ASSESSING FACTORS AFFECTING MOBILE MONEY TRANSACTIONS: THE CASE OF

AIRTEL MONEY

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Table of Contents
CHAPTER ONE: INTRODUCTION..............................................................................................1
1. Introduction..............................................................................................................................1
1.1. Background of mobile money..............................................................................................1
1.2. Mobile money in Malawi......................................................................................................2
1.3. Regulation of mobile money................................................................................................3
1.4. Malawi`s financial system....................................................................................................3
1.5. Problem statement................................................................................................................4
1.6. Main objective......................................................................................................................5
1.7. Specific objectives................................................................................................................5
1.8. Research questions................................................................................................................5
1.9. Significance of the study......................................................................................................5
CHAPTER TWO: LITERATURE REVIEW..................................................................................6
2. Introduction..............................................................................................................................6
2.1. Empirical review...................................................................................................................6
2.1.1. Understanding of mobile money transactions...................................................................6
2.1.2. Factors influencing the use of mobile money transactions...............................................6
2.1.3. Challenges of mobile money transactions........................................................................6
2.2. Theoretical review................................................................................................................6
2.3. Conceptual framework..........................................................................................................6
CHAPTER THREE: METHODOLOGY........................................................................................7
Introduction......................................................................................................................................7
Area of study....................................................................................................................................7
Participants......................................................................................................................................7

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 CHAPTER ONE: INTRODUCTION

1. Introduction

1.1. Background of mobile money

Mobile money was initially made popular by Safaricom and Vodafone’s M-Pesa (“M” for
“mobile”, “pesa” for “money” in Swahili) in Kenya, which started in 2007. The M-Pesa
application is installed on the SIM cards of customers and works on all handset brands. It is free
to register and the user does not need to have a bank account. Safaricom receives fees for
withdrawals and transfers, but keeps deposits into the mobile wallets free. The transfer service
was quickly picked up for use as an informal savings account system and electronic payment
mechanism for bills, goods and services. Mobile money services have spread rapidly in many
developing countries. However, only a handful of these initatves have reached a sustainable
scale, in partcular GCASH and Smart Money in the Philippines; Wizzit, MTN Mobile Money
and FNB in South Africa; MTN Mobile Money in Uganda; Vodacom M-PESA and Airtel in
Tanzania; Celpay Holdings in Zambia and MTN Mobile Money, Orange Money in Côte d’Ivoire
(Subia & Martnez, 2014).
Money Transfer is a technology that was to create a service which allowed microfinance
borrowers to conveniently receive and repay loans using the mobile phone. This would enable
microfinance institutions (MFIs) to offer more competitive loan rates to their users, as there is a
reduced cost of dealing in cash. The users of the service would gain through being able to track
their finances more easily. But when the service was trialed, customers adopted the service for a
variety of alternative uses; complications arose with Faulu, the partnering microfinance
institution (MFI)Hughes, N., & Lonie, S. (2007).
Mobile money describes the use of mobile phones to pay bills, remit funds, deposit cash, and
make withdrawals using e-money issued by banks and non-bank providers such as
telecommunication companies. This service currently exists in over 80 developing countries and
is growing rapidly,
particularly in Africa. It is enabling many people without access to financial services, known as
the unbanked that is to access an increasing range of financial services, from payments, to
savings and loans. Mobile money enables customers to use e-money, which is issued by an ‘e-
money issuer` which is usually a telecommunication company but sometimes a bank. While
precise terminology tends to vary across countries and literature, e-money is typically defined as
a type of stored value instrument or product that: is issued on receipt of funds; consists of
electronically recorded value stored on a device such as a server, card, or mobile phone; may be
accepted as a means of payment by parties other than the issuer; and is convertible back into cash
(Buckley, et al., 2015).
The concepts of stored value and convertibility distinguish e-money from credit cards, retail gift
cards, airtime, and other payment instruments that are not readily convertible. Customers can
make payments and transfers by sending short message service (SMS) mobile notifications to
each other. E-money accounts are credited when e-money is received from others and debited

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when payments are made. Customers convert their cash for e-money at cash merchants, which
tend to be retail outlets such as shops and petrol stations. These customers can then use this e-
money to make payments to each other and can later convert any remaining balance on their e-
money account for cash (Lyman, et al., 2008). Today mobile revolution is sweeping the world
and this is evidenced by the fact that there are over 2 billion people having cell phones in a world
where over 2.5 billion do not have bank accounts (Penn. M, 2011). Due to its convenience today,
the service has spanned through to at least 89 countries around the world with a total of 255
mobile money services in operation (MFS report, 2014).

1.2. Mobile money in Malawi

Malawi has seen an exponential surge in mobile phone users, with two dominant mobile network
operators, TNM and Airtel. Airtel and TNM have launched Airtel Money and TNM Mpamba.
Both have strong parallels with the M-Pesa, a mobile money service provided in Kenya by
Safaricom. All these have been built on the already existing telecommunication platform
(Madise, 2014), the focus is on airtel money.
Airtel Malawi launched Airtel mobile money in March 2012 as a mobile-based payment service
targeting the un-banked, pre-pay mobile subscribers. The service comprises a simple registration
process to set-up a customer’s new Airtel money account into which they can deposit and
withdraw cash at a large number of Airtel’s re-seller airtime distribution agents. Making a
deposit is a similar process to topping up their airtime prepay balance: the account identifier is
the mobile phone number and the customer goes to the very same place that they would go to
buy airtime. There the similarity ends; the Airtel money account is entirely separate to the pre-
pay airtime credit. Once registered,the customer can send funds to any other phone number, on
any network (Nardi & Steve, 2000). The receiver gets a text message that can be taken to a re-
seller agent and, cashed in, enabling person-to-person money transfer instantly over large
distances. A customer can also use their Airtel money account balance to buy goods and
services.
Airtel money is a branchless banking service, meaning that it is designed to enable users to
complete basic banking transactions without the need to visit a bank branch. The service allows
its customers to use their mobile telephones to buy airtime, send or receive money, manipulate
their bank accounts, store value in an account linked to their handsets and pay bills (Tsilizani,
2015).
Airtel Money was set up to, among other things, assist in economic development through
contributing in the financial inclusion agenda. With the pervasive network coverage which
includes rural areas, customers are able to participate in financial transactions via their phones.
Through Airtel Money, such customers are now able to do the following transactions; sending
and receiving money, Paying bills, Buying airtime via the phone, Accessing their bank account
via the phone, if they have a bank account, and are able to check their bank balances and
statements via phone, Sending money from the Airtel Money wallet to their bank accounts and
vice versa, Buying groceries and paying for services.

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The service comprises a simple registration process to set-up a customer’s new Airtel money
account into which they can deposit and withdraw cash at a large number of Airtel’s re-seller
airtime distribution agents. Making a deposit is a similar process to topping up their airtime pre-
pay balance: the account identifier is the mobile phone number and the customer goes to the very
same place that they would go to buy airtime. There the similarity ends; the Airtel money
account is entirely separate to the pre-pay airtime credit. Once registered, the customer can send
funds to any other phone number on the network (Nardi & Steve, 2000). The receiver gets a text
message
that can be taken to a re-seller agent and, cashed in, enabling person-to-person money transfer
instantly over large distances. A customer can also use their Airtel money account balance to buy
goods and services (including airtime credit for any other Airtel pre-payphone).

1.3. Regulation of mobile money

The regulation of mobile money involves a number of government bodies and regulators. In
Malawi, the RBM is the lead regulator for mobile money and is now focused on developing and
formalising the overarching regulatory framework for the mobile money sector. The Ministry
of Finance (MOF) is involved in the strategic policy development for mobile money as part of its broader
role in improving financial inclusion in the country. A range of other regulators in Malawi are
also exploring and developing regulatory responses to the mobile money market, including regulators
from the following sectors: telecommunications, competition, consumer protection, and anti-money
laundering and countering the financing of terrorism. RBM has a mandate to promote and oversee
Malawi’s national payments system, and it is under these auspices that it is responsible for overseeing the
mobile money sector. The Payments Department at the RBM takes the lead in the supervision and
regulation of the sector.It also takes the lead on coordinating efforts for RBM with a number of other
regulatory institutions. The Bank Supervision Department of the RBM is involved in mobile money
through its contribution to the work of the E-Banking Task Force (Buckley, et al., 2015).
The Malawi Communications Regulatory Authority (MACRA) regulates the postal, telecommunications,
and broadcasting sectors.43 Citation? It is responsible for administering the Communications Act 1998. An
MNO needs a licence from MACRA under this Act in order to provide mobile money
services. The Financial Intelligence Unit (FIU) is an autonomous central national agency reporting
directly to the Minister of Finance. The FIU has wide ranging powers in relation to combating
money laundering and terrorist financing. The Competition and Fair Trading Commission (CFTC)
examines competition and consumer protection issues and its role may become more prominent in mobile
money in response to MNO-banks/MFI partnerships.

1.4. Malawi`s financial system

Malawi’s financial sector is generally small with the banking industry comprising 13
commercial banks that span with over 80 branches across the country (RBM, 2014) .
Although the financial sector is small even at regional level and bank dominated, the
system is concentrated with a variety of institutions and markets comprising 13 banks,
two discount houses, one leasing finance company , ten insurance companies, four
DFIs, a young but growing microfinance industry and a nascent capital market (FSA
Mw, 2008).

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Only 11 percent of the 7.6 million adults in Malawi rely exclusively on banking while 6.4
percent use combined formal and informal means to manage their finances. The
remaining adult population of over 1million people out of these only use informal
mechanisms when transacting their finances. (FS Consumer mw,20
The low population of Malawians who have access to formal financial services
indicates high incidences of poverty and a high proportion of the population in rural
areas attributing it to few bank outlets and availability of other informal financial
mechanisms (WB, 2008). According to the Finscope report of 2014, only 33 percent of
Malawians are banked. On a positive note, however, the number of banked adults in Malawi
grew to 33 percent by 2014 as compared to only 19 percent in 2008 making financial inclusion to
move from 45 percent in 2008 to 53 percent in 2014 (FS Consumer Mw, 2014). On its part, the
government has provided incentives to encourage mobile banking services although access to
credit remains a constraint for Small and Medium
Enterprises (SMEs).

1.5. Problem statement

Mobile technologies are changing economic life in developing countries, where many people are
using cell phones for a range of financial transactions, such as receiving and sending money
transfers. Indeed, mobile money is already being used by banks and mobile network operators to
provide millions of unbanked consumers a way to store and access money digitally. mobile
money, allow unbanked people to use their phones as a bank account: to deposit, withdraw and
transfer money with their handset. They can also use mobile systems to pay utility bills and pay
for goods in merchant shops (Subia & Martnez, 2014).
Mobile money has spread rapidly across Africa since it was first introduced in Kenya in 2007,
and has been extensively studied in recent years. However, identification is challenging because
mobile money is typically rapidly adopted, making it difficult to preserve a control group. The
seminal studies on mobile money are the difference-in-difference studies by William Jack and
Tavneet Suri (Jack and Suri 2014; Suri and Jack 2016) as cited by (AGGARWAL, et al., 2020),
which are identified from plausibly exogenous regional differences in adoption timing. Most
research studies have focused much on the impact of mobile money, regulations of mobile
money and the importance of utilising mobile money, leaving a knowledge gap on challenges
faced by mobile money traction.
Looking at the figures of Airtel active customers on the network (GSM) which currently
stands at 3.4 million against 720,000 Airtel money registered customers with only
142,000 active customers as at September 2014 against the registered active Airtel
mobile money subscribers, it gives a clear picture that the service is being adopted
as per the expected objective of getting all Airtel Malawi customers registered on mobile
money. Therefore, the study seeks to identify factors affecting mobile money transaction using
airtel money.

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 1.6. Main objective.
The aim of this study is to assess factors affecting mobile money transaction in Lilongwe urban

1.7. Specific objectives

To achieve the main objective the following are specific objectives:
 To examine understanding of mobile money transactions
 To identify factors influencing the use of mobile money transactions
 To assess challenges by users in accessing mobile money transactions

1.8. Research questions

The following research questions will be used to chieve the research objectives:
 How does user understand mobile money transactions?
 What are factors influencing the use of mobile money transactions?
 What are factors that are affecting mobile money transactions?

1.9. Significance of the study

The study will help in addressing challenges faced by airtel money users in accessing mobile
money transactions. The results are expected to provide an in-depth understanding of mobile
money transactions and the factors influencing the adoption of mobile money tractions by the
users. This will provide service providers with information to develop and formulate policies that
will sustain and promote the use of mobile money.

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 CHAPTER TWO: LITERATURE REVIEW

2. Introduction

2.1. Empirical review

2.1.1. Understanding of mobile money transactions

2.1.2. Factors influencing the use of mobile money transactions

2.1.3. Challenges of mobile money transactions

2.2. Theoretical review

2.3. Conceptual framework

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 CHAPTER THREE: METHODOLOGY

Introduction

Area of study

Participants

3.1 Introduction

According to Saunders et al (2016), research methodology refers to techniques and procedures

used to obtain and analyze research data, collected through questionnaires, observations,
interviews and statistical and non-statistical techniques. Research methodology refers to “a
system of beliefs and assumptions about the development of knowledge” (Saunders et al.2016).
The method explains how research was carried out and implications of those choices (Saunders
et al 2016). This chapter outlines the overall approach to this study. It describes population and
location of the study, sample size and sampling techniques, research design, data collection, data
analysis and ethical considerations.

3.2 Area of Study

The study will be conducted in Karonga district, specifically Rukulu women rice processing
cooperative which is located at the Karonga boma. Karonga is one of the 3 main districts that
produce rice in large quantities and has many rice cooperatives which are active as well. Rukulu
has been chosen because it has 60 members which makes the application of random sampling
statistically applicable. It has also selected because NGOs like Christian Aid in collaboration

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with NBS bank and world Connect Malawi have had their projects in relation to women
empowerment.

The map below shows Karonga district showing Rukulu cooperative.

3.3 Participants

Population in this case means all the individuals or objects that meet certain requirements for
membership in the overall group (Churchill and Brown, 2017). Sekeran (2013), on the other
hand, defines population as any set of persons or objects that poses at least one common
characteristic. He further states that any scientific research targets a given population through
which questionnaires, interview guides, focused group discussions or observation guides are
distributed so as to get the desired or required data for analysis. For this research, the study
population is all the members of Rukulu rice cooperative in Karonga.

3.4 Research Design and Methods

According to Oppenheim (2015), research design relates to the basic blueprint of the study and
the logic behind it, in addition to what will make it possible and valid to extract additional
general conclusion from it. Research design is the conceptual structure which constitutes the plan
for the process of collection, measurement and analysis of data (Kothari, 2014). Babbie (2018)
noted that, “Research design involves a set of decisions regarding what topic is to be studied
among what population, with what research methods, and for what purpose”. This study will
adopt descriptive approach by way of survey where both qualitative and quantitative research
will be used.

3.4.1 Research Philosophy

The study will include the collection, measurement and analysis of data. It will use both
qualitative and quantitative method. It will target women of Rukulu rice cooperative by using a
simple random (probability) sampling. Questionnaires and focus group discussions will be used
to gather the data from the participants. The data will be entered using SPSS and analysed using
Microsoft Excel and STATA.

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3.4.2 Research Approach

There are two main research approaches deductive and inductive. In the deductive approach a
theory and hypothesis are developed and a research strategy is designed to test the hypothesis
(Saunders et al, 2012), while the inductive approach, data is collected and a theory is developed
as the results of the data analysis (Saunders, 2016). In this research the researcher will adopt the
inductive approach. This approach allows the researcher to give subjective justification and
reasoning with anecdote evidence from everyday experience, the inductive approach offer the
researcher a chance to triangulate the primary data, secondary data and personal experience in
determining what is applicable and why it is applicable and arrive at findings which applies to
independently and interdependently variables.

3.4.3 Research Strategy

The study used semi-structured questionnaires and FGDs to collect cross-sectional data. The
researcher chose research assistants because of the nature of the population, being rural area,
research assistants will be more preferably better to administer and time saving. The
questionnaires will be constructed in a simple language and will be easily interpreted by the
research administrators, to suit all the respondents regardless of their education background.

3.4.4 Time Horizon

Topic development and approval by the supervisor were done in June 2022. Proposal writing and
presentation will be in the month of July 2022. The data collection process, analysis and the
writing of the final research report will be done in the next three months of August to October
2022. This therefore means that the study took a period of five months, from topic development
to final report submission.

3.4 Sampling

3.4.1 Sample Size Determination

A sample is a selected subset of a population to represent the whole population in a study

(Kumar 2019). Normally a research sample is chosen from a target audience when the target

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population is too large to be studied. The study will use PPS and simple random sampling in
coming up with sample size;

Slovene’s formula will be used to calculate sample size

N
n= 2
… … … … … … … … … … … … … … … … ..(1)
1+ N (e )

n=sample size

N=population

𝑒2 =margin of error

Note: 0.1 margin error will be selected because the population is relatively small.

60
n= 2
1+60 (0.1 )

= 38

Giving room for non-response error of (10%) the sample size increases to 42 women
respondents.

3.4.2 Sampling techniques

Sampling techniques provide a range of methods that enable one to reduce the amount of data
needed for the study by considering only data from a sub-group rather than all possible cases or
elements (Saunders et al., 2016). According to Saunders et al. (2016), there are two types of
sampling: probability-where the chanced of each case being selected from the population is
known and is usually equal for all cases, and non-probability-where the chances the of each case
selected from the total population is not known, making it possible to answer research questions
(Saunders et al., 2016).

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Firstly, the study will use a non-random sampling called purposive sampling which will be
applied to identify the targeted women rice cooperative. Rukulu rice cooperative has been
purposively selected because it contains female members only and has been working with
different NGOs. The second one will be the PPS (proportional probability sampling), this will be
employed since members are grouped into zones according to the location or area of residence.
From the PPS technique, the researcher will get the number of members needed from each zone.
Finally the simple random sampling procedure will be applied in all the zones to come up with
the total sample.

3.5. Data Collection methods and tools

Research instrument is a tool through which the research data is obtained (Kumar,2019). The
researcher will use questionnaire and interview as the instrument for data collection. The
questionnaires will be used to collect data on demographic characteristics of participants, identify
the contributions of NGOs towards economic empowerment. Focus group discussions will be
used to capture data on the strategies that these NGOs use to empower women economically and
also describe the contributions that they make towards the same. The researcher opted for
questionnaires and FGDs because they allow the researcher to gather information from a larger
audience in less time and at an affordable cost.

3.5.1 Pretesting of the data collection tools

According to Saunders et al., (2016), pretesting is the refining of questionnaires so that

respondents do not face any problems in answering questions and to eliminate further problems
in recording data. The main objective of the questionnaire pre-test is to ensure that wording of
the statement, flow of questions, scale suitability measurement, instructions and explanations of
questionnaire were proper (Churchill et al., 2017). According to Churchill et al., (2017), data
collection should never begin without an adequate pre-test of the instrument. 5 respondents will
be selected to take part in the pre-testing exercise. It will be aimed at checking how the
respondents would react to the questionnaire and whether the questions will be clear to be
understood.

3.6 Data Analysis

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According to Cooper and Schindler (2015) data analysis involves reducing accumulated data to a
manageable size, developing summaries, looking for patterns and applying statistical techniques.
Data analysis will be conducted through Statistical Package for Social Science (SPSS), STATA
and Microsoft Excel. Data will be presented in tabular and graphical forms. The tools to be used
to analyze all the specific objectives have been given bellow.

3.6.1. Descriptive Statistics to analyse the demographic characteristics of the respondents

The study will use descriptive statistics such as percentages, frequencies, means and even
standard deviation to analyse the socio-economic characteristics of the women as members of
Rukulu rice cooperative in Karonga and this will be in STATA.

3.6.2 Likert scale to analyse the strategies that NGOs use and the contributions towards
women empowerment

Likert scale allows ranking of respondents to show the attitude or opinion of people on the issues
at hand. With this likert scale, respondents are asked to rate the items on a level of agreement
(Croasmun, 2011). This will be done by Microsoft excel and STATA. Content analysis
analysis which refers to observation of similarities among various social phenomena to develop
concepts or ideas through a systematic method will then be used to describe the contributions
towards women economic empowerment in Karonga.

3.7 Reliability and Validation

According to Saunders et al (2016) Validation is the process of verifying research data, analysis
and interpretation to establish their validity/credibility/authenticity. In the validation process of
this study, the researcher will conduct a pilot study to make ensure the tools of data collection
will yield valid information. Questionnaires and interview questions will be tested out in a small
sample of 5 respondents to check on the clarity of the instruments.

3.8 Ethical Considerations

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According to Ranjit Kumar (2019), the ethics code of conduct varies from profession to
profession, so it is not possible to provide a universal answer to this question. However, in
research, any dilemma stemming from a moral quandary is a basis of unethical conduct. There
are certain behaviours in research such as causing harm to individuals, breaking confidentiality,
using information improperly and introducing bias, that are considered unethical in any
profession.

Therefore, this study put in place the following criteria to guide the researcher in order to
properly undertake the study in professional way.

The research took into account all ethical issues with prudence and care such as:

i. Respecting the rights of participants, especially the right to be informed, right to privacy
and choice to participate.
ii. Avoiding influencing participants’ opinions or attitudes on any issue through direct or
indirect attempts.
iii. Participants’ confidentiality; by not giving out information about general business
activities or providing any information from the research to a third party.
iv. Allowing voluntary responses from willing respondents.
3.9 Summary

The chapter has covered the research methodology used for the study which covered population
and location of the study, sample size and sampling techniques, research design, recruitment of
study participants, data collect tools, data collect, analysis of the data and ethical considerations.

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