MOBILE-PHONE MONEY TRANSFER SERVICES USAGE IN DODOMA URBAN, TANZANIA

IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563 MOBILE-PHONE MONEY TRANSFER SERVICES USAGE IN DODOMA URBAN, TANZANIA V Venkatakrishnan Department of Development Studies, University of Dodoma, Tanzania Ngilangwa, Eston Vocational Education and Training Authority (VETA), Dodoma, Tanzania Abstract-Lack of financial inclusion seems to have led to many development challenges of poor in Sub-Saharan Africa and the rest of the world. Due to cheaper and reliable methods of transferring money the people in Kenya and other countries of Africa were depending upon the bus/courier companies and friends and family members to transfer money to their family members. The introduction of a mobile phone based money transfer services using SMS in Kenya seems to have revolutionized the way the money is transferred not only in Kenya but also in other African countries. A study was undertaken in Dodoma, the political capital of Tanzania to bring out the usage and utility of mobile money transfer services. It brought out usage and utility of mobile-phone money transfer services and the interface between the agents and the customers. Key words: Mobile-phone money transfer, utility bill payment, customer-agent interface I. INTRODUCTION It has been claimed that access to banking services is very much limited to the majority of Africa s population as there is a dearth of bank branches in rural areas. The financial inclusion has become a key requirement for overcoming many development challenges faced by the continent. Many African scholars have mentioned that only one in five households in Sub-Sahara have access to financial services. These scholars have also claimed that access to financial services is crucial to economic growth and poverty reduction. It might be worth noting that Sub-Saharan Africa along with South Asia comprises a major part of the poor in the world. Africa is concurrently facing a mobile phone revolution as the numbers of mobile phones are increasing exponentially. Making use of the increasing access of mobile phone services in Africa, many mobile phone service companies have been delivering varieties of services such as mobile-phone money transfer (MMT), information on agriculture and livestock prices and many e-commerce applications. II. MOBILE-PHONE MONEY SERVICES Mobile-Phone money services in Kenya Safaricom, a telecom service provider in Kenya initiated a service called M-PESA in 2007. PESA in the Swahili language means money. This is an SMS based moneytransfer system to enable the users to deposit, transfer and withdraw money using the mobile phone. A payment system operated by a mobile phone service providers, non-bank retail outlets manned by the agents (known as wakalas in the Swahili language) authorized by these mobile phone service providers and access and operation of account by initiating the transactions by the customers constitute the M-PESA, which has been called as mobile-phone money transfer (MMT) for the purpose of this study. It was also mentioned by some authors that M-PESA is used not only for remittance purposes, but also to save, to purchase pre-paid phone credit and other goods and services, to pay bills, and to execute bank account transactions. The agent plays an important role in the MMT services. It has been defined that an agent a person or business that is contracted to facilitate transactions for users. The most important of these are loading value into the mobile money system, and then converting it back out again. Further, these agents register new customers too. They earn commissions for performing these services. They also often provide front-line customer service such as teaching new users how to initiate transactions on their phone. It was found out that the within two years of its launching, 40 percent of the adult population started using M-PESA. Some studies have also found out instances where in the M-PESA has resulted in increased money circulation in the villages. It was reported that by impacting flows of capital, security of money, and transactions, M-PESA seemingly tended to facilitate a conducive environment necessary for ensuring food security. Further, it was also mentioned that in Kenya, M- PESA is being used in many ways by smallholder farmers and others in the agriculture sector. Mobile-phone money transfer service across the world The M-PESA has revolutionized the methods of transferring money from persons in urban areas to their family members in rural areas and other places. The weak network of bank branches in rural Africa combined with the lack of reliable and accessible methods of exchanging money between people in different parts of a country have resulted in the immediate acceptance of mobile money transfer service across many countries of Africa and the rest of the world. A survey of the industry in 2011 claimed that as on June 2011, there were 60.4 million active customer accounts in the world of which East Africa alone constituted 35.9 million. The rest was from West Africa (6.4 million), Asia-Pacific (12.6 million) and Central Asia and Middle East (1.9 million). It was reported that as on early 2012, there were 113 live mobile money deployments in 31

IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563 different parts of the world and around 88 in pipeline for the study tried to discover the purposes of transactions such as next year. sending and receiving money, payment for utility services, interests and access to loans. Mobile-phone money transfer service in Tanzania In Tanzania also, mobile phone companies have been providing various services including mobile-phone money transfer (MMT) since 2008. It was found out by many scholars that, prior to introduction of M-PESA and other MMT services in Tanzania, sending money through the friends/family members and use of courier/transport companies for this purpose were very popular for transfer of money. Though only one service provider started to offer the MMT services initially, in the last few years, a number of mobile phone service providers have started to provide them. It also could be seen that many wakalas (agents) of the MMT services simultaneously offer these services of various mobile phone service providing companies such as Vodacom, Tigo, Airtel and Zantel. It seems that it is in contravention to the expectations and conditions of these service providing companies that the wakalas will have to stick to only one company and provide its services only. The question that remains to be addressed is that to what extent customers needs assessment does exist. Here manifests scant knowledge and information on how these services do fulfill customers expectations particularly by the MMT services in Tanzania. MMT services in Tanzania have been used by different customers regardless of the age and sex. Extensive information on the extent of utilization of MMT services is not at all available. Frequent switching over by the customers from one service providing company to another company has become a regular phenomenon. There is also a lack of knowledge on the dynamics and retention methods of MMT customers due to competing mobile phone service providing companies which try to establish this service of MMT by focusing on the same customers within the limited sphere. Study objectives 1. To identify the extent of mobile phone money transfer service use by customers 2. To bring out the interface between the customers and agents of the companies in providing the mobile phone money transfer service 3. To discover the benefits obtained by customers from using mobile phone money transfer service Research questions What are the uses of mobile phone money transfer services among customers? The study tried to identify the usage of mobile phone money transfer based on duration of usage among customers, number of mobile phone companies used by customers to access the service of mobile money transfer, frequency of using a particular mobile phone company and its services, and purposes of visiting mobile phone money transfer agents. What are the benefits obtained from using mobile phone money transfer services among customers? The Study area Dodoma, the political capital of Tanzania, one of the fastest growing towns in Tanzania and the fifth largest urban area was selected for undertaking the study. Dodoma town is centrally positioned in Tanzania in the Dodoma region which is the 12 th largest in the country that covered an area of 41,310 sq. km equivalent to 5% of the total area of Tanzania Mainland. According to National Census 2002, Dodoma town had a total population of 495,800 people. The town has been observed to be rapidly growing due to different reasons. The increased investments in the town expansion is due to the existing and newly constructed academic institutions such as the University of Dodoma (UDOM) and Local Government Training Institute-Hombolo, expansion of Institute of Rural Development and Planning (IRDP), Mipango, St. John s University of Tanzania, Madini Institute, The Open University of Tanzania, College of Business Education (CBE), Capital Teachers College and other academic institutions. Dodoma is also administratively the capital city of Tanzania. In addition, the government efforts to construct the central corridor roads are stimulating the expansion of the town and more people are investing in various economic activities. The Dodoma town is the business area which comprises large number of population that caters to residents from rural and sub-urban areas surrounding Dodoma who visit it for different business purposes including seeking MMT services provided by various mobile phone companies. This made the choice of the study location to be Dodoma Town. III. RESEARCH METHODOLOGY The study used cross sectional survey design because information was collected at one point in time. Furthermore, the study employed mixed methodology approach. Both quantitative and qualitative methods of collecting and analysing data were used. The sample unit for this study was the Madukani area in the Dodoma town where all the customers seeking the MMT services were identified. Further, the agents and mobile phone company representatives from Tigo, Vodacom, Airtel and Zantel contacted for the study were located in the area. The sample size of this study comprised total of 88 customers and 12 Wakalas (agents of mobile money services provided by the mobile phone companies) for withdrawing and depositing the money. These customers were randomly obtained at the time when they visited agents who were providing services of MMT. Agents represented four mobile phone companies found in the study area namely, Vodacom, Tigo, Airtel and Zantel and they were randomly selected. In addition, representatives of four mobile phone companies were selected purposively due to their in-depth knowledge on the subject. This made the total sample size to be 104 for this study. 32

The different methods and approaches of gathering information for this study included interview, survey and documentary review. Structured questionnaire was used as a tool for data collection from the customers and agents (wakala) of MMT services and interview guide for representatives of Tigo, Zantel, Vodacom and Airtel mobile operating companies. Secondary data were gathered from the offices of marketing officers from each mobile phone company and also from records completed by agents and internet. The combination of these sources of data was adopted for their suitability and ensuring accuracy of the results. Before data collection, a pilot test was conducted for the tools used for the study. This was conducted by administering the questionnaire to the selected users of the mobile money service at the study area prior to collecting data from the customers. It was done so as to test the validity of instrument (questionnaire) before actual data collection from the study area. All missing necessary information in the questionnaire observed during the pilot was incorporated into the questionnaire for increasing its validity and reliability. Primary data for this study were largely collected during May- June 2012 and it was completed in August 2012. IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563 to higher age group of 45 and above. The remaining 25% were in the age group of 36-45 years. A substantial number of customers covered for this study were males (55.7%). Nevertheless, females were also adequately represented as they constituted the remaining 44.3 percent. All the customer respondents attended formal education. Their education level ranged from primary to college/university. Considerable number (30.7%) respondents attained secondary education while 28.4% had achieved primary education, 18.2% had technical certificates, 14.8% had education up to diploma level and only eight percent of respondents attended University and were degree holders. IV. STUDY FINDINGS Access of mobile phone money transfer services Majority of respondents (63.6%) have been using mobile phone money transfer services for more than two years, while 26.1% of respondents have been using this service for about one year; only 10.2% of respondents have been using mobile phone money transfer for less than one year. The Table 1 provides these details. Most of the data collected by the use of structured questionnaire were quantitative in nature. Therefore, before entering data into computer program for analysis, questionnaires were organized by coding so that they can be taken for further analysis. Responses for each question in each questionnaire were clearly screened to ensure clarity of responses on each questionnaire. Then data were organized further for analysis. With regard to the quantitative data, after coding they were entered into computer program known as Statistical Package for Social Scientists (SPSS Version 16, 2007) for analysis. Analyses were done by the use of descriptive statistics whereby tables and figures of different variables in frequencies and percentage were generated. Data obtained from interview were qualitative in nature. These qualitative data were edited, condensed and recorded in the note book as well as stored in electronic form. Then these qualitative data were analyzed by the use of content analysis method. The qualitative information from the mobile phone company representatives was summarized and judgments were made out of these summaries. Profile of respondents A total of 88 customers using the mobile-phone money transfer (MMT) services were contacted for this study. In addition, 12 wakalas (agents) of various MMT service providing companies such as Vodacom, Tigo and Airtel were also covered for this study. The customers belonged to different age groups. One third of them (33% of 88) were in the age group 26-25 years and 30.7 percent belonged to the age group of 18-15 years. Only 11.4 percent were belonging Table 1: Duration of using mobile phone money transfer service Duration Frequency Percent Less than a year 9 10.2 One-two years 23 26.1 More than two years 56 63.6 Total 88.0 With regard to the mobile phone service company used to obtain service of MMT, 67% of respondents have been using the service from only one company. The remaining 33% have been using more than one company to access it. Among those who used only one company to access these mobile phone money transfer services, a majority of respondents 34.1% used M-PESA, 21.6% respondents used TIGO-PESA and 11.4% respondents used AIRTEL MONEY as indicated in the Table 2. Table 2: Service providing companies used to access mobile phone money transfer Company used to access the MMT Frequency Percent (%) TIGO-PESA 19 21.6 M-PESA 30 34.1 AIRTEL MONEY 10 11.4 TIGO-PESA, M-PESA and AIRTEL-MONEY 29 33.0 Total 88.0 33

IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563 The study went further to determine the company which was The number of visits by customers to agents per month frequently used by the customers of mobile phone money (wakala) ranges from one to more than three visits. Majority transfer services. Majority of them, 46.2% used M-PESA more of respondents, i.e. 45.5% visited agent (wakala) of mobile frequently, closely followed by TIGO-PESA which has been phone money transfer once per month, while 26.1% of used frequently by 43.2% of the responded customers. Only respondents used to visit agent twice per month and only 10.2% of customers interviewed used AIRTEL MONEY 28.4% of respondents visited them three or more than three frequently. times per month. Querying further on what led these customers to use more frequently a particular mobile phone money transfer company s services, it was revealed that majority of customers, 48.9% claimed that their company provided services more efficiently, while 21.6% of respondents pointed out that their mobile phone company services were easily accessible and available anywhere. Only 9.1% of respondents responded that their mobile phone company had more customers through which their business operated effectively. These views are presented in the Table 3. Table 3: Reasons for availing the MMT from a particular service provider Perspectives Frequency Percent Lower cost compared to other companies 18 20.5 It provides services more efficiently 43 48.9 Easily accessible anywhere 19 21.6 It has more customers compared to others 8 9.1 Total 88.0 Customers and agents interface in use of MMT It has been found from this study that, customers of mobile phone money transfer, visited mobile phone money transfer agent (wakala) for the first time for different purposes. Among the customers, 39.8% visited the agent (wakala) for the first time to withdraw cash, 25% of them visited agent for the purpose of making deposit, while 18.2% visited agent (wakala) for application of user s identity, and 14.8% of customers visited agent (wakala) for the first time to check their balance in their phone (account balance inquiry). Only 2.3% of the total respondents visited agent (Wakala) for the first time to seek advice on mobile phone money transfer as shown in the Table 4. Table 4: Reasons for visiting the agent (Wakala) for the first time Reasons to visit the agent first time Frequency Percent (%) Make deposit 22 25.0 Balance enquiry 13 14.8 Applying for user s ID 16 18.2 Cash withdrawal 35 39.8 Seek advice on mobile money transfer 2 2.3 Total 88.0 The number of visits by the customers to the agents seemed to have increased. A majority, 55.7% of respondents, agreed that their number of visits has changed and increased since they visited the agent for the first time. Only 26.1% of respondents claimed that their number of visits has changed but decreased from the time they visited agent (wakala) of mobile phone money transfer for their first time. Only 18.2% of the total respondents they had no opinion neutral. For those who said that their number of visits has decreased, the findings revealed that several factors have been accompanied with such situation. Reduced cash flow with the agents was pointed out as the major reason by 13.6% of the customers for the visits decreased, unsatisfactory services provision by the agent was cited by 8% customers, and 6.8% of the customers indicated unreliable network connection. The Table 5 indicates the response on increase or decrease in the number of visits and the reasons as to why the number of visits had decreased. Table 5: Frequency of visits to agents and reasons for decrease of visits Reason for decrease in number Visits decreased or increased of visits Response Frequenc (%) Response Frequenc (%) y y Increased 49 55. 7 Unsatisfactor y service from Wakala 7 8 Decrease d None of the above 25 28. 4 14 15. 9 Reduced cash flow from operating business Most of the time no network connection from service provider Total 88 Not applicable Total 12 13. 6 6 6.8 63 71. 6 88 With regard to information on whether the customers always used to go to the same agents on his/her visits, findings from the field revealed that 51.1% of total customer respondents claimed that they do not go to the same agent (wakala). The reasons indicated by these respondents was that; there were many agents who provided services of mobile phone money transfer. With regard to 48.9% respondents who claimed that they always used to go to the same agent, they mentioned that their agents being accessible and having more customers 34

through which money circulation and availability was more reliable as the reasons. Information availability and accessibility are two things which are mutually supportive. In any business/services provision organization, one might need his/her customers to have enough and updated information about the new services and products offered by it. The finding from the field show that 40.9% of customers accessed information about new services introduced by mobile companies through advertisements in the media. However, 25% of customers claimed that they accessed information through agent (Wakala) of these mobile phone companies, and 23.9% of customers declared that they accessed information through text messages sent to them by mobile phone companies, while 9.1% of the customer respondents obtained information through reading brouchers and only 1.1% of them accessed information through friends as shown in the Table 6. Table 6: Sources of information on new services Sources of information Frequency Percent (%) Friends 1 1.1 Agent 22 25.0 Brouchers 8 9.1 Advertisements in the media 36 40.9 Mobile company s text message 21 23.9 Total 88.0 Utility of mobile money transfer services Findings from the field show that a majority, 73.9% of respondents did not use mobile phone money transfer for buying commodities; only 26.1% of the total composition of respondents used mobile phone money transfer to buy commodities. It was further revealed that, most of the mobile phone money transfer customers, i.e. 97.7% of them did not use mobile phone money transfer for merely sending money only, but they were using this service in many other ways. Only a few of the customer respondents, i.e. 10.2% indicated using mobile phone money transfer for just one purpose of sending money only. Table 7: Various usages of mobile phone money transfer Uses Frequency Percent (%) Sending money only 2 2.3 Receiving money only 10 11.4 Both sending and receiving money 53 60.2 Utility bill payments 15 17.0 Utility bill payment, sending and receiving money 8 9.1 Total 88.0 Data from the field revealed that customers were using mobile phone money transfer for sending money, receiving money, utility bills payments and for both sending and receiving IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563 money. From these findings, it is revealed that a majority, 60.2% of respondents used mobile phone money transfer for both sending and receiving money, other 17% used mobile phone money transfer for utility payments, while 11.4% of them were using this service for only receiving money, while the multiple purposes of utility bill payments, sending and receiving money were used by 9.1% of respondents. A mere 2.3% used mobile phone money transfer service for sending money only as indicated in the Table 7. The study further analyzed the frequency of using various services through the use of mobile phone money transfer. The findings revealed that, funds transfer to own accounts and sending money to family/friends were always used by a majority of customer respondents with 84.1 % of them using it. Only bills alert information service was always used by 1.1% of the customer respondents. And 13.6% reported to use funds transfer to own account service occasionally while 2.3% had never used this service. Further the findings from the field indicated a majority of customer respondents, 77.3% had never used mobile phone money transfer services for paying bills, 78.4% of customer respondents had never used mobile phone money transfer for customer care inquiries services and 84.1% of customer respondents also indicated that they had never used mobile phone money transfer service for reporting on improper transactions as shown in the Table 8. Table 8: Frequency of utilization of various services using mobile phone money transfer Total (%) and Type of service Always Occasionally Never Frequency (N) Funds transfer to 84.1% (n=74) 13.6% (n=12) 2.3% (n=2) own account Pay Bills 22.7% (n=20) 77.3% (n=68) Bills alert 1.1% 15.9% 83% information Send money to family/friends Buying airtime Balance inquiry Report on improper transactions Customer care inquiries Statement of transaction (n=1) 84.1% (n=74) 67% (n=59) 65.9% (n=58) (n=14) 14.8% (n=13) 33% (n=29) 34.1% (n=30) 23.9% (n=21) 21.6% (n=19) 15.9% (n=14) (n=73) 1.1% (n=1) 76.1% (n=67) 78.4% (n=69) 84.1% (n=74) 35

The customers used to pay both pre and post paid bills for various utilities by using their mobile phone. People who used DSTV and STAR TIMES DECORDERS could buy their pre paid account credit using mobile phone money transfer. Electricity service providers (TANESCO) also allowed people to buy LUKU using mobile phone money transfer. Findings of the study show that 59.1% of respondents were using mobile phone money transfer services for paying bills to TANESCO, 13.6 % of respondents were using mobile phone money transfer for DSTV Subscriptions, while 15.9% of customers were using mobile phone money transfer for buying airtime (postpaid) for services provided by the mobile phone company, and 11.4% were using mobile phone money transfer regarding higher education loan application. V. RECOMMENDATIONS Irrespective of the restrictions placed by the mobile phone service providing companies, many agents of the MMT services act as agents of many service providers. This has become essential due to the requirements of satisfying the customers who continue to subscribe to many different mobile phone companies simultaneously due to cost considerations. The mobile phone service providing companies have to make it easier for the customers to seamlessly use the services of other companies than creating barriers. There are also issues related with the saturation of the customer base for the mobile phone money transfer services. Though efforts have been made by these mobile phone companies to enable the customers to make payments for utility services like electricity, water and cable television in Tanzania, the intake of these services is limited to large urban areas. Even within these urban areas, there are still issues related to improving the trust of the customers in making payment for these utility services. Enabling the payment of loans, dividends and other financial services through these mobile money transfer facilities is certain to result in expansion of the market. With a view to overcome the issue of competing for the existing limited customers, the mobile phone money service providers may have to take efforts in this direction. There were also issues like fear of losing the password for operating the MMT account, unreliable electric supply and consequent network failure which have resulted in some of the customers leaning back to the traditional methods of transferring money such as bus/courier companies. It was stated that the customers are not able to obtain loans or interest based on the balance money available in their MMT accounts with the mobile service providers. With a view to tap another segment of the customers who might evince interest in case the above mentioned are addressed, the mobile service providing companies may consider paying interest on the balance available in the MMT accounts of their customers. IRACST- International Journal of Research in Management & Technology (IJRMT), ISSN: 2249-9563 References Gabriel Demombynes and Aaron Thegeya (2012), Kenya s Mobile Revolution and the Promise of Mobile Savings, Policy Research Working Paper 5988, The World Bank Africa Region, Poverty Reduction and Economic Management Unit, March 2012 Gunnar Camner, Emil Sjöblom, Caroline Pulver (non-dated), What Makes a Successful Mobile Money Implementation? 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Plyler, Sherri Haas and Geetha Nagarajan (2010), Community- Level Economic Effects of M-PESA in Kenya: Initial Findings, IRIS CENTER, University of Maryland Neil Davidson and Claire Pénicaud (2011), State of the Industry: Results from the 2011 Global Mobile Money Adoption Survey, GSMA, London Richard, Wray (2008), Cash in hand: why Africans are banking on the mobile phone, The dramatic spread of the handset is revolutionising the way money circulates, The Guardian, Tuesday June 17, 2008, http://www.guardian.co.uk/business/2008/jun/17/telecoms.telecoms/print accessed on 03 Feb 2013 William Jack, Tavneet Suri, and Robert Townsend (2010), Monetary Theory and Electronic Money: Reflections on the Kenyan Experience, Economic Quarterly, Volume 96, Number 1, First Quarter 2010, Pages 83 122 William Jack and Tavneet Suri (2011), The Economics of M-PESA., NBER Working Paper 16721, January AUTHORS PROFILE V Venkatakrishnan is a Senior Lecturer (Development Studies), at the University of Dodoma (UDOM), Tanzania since Nov 2009. He has obtained his PhD (Development Studies) from the University of Mysore. He has experience in research, teaching, supervision and consultancy since 1998. Prior to joining the UDOM, he has served at the Institute of Rural Management, Anand (IRMA), Administrative Staff College of India (ASCI), Hyderabad, Addis Ababa University (AAU), Ethiopia and KIIT University School of Rural Management (KSRM), Bhubaneswar. He is a life member of the Indian Institute of Public Administration (IIPA), New Delhi and Indian Society for Technical Education (ISTE). Ngilangwa, Eston has obtained MA (Development Studies) from the University of Dodoma, Tanzania. He is currently working at the Vocational Education and Training Authority (VETA), Dodoma. He has also served in various media organizations prior to joining VETA. The data used in this paper was based on his unpublished Masters dissertation entitled Mobile Phone Money Transfer Services Usage and Customer Satisfaction in Dodoma Urban. 36