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Macroeconomic Effects of Mobile Money in Uganda

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  • Mawejje, Joseph
  • Lakuma, E. C. Paul

Abstract

This paper examines the effects of mobile money, a rather new innovation in Uganda’s financial sector landscape on aggregate economic activity and other macroeconomic variables. We first estimate the long-run effect of mobile money deposits and value of transactions on monetary aggregates using vector error correction (VEC) techniques. We then estimate the short-term effects of mobile money on selected macroeconomic variables using Structural Vector Autoregressive (SVAR) methods. Results show modest macroeconomic impacts: mobile money has moderate positive effects on monetary aggregates, the consumer price index, and private sector credit. Mobile money deposits do respond to changes in monetary policy instruments, signalling possible ameliorating effects for the conduct of monetary policy. These results provide evidence for policy makers to continue supporting the growth of mobile money platforms. In particular, policy makers should provide the policy and regulatory framework through which mobile money balances can become interest-bearing assets, as this will further strengthen the monetary policy transmission mechanism.

Suggested Citation

  • Mawejje, Joseph & Lakuma, E. C. Paul, 2017. "Macroeconomic Effects of Mobile Money in Uganda," Research Series 260017, Economic Policy Research Centre (EPRC).
    • Handle: RePEc:ags:eprcrs:260017
    DOI: 10.22004/ag.econ.260017
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    Cited by:

    1. Lorna Katusiime, 2021. "COVID 19 and Bank Profitability in Low Income Countries: The Case of Uganda," JRFM, MDPI, vol. 14(12), pages 1-19, December.
    2. Samuel Orekoya, Phd, . "Impact Of Mobile Money On Prices And Output In Nigeria," Journal of Economic and Sustainable Growth 1, Office Of The Chief Economist, Development Bank of Nigeria.
    3. Lorna Katusiime, 2021. "Mobile Money Use: The Impact of Macroeconomic Policy and Regulation," Economies, MDPI, vol. 9(2), pages 1-19, April.
    4. Lakuma, Corti Paul & Katunze, Miraim & Nagawa, Maria & Mawejje, Joseph & Lwanga, Musa & Mbowa, Swaibu & Shinyekwa, Isaac, 2017. "Country Reviews of Capacity Development: The Case of Uganda," Occasional Papers 257819, Economic Policy Research Centre (EPRC).

    More about this item

    Keywords

    Community/Rural/Urban Development; Demand and Price Analysis; Financial Economics; Public Economics; Resource /Energy Economics and Policy; Risk and Uncertainty;
    All these keywords.

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