Interoperability Between Mobile Money Agents and Choice of Network Operators: The Case of Tanzania

Lukasz Grzybowski; Valentin Lindlacher; Onkokame Mothobi

doi:10.1515/rne-2023-0024

Published online by De Gruyter September 1, 2023

Interoperability Between Mobile Money Agents and Choice of Network Operators: The Case of Tanzania

Lukasz Grzybowski , Valentin Lindlacher and Onkokame Mothobi

From the journal Review of Network Economics

https://doi.org/10.1515/rne-2023-0024

Showing a limited preview of this publication:

Abstract

In this paper, we investigate the effects of non-exclusive agreements between networks of mobile money agents on mobile network operator choices, using survey data from Tanzania conducted in 2017. By combining survey responses with geo-location data and information on agent proximity, we employ discrete choice models to analyze consumers’ decisions in subscribing to mobile network operators and their corresponding mobile money providers. Our findings highlight the significant influence of the distance to mobile money agents on consumers’ subscription choices. To explore the impact of interoperability (non-exclusivity) at the mobile money agent level, where consumers can use the nearest agent from any mobile money provider, we assess its effects on market shares of mobile network operators. Our results indicate that interoperability at the agent level has only a minor impact on market shares. Smaller operators experience marginal gains as their consumers can now utilize agents of larger providers, which are often closer in proximity. In conclusion, we find that interoperability at the agent level does not considerably alter the market structure in the context Tanzania during the period under consideration.

Keywords: mobile money; interoperability; M-Pesa; Tanzania; mobile networks

JEL Classification: O16; O18; O33; L86; L96

Corresponding author: Lukasz Grzybowski, Faculty of Economic Sciences, University of Warsaw, 44/50 Dluga Street, 00241 Warsaw, Poland; and School of Economics, University of Cape Town, Rondebosch, 7701, Cape Town, South Africa, E-mail: lukasz.grzybowski@uct.ac.za

Funding source: Bill and Melinda Gates Foundation

Acknowledgment

We acknowledge financial support from FIT IN Initiative at the Toulouse School of Economics. We would like to thank participants at the “FIT IN Initiative: Workshop on Mobile Money Interoperability” in 2022 in Toulouse for helpful comments. Lukasz Grzybowski acknowledges grant No. 2021/43/P/HS4/03115 co-funded by the National Science Centre and the European Union’s Horizon 2020 research and innovation programme under the Marie Skłodowska-Curie grant agreement No 945339. All errors are ours.

Appendix A

Table 2:

Multinomial logit/probit/Heckman selection model.

	Multinomial logit					Probit	Heckman
	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
	Phone	Airtel	Halotel	Tigo	Vodacom		Phone	Mobile money
dist_agent	−0.012**					0.001	0.001	0.003
	(0.005)					(0.005)	(0.003)	(0.005)
Network dummies		−2.808***	−4.631***	−4.631***	−1.922***
Network dummies		(0.654)	(1.191)	(1.191)	(0.606)
LTE <5 km		−0.137	−0.009	−1.297***	0.141	−0.332	−0.181
LTE <5 km		(0.446)	(1.045)	(0.384)	(0.384)	(0.349)	(0.208)
Dark		−0.458	−0.262	−0.827**	−1.004***	−0.915***	−0.519***	−0.532**
Dark		(0.429)	(1.078)	(0.350)	(0.369)	(0.319)	(0.192)	(0.209)
Bank account		1.279**	2.528***	2.040***	1.494***	1.694***	0.900***	0.264
Bank account		(0.613)	(0.799)	(0.554)	(0.554)	(0.533)	(0.268)	(0.290)
Credit card		2.022*	0.978	1.652	1.629	1.721	0.813	0.360
Credit card		(1.145)	(1.334)	(1.116)	(1.115)	(1.102)	(0.522)	(0.383)
Electricity		0.511**	0.284	0.861***	0.576***	0.638***	0.376***	−0.052
Electricity		(0.243)	(0.575)	(0.211)	(0.209)	(0.175)	(0.103)	(0.179)
Age <25	0.072					0.043	0.033	0.644*
Age <25	(0.356)					(0.356)	(0.211)	(0.340)
Age <35	0.703**					0.700**	0.418**	0.553
Age <35	(0.354)					(0.354)	(0.212)	(0.364)
Age <45	0.805**					0.826**	0.503**	0.612
Age <45	(0.370)					(0.370)	(0.221)	(0.381)
Age <55	0.290					0.292	0.187	0.660*
Age <55	(0.391)					(0.391)	(0.236)	(0.375)
Age <65	0.646*					0.659*	0.416*	0.630
Age <65	(0.390)					(0.391)	(0.235)	(0.405)
Income <25k	0.682*					0.700*	0.372	−0.476
Income <25k	(0.406)					(0.408)	(0.246)	(0.429)
Income <100k	1.558***					1.574***	0.865***	−0.236
Income <100k	(0.435)					(0.437)	(0.259)	(0.463)
Female	0.699					0.705	0.443	0.433
Female	(0.696)					(0.698)	(0.387)	(0.434)
Married	0.535***					0.567***	0.338***	−0.069
Married	(0.188)					(0.189)	(0.110)	(0.182)
HH size = 2	−0.345					−0.337	−0.217	−0.199
HH size = 2	(0.341)					(0.340)	(0.198)	(0.280)
HH size > 2	−0.511*					−0.496*	−0.301*	−0.214
HH size > 2	(0.286)					(0.285)	(0.164)	(0.244)
Primary	0.487*					0.515*	0.322**	0.416
Primary	(0.267)					(0.266)	(0.159)	(0.291)
Secondary	1.044***					1.091***	0.669***	0.730*
Secondary	(0.308)					(0.307)	(0.183)	(0.377)
Tertiary	1.196***					1.266***	0.795***	0.819*
Tertiary	(0.414)					(0.413)	(0.240)	(0.430)
Employed	0.619*					0.613*	0.372*	0.323
Employed	(0.333)					(0.333)	(0.193)	(0.261)
Self_employed	0.482*					0.407	0.247	0.316
Self_employed	(0.275)					(0.275)	(0.163)	(0.235)
Housework	−0.506*					−0.555*	−0.323*	0.328
Housework	(0.287)					(0.288)	(0.172)	(0.264)
Student	−1.001***					−1.000***	−0.580***	−0.622*
Student	(0.357)					(0.358)	(0.210)	(0.356)
Retired	−0.854*					−0.888*	−0.494*	0.397
Retired	(0.454)					(0.455)	(0.268)	(0.442)
ATM <2 km	0.392					0.403	0.220	−0.094
ATM <2 km	(0.274)					(0.275)	(0.157)	(0.187)
Constant						−1.116*	−0.660*	0.583
Constant						(0.587)	(0.351)	(0.922)
Athrho								−0.173
Observations	5950					1190	1190	779

*denotes significance at a 10 percent level; **denotes significance at 5 percent level; and ***denotes significance at 1 percent level.

Table 3:

Simulated market shares.

	Whole market
	Current	Simulated	Change
Airtel Cash	12.7 %	12.7 %	−0.2 %
Ezy Pesa	1.7 %	2.4 %	44.4 %
M-Pesa	23.9 %	23.5 %	−1.5 %
Tigo-Pesa	27.2 %	27.3 %	0.2 %
None	34.5 %	34.1 %	−1.2 %

	Urban			Rural
	Current	Simulated	Change	Current	Simulated	Change
Airtel Cash	13.8 %	13.9 %	0.2 %	11.1 %	11.0 %	−0.8 %
Ezy Pesa	2.3 %	2.7 %	15.3 %	0.8 %	2.1 %	156.8 %
M-Pesa	23.9 %	23.7 %	−0.7 %	23.8 %	23.2 %	−2.5 %
Tigo-Pesa	36.7 %	36.6 %	−0.2 %	14.2 %	14.4 %	1.5 %
None	23.3 %	23.1 %	−0.5 %	50.1 %	49.2 %	−1.7 %

	Light			Dark
	Current	Simulated	Change	Current	Simulated	Change
Airtel Cash	14.1 %	14.0 %	−0.3 %	11.4 %	11.4 %	−0.1 %
Ezy Pesa	2.4 %	2.7 %	12.5 %	1.0 %	2.2 %	118.9 %
M-Pesa	23.3 %	23.2 %	−0.6 %	24.4 %	23.8 %	−2.3 %
Tigo-Pesa	40.5 %	40.4 %	−0.2 %	14.5 %	14.7 %	1.1 %
None	19.7 %	19.7 %	−0.3 %	48.8 %	48.0 %	−1.6 %

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Received: 2023-05-06

Accepted: 2023-08-16

Published Online: 2023-09-01

From the journal

Review of Network Economics