Is Promoting Mobile Money Usage Consistent With Restricting Access to Phone Communication?: An Analysis of Direct and Indirect Network Effects in Mobile Money Adoption in Burkina Faso

To increase financial inclusion in Africa, many governments are promoting mobile money usage. But at the same time, despite efforts, relatively high costs characterize traditional mobile phone communication (calls, text messages, internet access, social media, etc.). Also, non‐price barriers like restricted access to internet or low national coverage rate of mobile communication signal may have led many people to have difficult access to traditional mobile phone communication. In this paper, we investigate the role of indirect (traditional phone communication network) and direct (mobile money network) network effects on mobile money adoption in Burkina Faso. We use FinScope data and a recursive multivariate probit model to find that, in Burkina Faso, mobile money services benefit more from the indirect network effects than the direct network effects. In other words, it is inconsistent to impose large taxes and fees on phone communication or to limit access to internet, messaging apps and social media, while promoting mobile money adoption.