twist: a team of researchers from Somaville University decided to test this theory with 200 real people in Mogadishu. They didn't just guess; they asked questions, crunched numbers using a powerful computer program called SPSS, and looked for a direct link between having a good phone money service and actually being financially included.

The Big Surprise
The results? The magic key didn't seem to work the way everyone hoped. The study found that even though people could use mobile money, and it was often easy and cheap, these factors did not have a statistically significant effect on financial inclusion.

Think of it like this: Imagine you have a perfectly smooth, free, and super-fast slide in your backyard. You'd think everyone would slide down it and have a blast, right? But in this case, the researchers found that just having the slide didn't mean people were actually having fun or getting to the bottom. The slide (mobile money) was there, but it wasn't the main reason people were (or weren't) enjoying the ride.

What the Numbers Say
The researchers were very specific with their data. They looked at 200 people, mostly young adults between 18 and 35 years old, with a mix of education levels and mostly low incomes. When they ran the math:

The connection between how easy it was to use the service and financial inclusion was incredibly weak (a correlation of just 0.069).
The connection between how cheap and reliable the service was and financial inclusion was practically non-existent (a correlation of -0.013).
In fact, the whole model they built to explain this only accounted for 0.7% of the difference in financial inclusion. That's like trying to explain why a car is moving by looking at the color of the paint; it's just not the right tool for the job.

The study explicitly argues against the idea that simply making mobile money accessible, affordable, and reliable is enough to solve the problem of financial exclusion in Mogadishu. The data suggests that these service features alone are not the "magic bullet" many hoped they were.

So, What's Actually Holding the Door Shut?
If the phone app isn't the main key, what is? The researchers suggest that the real locks on the treasure chest are things like:

Financial Literacy: Do people actually know how to use the money tools to save or build wealth, or are they just using them to send cash to friends?
Trust: Do people believe the system won't disappear or get hacked?
Income Stability: Do people have enough steady money coming in to even think about saving?
Integration: Is the phone money connected to real banks that can offer loans or insurance?

The study suggests that while mobile money is widely used for simple tasks like sending money or paying bills, it hasn't yet transformed into a full financial system for the poor in Mogadishu. It's like having a bicycle that's great for short trips, but it won't get you across the ocean unless you also have a boat, a map, and the skills to sail.

The Takeaway
The authors conclude that we need to stop thinking that just fixing the phone app will fix the economy. Instead, they recommend focusing on teaching people about money, building trust in the system, and connecting these phone services to real banks. Until those other pieces are in place, the "magic key" of mobile money might just be a very shiny, very useful, but ultimately incomplete tool for unlocking true financial freedom in Mogadishu.

Technical Summary: The Role of Mobile Money Services in Enhancing Financial Inclusion Among Low-Income Communities in Mogadishu, Somalia

Problem Statement
Despite the widespread adoption of mobile money services in Somalia, particularly in Mogadishu, where formal banking infrastructure is weak or absent, there is limited empirical evidence regarding their actual impact on financial inclusion for low-income populations. While mobile money is often marketed as a transformative tool for economic growth and poverty reduction, existing literature suggests a gap between basic transactional access and meaningful financial inclusion (access to credit, savings, and insurance). The study addresses the uncertainty surrounding whether mobile money services alone can drive financial inclusion in fragile, under-regulated environments like Somalia, or if structural and behavioral barriers prevent such outcomes.

Methodology
The research employed a quantitative, correlational research design to examine the relationship between mobile money service attributes and financial inclusion.

Sample: The study utilized a sample of 200 respondents from Mogadishu, comprising low-income residents, small business owners, and active mobile money users. Participants were selected via simple random sampling to ensure representativeness.
Data Collection: Primary data was gathered using a structured questionnaire with closed-ended questions based on a five-point Likert scale. The instrument measured three independent variables: Accessibility (agent proximity, registration ease, network coverage), Affordability (transaction fees), and Reliability (system stability, speed, error rates). The dependent variable was the Level of Financial Inclusion.
Analysis: Data were analyzed using the Statistical Package for the Social Sciences (SPSS). The study applied descriptive statistics (mean, standard deviation) and inferential statistics, specifically Pearson correlation and multiple regression analysis, to determine the strength and significance of the relationships between the variables.
Theoretical Framework: The study was grounded in the Financial Inclusion Theory (focusing on access to services for economic well-being) and the Technology Acceptance Model (TAM) (focusing on perceived usefulness and ease of use).

Key Results
The empirical findings challenge the assumption that mobile money service attributes directly drive financial inclusion in this context:

Descriptive Statistics: Respondents generally perceived mobile money services as accessible (Mean scores ranging from 3.76 to 3.97) and relatively affordable and reliable (Mean scores ranging from 3.03 to 4.21), with high consensus on network coverage and agent proximity.
Correlation Analysis: The analysis revealed weak and statistically insignificant correlations between the independent variables and financial inclusion.
- Accessibility: Pearson correlation ( $r = .069$ , $p = .404$ ) indicated no significant relationship.
- Affordability and Reliability: Pearson correlation ( $r = -.013$ , $p = .878$ ) indicated no significant relationship.
Regression Analysis: The regression model demonstrated extremely low explanatory power.
- The coefficient of determination ( $R^2$ ) was 0.007, meaning mobile money service factors explained only 0.7% of the variance in financial inclusion.
- The Adjusted $R^2$ was negative (-.007), and the overall model was not statistically significant ( $F = 0.500$ , $p = 0.608$ ).
- Individual coefficients for Accessibility ( $p = 0.325$ ) and Affordability/Reliability ( $p = 0.584$ ) were not statistically significant predictors.

Key Contributions

Theoretical Contribution: The study extends the application of Financial Inclusion Theory and TAM to a fragile-state context (Somalia). It suggests that in such environments, the standard assumptions of these models—that access and perceived ease of use automatically lead to financial inclusion—may not hold true without accounting for contextual structural factors.
Empirical Contribution: The paper provides specific empirical evidence from Mogadishu indicating that high usage and accessibility of mobile money do not necessarily translate to deeper financial inclusion. It highlights that in low-income, weak-state settings, service attributes (access, cost, reliability) are insufficient determinants of inclusion outcomes.

Significance and Claims
The paper claims that while mobile money is ubiquitous in Mogadishu, it currently functions primarily as a transactional tool rather than a comprehensive system for financial inclusion. The study concludes that accessibility, affordability, and reliability alone are not the main drivers of financial inclusion for low-income communities in this context.

Instead, the authors posit that structural and behavioral factors—specifically financial literacy, income stability, trust in the financial system, and integration with formal financial institutions—play a more critical role. The paper argues that policy interventions must move beyond simply improving service delivery metrics and should focus on:

Fortifying financial literacy initiatives.
Establishing trust through better regulatory standards and consumer protection.
Integrating mobile money platforms with formal banking institutions to facilitate access to higher-order services like credit, savings, and insurance.

The study does not claim that mobile money is ineffective, but rather that it is insufficient on its own to achieve meaningful financial inclusion in the specific socio-economic and regulatory environment of Mogadishu.

Technical Summary: The Role of Mobile Money Services in Enhancing Financial Inclusion Among Low-Income Communities in Mogadishu, Somalia

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