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TEOFILO KISANJI UNIVERSITY
CONTRIBUTION OF MOBILE MONEY IN FINANCIAL
SYSTEM INCLUSSION TO RURAL AND POOR URBAN
RESIDENTS IN TANZANIA:
A CASE OF MBEYA REGION
BY:
AMOUR ABDALLA, A
REG. NO TEKU/BAEC/101322
A research proposal to be submitted for the requirement of an award for Bachelor of Arts
Degree in Economics of the Teofilo Kisanji University (TEKU).
2013

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CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The significance of the financial system in the growth and development of any economy has
been a matter no doubt to world economists since the introduction of Sustainable Livelihood
Framework (SLF) theory in the late 20th
and early 21st
century which shows that the access
by poor households to the financial services builds up their productive assets and improves
their productivity. It is further explained through the SLF model that the access to financial
services increases and diversify incomes for the poor population, expands their asset base and
increase access to education, health services and enhances food security (Bee 2007).
However, while financial system is comprehensively defined as it ―consists of institutional
units and markets that interact, typically in a complex manner, for the purpose of mobilizing
funds for investment, and providing facilities, including payment systems, for the financing
of commercial activity‖ (IMF 2004), so to mean ―the interaction between the supply of and
the demand for the provision of capital and other finance-related services‖ (Goethe 2003), the
financial system in Tanzania is narrowly defined as, comprised with and dominated by the
commercial banks (IMF 2003).
Alongside other financial intermediaries such as the insurance companies, pension funds and
security firms, the commercial banks have been dominating the financial system in Tanzania
where by the banking institutions had 75% share of the total assets of all financial institutions
by year 2010 (BOT 2010). The functions of these commercial banks remaining to be the
basic traditional three; the accepting of deposit, advancing of money (Saleemi 2007) and
money transfer related activities (Mudida 2003)
Unfortunately enough, the network of financial system is primarily not inclusive in Tanzania.
The IMF‘s Financial Stability Report (June, 2010) shows that in 2009 only 12% of
Tanzanians had an access to formal banking services, 4% had an access to other formal
financial institutions (insurance, social security, etc), other 27% had an access to only
informal financial services and 56% had been totally excluded from the financial system.

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Impliedly, this 56% of the population not only had no access to deposit and borrowing,
which may require a person with relatively high income level, but also sending and receiving
money, which does not require a person to be a high income earner.
The poor population and the rural residents form the major part of the population excluded
from the financial system (56%). Less than 10% of the populations in most part of the rural
areas have an access to financial services in general (IMF 2010). The 2010‘s annual report of
the Directorate of Banking Institution of the BOT shows that as at 31st
December, 2010, the
total number of banking institutions being 42 with the total of 473 branches in all over the
country. However, 158 branches (equal to 33.4%) are in Dar-es-salaam only, other 35
branches are in Mwanza only and 34 in Arusha. This makes the sum of 227 branches which
is the same as nearly 48% of all branches to be located in only three major cities of the
country. How unequally distributed! The implication here is to show how the rural residents
and ultimately the poor are left with no access to financial services.
While the rural residents lack of access to financial system is backed by insufficient networks
of the branches in their areas, the urban poor and women do not have bank deposits, neither
do they borrow from banks nor transfer funds, although they are surrounded by bank
branches, because ―financial services may be expensive to provide to the poor who lack
pledge-able collateral, and informal services often charge exorbitant interest rates on credit to
cover the high screening and monitoring costs that are required to keep default low‖ (Pande
et al 2012).
Also, many of these people are not well informed about the usefulness and importance of
financial services through banks. Expensiveness of running the bank accounts and
complexities, bureaucratic procedures as well as avoidance of too much paperwork form the
barriers for having bank accounts (Kunt and Klapper 2012). It also has been known by the
people in Sub Saharan Africa that the banks are only for the rich. The studies show that ―81%
of the adults interviewed in the Sub-Saharan Africa admitted that they don‘t have enough
money to open and maintain an account.‖ (Technology Banker 2012)
Then, the mobile money system was officially launched. In April 2008, Vodacom was the
first mobile phone company to establish the mobile money through its well known M-Pesa

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after that was seen as successful introduction of the mobile money platform in Kenya just a
year earlier (IFC 2010). Currently, the four major cell phone companies are competing for
the market share of the mobile money service provision in Tanzania. These companies are
Vodacom (T) Ltd for M-Pesa, MIC (T) Ltd for TIGO-Pesa, Airtel (T) Ltd for its Airtel
Money and Zantel for its Z-Pesa. (BOT 2011, BOT 2010, Bangens and Soderberg 2011 and
Alexandre and Eisenhart 2013).
Studies show that up to November, 2011 about 93% of Tanzanians are aware of at least one
provider of Mobile Money services and 24% of the Tanzanians are actually using the mobile
money (Audiencescapes 2011). This rapid response to mobile money application in Tanzania
has been a result of the widespread application of mobile phones in the country. Several
studies reveal that 78% of the households own mobile phones and 63% of the individuals
own mobile phones (Audiencescapes 2011:3, Alexandre and Eisenhart 2013).
Now, the base of this study is to examine the extent at which the mobile money has
contributed to the spread of the financial system in Tanzania. There is a need to measure how
much has mobile money contributed to the widespread of the network of the financial
service. The study is therefore grounded on how much the mobile money services reached
and helped to include the rural residents and the urban poor into the financial system.
1.2 STATEMENT OF THE PROBLEM
It is already known that the introduction of mobile money in Tanzania has contributed to
widening the network of the financial system and consequently the financial services among
Tanzanians (Ishengoma 2001), but to what extent and to what kind of people, nobody knows
of yet.
The exact people who are benefited and how do they benefit should be a question of interest
whenever the topic of the spread of the financial system is displayed for public discussion. In
the community formed by the poor and the rich, the rural and the urban, the small and large
businesses, the school and college students, the workers and the jobless, the distribution of
the gain is never equal. However, as impliedly learnt through the preceding discussion all

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these groups, for the purpose of this study, will be classified in to two; the rural residents and
the urban poor residents, since it is the easiest way to classify and identify the financial
system exclusion victims ( Kunt and Klapper 2012, Pande et al 2012).
From which angles these groups do benefit should be a matter of high interest in this
analysis. When we said these groups had been excluded in the financial system we meant
they had no access to deposits and thus nor overdrafts or short term loans and advances,
money transfer (sending and receiving money) and access to doing transactions (purchasing
and selling) via debit and credit cards. There is a need also to measure the easiness of
conducting these financial transactions, if any, brought by the mobile money, specifically to
these groups.
There is, therefore, a need to measure the contribution of mobile money towards the spread
of the financial system network to the special groups who were the victims of the financial
system exclusion in the country. Our problem here, is therefore, not whether the financial
system network has been widened or not, but rather who exactly have been reached and how
do they actually benefit from this development.
The spreading of financial system, for the purpose of this study, therefore means the
accessibility of the financial services to the rural residents and the urban poor dwellers who,
before the introduction of mobile money were in acute problem of poor access to the
financial system (Ishengoma 2001). The specialty of this study is that it will go further to
evaluate how far has the mobile money helped to include these groups in the financial
system, which services are much more applicable to these groups, and if the introduction of
the mobile money has made the transactions conducted by these groups copying up, at least
in relative terms, with the growing technology and the changing business world.
1.3 RESEARCH OBJECTIVE
The general objective of this study is to measure the extent of the contribution of the mobile
money to financial system inclusion to the rural residents and urban poor population.

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1.3.1 The specific objectives of this study are;
1. To find out if the mobile money has been of help to Tanzanians in access to financial
services.
2. To find out the magnitude that the mobile money has reached people in the Tanzania
3. To find out any improvement associated with mobile money usage by Tanzanians.
1.3.2 RESEACH QUESTIONS
The research objectives is sought to answer the following research questions;
1. Has the mobile money helped Tanzanians to gain access to the financial services?
2. To what extent has the mobile money reached Tanzania residents?
3. Is there any improvement associated with the mobile money usage by Tanzanians?
1.4 SIGNIFICANCE OF THE STUDY
The inaccessibility of the financial services to the poor urban and the rural residents is
directly correlated to their poor living standards and vulnerability to poverty (Bee 2007).
Impliedly widening the network of the financial system to the rural areas and increase its
accessibility to the urban poor is taken as a relief and an instrument to break the cycle of
poverty. Mobile money has widened the financial system inclusion as proved by Ishengoma
(2011), but the most vulnerable groups and the mostly injured victims of the financial
exclusion were never directly spoken about.
If the mobile money was to increase the financial inclusion, it should have to directly benefit
these groups. To measure the successfulness of mobile money into spreading financial
system one would have to identify who exactly benefited, and how. It should also be a matter
of interest to find out anything special with the mobile money that would enable the group to
cope with the changing world.
That is where this study is needed. An examination is needed to measure the extent to which
the mobile money has reached and helped the first class victims of the financial exclusion,

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and that is exactly this study is going to do; to measure the significance of the mobile money
to the classes of the poor.
The rationality of this study is directly attached to the policy formulation that will help the
most victims of financial exclusion to get attached to the system and consequently find the
means to get out of the poverty.
The mobile money service providers will take the results of this study as the reflection of
their services widespread. Did they really get to the whole market? This study will not only
provide the answer to this question, it will also analyze the difference they made.
1.5 THE SCOPE OF THE STUDY
Many literatures are already published studying the new innovation into the financial system-
the mobile money- in Africa. Some have described their impulse on the rapid growing and
successfulness of the mobile money in Africa (Ngugi et al 2010), some had to do with the
trucking of the mobile money and its channel of distribution in Tanzania (Audiences capes
2011 IFC 2010), others focused on the laws and regulations and called for legal system
reaction towards mobile money legal requirements (Ally 2012) and some went further to
analyze the way the mobile money increased the mobile inclusion in Tanzania (Ishengoma
2011, Alexandre and Eisenhart 2013).
This study, therefore, will focus to the degree of the financial system inclusion brought by,
and as a result of the mobile money to the poor urban and rural residents. The scope of this
study will go as far as the interests of these two groups is concerned regarding the mobile
money accessibility to them, how has it made easier for them to join the financial system, and
what extra developments that the mobile money brought to them.
Mbeya region is chosen to represent Tanzania in this study. The selection of Mbeya is done
not only because of the logistic reasons concerning the researcher, that is he has his research
center located Mbeya (Teofilo Kisanji University), but also because Mbeya is a growing city,
it also has the districts which are nearby the city but far away in terms of development
services accessibility. Mbeya will make a suitable specimen for the required observation.

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1.6 LIMITATION OF THE STUDY
This study will limit itself and focus only on the accessibility and benefits of the mobile
money to the rural and urban poor residents. There will be no questions on why these groups
did find banking system complicated and expensive because, as briefed earlier, that part is
already covered by several other studies. However, the study will require for the comparison
between the mobile money system and traditional banking system.
This study will also avoid the general analysis of the spread of mobile money network and
will concentrate only on how the two groups got to use and benefit from the mobile money
and so connected to the financial system. However, the study will also look for any special
and extraordinary benefit of mobile money to these groups.
Mbeya region is also very large. Thus the study, obviously, will not cover all districts in the
region. Of course, the ―city‖ itself will be of necessary interests and some districts will be
chosen to provide for the rural area samples.

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CHAPTER TWO
LITERATURE REVIEW
2.1 PREAMBLE
This chapter intends to create the hypothetical framework of the study through, among
other ways, reviewing the literatures already published to analyze the matters related to
the financial system, the financial system inclusion, the financial system spread to the
poor and rural residents and the role of the mobile money to the financial system and the
role it played to development of financial system and financial system inclusion.
It should be recalled that the base of this study is to analyze how and to which extent has
the mobile money reached the rural residents and poor urban dwellers, connected them to
the financial system and helped them participate in the new ways of transaction and
payment systems.
2.2 FINANCIAL SYSTEM IN TANZANIA
2.2.1 Financial System defined
Defining financial system needs a clear pre-thinking and assurance of the discipline and
areas that one needs to study the ‗terminology‘ from. This is because one could find the
same word used in business accounting, computer information system and economics to
fit the discipline. It is important to note that, for the purpose of this study, in general, and
this review, in particular, the world will mean the ‗financial system‘ from the economic
point of view whenever mentioned.
Again, from the economic perspective, the term financial system is rather complicated
such that it is difficult to find the single simple definition of the term. For instance, the
Farlex‘s Free Dictionary (2013) which also derived the definitions from the Great Soviet
Encyclopedia (1979) provides two definitions for the very terminology- broader and
narrow definition of the financial system.

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In the broad sense, it is stated that the financial system means ―the totality of spheres
(components) of financial relations through which, within the framework of a
socioeconomic structure, the creation and use of monetary funds are ensured.‖ (Farlex
2013). It is added that; in the narrower sense, a financial system is the system of financial
institutions in a country that mobilize monetary resources, distribute the resources in the process
of financing and crediting, and exercise financial control. Farlex (2013)
From the point of both the wider and the narrow definitions above, the financial system is
a complicated terminology to state. Some literatures for this reason suggested that a
person is obliged to specify the areas of concern that is needed in the analysis of financial
system (Schmidt and Tyrell 2003). This is due to the reason that the financial system may
be defined differently from different angles and sometimes the financial sector may be
confused with the financial system.
As they foreseen this, Schmidt and Tyrell (2003) defined the financial system as a
broader term which is often confused as a narrow concept of financial sector. They
defined the financial sector narrowly as; …that part – or sector – of an economy which offers
and provides financial services to the other sectors of the economy. It consists of the central bank,
other banks, non-bank financial institutions, organized financial markets and the relevant
regulatory and supervisory institutions (Schmidt and Tyrell 2003).
Again the financial system covers more than that, it is broader and is given as the
interaction between the supply of and the demand for the provision of capital and other
finance-related services (Schmidt and Tyrell 2003).
The OECD and IMF both seem to have the same meaning regarding the financial system. Their
definition is given as; a financial system consists of institutional units and markets that interact,
typically in a complex manner, for the purpose of mobilizing funds for investment, and providing
facilities, including payment systems, for the financing of commercial activity. (OECD 2013 and
IMF 2004)
The definition that may seem more elaborative is the one given by Gupta (2011). Gupta
defines the financial system as ―a set of institutional arrangements through which
financial surpluses (or commands over the real resources) in the economy are mobilized
from the surplus units and transferred to the deficit spenders.‖ (Gupta 2011).

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Fig 2.1 Financial System (Source: Kumar (2013)
This definition is identical to what Kumar (2013) provides diagrammatically, it is
portrayed that the financial system is made up with the two classes of the actors in the
economy – the suppliers and the seekers or demanders of the fund- who exchange to
each other the flow of funds, financial services and claims of incomes and finance.
In his definition Gupta simply states that the financial system as the institutional
arrangements. And he was ready to elaborate the institutional arrangements to include all
conditions and mechanism governing the production, distribution, exchange and holding of
financial assets or instruments of all kinds and the organizations as well as the manner of
operation of financial markets and institutions of all descriptions (Gupta 2011).
It became easier to understand when he explained that in concrete terms, the financial
assets, the financial markets and financial institutions are the main three constituents of
any financial system‖ Gupta (2011). This statement again, can be easily understood with
the help of Kumar‘s diagram as he elaborates the constituents of the financial system.

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Fig 2.2 Constituents of Financial System (Source; Kumar (2013)
Financial assets are ―monetary claims by one party against another party‖ Samuelson et
al (2002). Examples of the frequently spoken about financial assets that one or a family
might own ―include cash, a checking account, stock or bond (Frank and Bernanke 2009).
They may also be explained in terms of money, savings accounts, government securities,
equities, financial derivatives, and pension funds. (Samuelson and Nordhaus 2002)
Financial Markets are defined as the ―dynamic, heterogeneous distribution system
through which the cash-surplus entities provide money to cash deficit entities (Higgins
2009). It is provided that besides the business which are the most prominent players of
the financial market, ―other active participants include national, state and local
governments and agencies, pension funds, endowments, individuals, commercial banks,
insurance companies, and the list goes on and on.(Huggins 2009).
Financial intermediaries are ―institutions or firms that mediate or stand between ultimate
lenders and ultimate borrower or between those with budget surpluses and those who
wish to run budget deficits (Gupta 2011). These include banks, insurance companies,
provident fund, investment companies and unit trusts.

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2.2.2 Tanzania Financial System Structure
Financial system in Tanzania, like that of many African countries, is dominated by
banking institutions. The 2010‘s final report of the Directorate of Banking Institutions
elaborates that, in the Tanzanian financial system, banking institutions are the major
players, accounting for about 75% of total assets of the system (BOT 2010). Alongside
the banking institutions, literatures mention other financial system institutions as pension
funds, insurance firms, security firms, bureau de change, microfinance institutions and
mobile payment system (BOT 2010).
2.2.3 Financial Inclusion in Tanzania
The easiest way to find out who gets excess to financial system, and to what extent, is by
examining the accessibility of the most dominant type of financial institution. For the
case of Tanzania, the rural residents are highly excluded from the system. However the
bank branches are highly increasing; the rural areas are not yet reached by these branches
to the extent that can include the rural residents to the financial system. Up to December,
2010, the totals of 473 branches of banks were at work country wide. Unfortunately, sum
of 158 of these branches are in Dar-es-salaam, 35 are in Mwanza and 34 in Arusha (BOT
2011). You could find that about 48% of the countrywide branches are found only in
three major cities of the country.
Distances from branches are identified as a major reason for inaccessibility of the
financial services to the rural residents. Tanzania has a large share of non-account-
holders who cite distance as a reason for not having an account—47 percent—and also
ranks near the bottom in bank branch penetration, averaging less than 0.5 bank branches
per thousand square kilometers. (Kunt and Klapper 2012)
Again, the BOT (2010)‘s report of Directorate of Banking Supervision summarizes the
accessibility of financial services as 12.40% of the Tanzanian population was served by
formal institutions (banks and financial institutions), 4.30% by semi-formal institutions
(microfinance institutions and SACCOS) and 27.30% by informal village associations
(VSLA/VICOBA), whereas 56.00% had no access to financial services. (BOT 2010)

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To the poor rural residents, the case of inaccessibility to the financial services is
associated not with the availability of the service itself but highly with the ability of the
people to use the services. Tanzania shares this condition with the rest of other poor and
Sub Sahara African countries. Financial services may be expensive to provide to the poor
who lack pledge-able collateral, and informal services often charge exorbitant interest
rates on credit to cover the high screening and monitoring costs that are required to keep
default low (Pande et al 2012).
Regardless the number of bank branches and other formal ways of financial services
surrounding the environment of the rural residents, poor rural residents have been found
in many researches that they use informal means of financial services (Pande et al 2012)
Inadequate access to financial services is widespread in developing countries, with access
as low as 5 percent of the adult population in places like Nicaragua and Tanzania.
Moreover, in many developing countries, the poor have no access, if any, only to
informal financial service, such as moneylenders.
Kunt and Klapper (2012) think that the world wide reason for not using formal financial
system is;
(i) Lack of enough money to use one. They also argue that;
(ii) Having a formal account is not costless in most parts of the world and
may be viewed as unnecessary by a person whose income stream is small
or irregular, and that;
(iii) Banks or accounts are too expensive
2.3 MOBILE MONEY IN TANZANIA
2.3.1 Mobile Money Defined
Mobile money has been defined as the money stored using the SIM (subscriber identity
module) in a mobile phone as an identifier as opposed to an account number in
conventional banking. (UNCTAD 2012).

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Based on its functionality, Lachaal and Zhang (2012) define mobile money as it includes
all the various initiatives (long-distance remittance, micro-payments, and informal air-
time) aimed at bringing financial services to the unbanked, as well as convenience for the
banked, using mobile telephony technology. Generally, it is the system of using the
mobile phone to save, send and receive money, and to pay for and receive payment for
various transactions using mobile phones.
Further, UNCTAD (2012) mentions the players involved in the mobile money system as;
(a) The Mobile Network Operators that provide the mobile network and the customer
base that already use the mobile phones,
(b) A bank or other financial institution with banking license and infrastructure that
enables the exchange of money between different parties,
(c) Regulatory authority,
(d) An agent network of people, automatic teller machines and branches,
(e) Merchants and retailers, who accept mobile money payments in exchange for
different products and services,
(f) Businesses that utilize mobile money as a means to deliver their services,
(g) equipment manufacturers and platform providers include a wide array of stakeholders
like mobile phone makers, network equipment vendors as well as application providers,
and
(h) Mobile money users who are normally subscribers to an MNO are other services.
(UNCTAD 2012)
2.3.2 Mobile Money Services
UNCTAD (2012) declares three main categories of mobile money services being transfer,
mobile payment and mobile financial services.

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a) Mobile Money Transfer; this is also called Person to Person (P2P) transfer. It
involves transfer of money from one person to another without involving any
exchange of goods or services.
b) Mobile Money payments; this involves the mobile transfer of money in exchange of
the goods. This may also be called Person to Business transfer (P2B) and when
involving the business with another business it is called Business to Business (B2B)
transfer.
c) Mobile Financial Services; in this case the mobile money is connected with the bank
account to get the full range of banking and financial services such as saving, credit,
insurance and microfinance through mobile phone.
2.3.3 Mobile Money; the rapid acceptance
The rapid acceptance of the mobile money in East Africa and Tanzania in particular is
not the only wonder that the mobile money has done in the world; it is also known that
the mobile money has more warmly welcomed in Africa than in the West- a traditional
home of changes. ―Welcome to Africa, the home of mobile banking, until the west
catches up‖ writes the October 27th
The Times (2010) to mean and describe that the
mobile money technology has been welcomed with a wider and accelerating market
expansion in Africa more than anywhere else in the world.
The rapid adoption of the mobile money technology in Africa is associated with the rapid
adoption of mobile phones and widespread application of the mobile phones. (Alexandre
and Eisenhart 2013: Audiencescapes 2011). Africa showed quick adoption of the mobile
phones application. In 2000, the continent witnessed the 30% growth in mobile phone
users and up to 2012 it was forecasted that the mobile money subscribers would have
reached 735 million. Lachaal and Zhang (2012).
In Kenya, for example, Vodacom M-Pesa was introduced in April, 2007. Only 14 months
later, M-Pesa recorded 2.7 million users of M-Pesa and 3,000 agents. IFC (2010).

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2.3.4 Mobile Money in Tanzania
Vodacom was the first one to introduce the mobile money services in Tanzania through
the lunch of its M-Pesa in April, 2008 after a successful launch in Kenya a year earlier
(IFC 2010). Then Zantel with Z-Pesa, Tigo with its Tigo-Pesa and Airtel Tanzania with
its Airtel Money came in. (BOT 2011, BOT 2010, Bangens and Soderberg 2011 and
Alexandre and Eisenhart 2013).
Tanzania is not only among the first adopters of mobile money but also showed the quick
acceptance of the services. For example in June 2009, 14 months after the launch of M-
PESA in Tanzania, Vodacom announced that registrations had reached 280,000 users
who were transferring USD 5.5 million per month at about 930 agent locations (IFC
2010). Mobile money in Tanzania is taking shape amid a fast-growing market for mobile
communications in general. The International Telecommunications Union (ITU)
estimates that the number of mobile subscriptions in Tanzania more than doubled
between 2007 and 2009, from 8.3 million (20.2 subscriptions per 100 inhabitants) to 17.5
million (40 subscriptions per 100). Audiencescapes (2010) study also saw that the rate of
increasing of the mobile money application was overwhelmingly high. It was shown that
63% of the respondents answered they had started using mobile money for less than six
months. As at 31st
August, 2011, Tanzania had 7 mobile network operators 2 of them
were mobile money platforms and 9.2 million mobile money subscribers which is equal
to 43.4% of all mobile money subscribers (UNCTAD 2012).
2.4 CONCEPTUAL FRAMEWORK.
While the access to banking services is determined by the accessibility of the banks
themselves, the income level of individual, education level and knowledge an individual
have on the importance and application of banks (Kunt and Klapper 2012), Pande et al
(2012)-things that that 56% of Tanzanians do not have (BOT 2010), mobile money
application is highly determined by access to mobile phones and Income often [is] not a
factor in usage of MM [mobile money] applications (Audience Scapes 2011).

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Access to mobile phones to rural and poor urban residents seems to be no problem in
Tanzania. Poverty did not hinder 78% of households and specifically 63% of individuals
to own mobile phones (Alexandre and Eisenhart 2013), it is shown that 55% of the
sample mobile phone adopters earn less than two US dollars a day and 20% earn between
2 and 4 US dollars a day at Purchasing Power Parity (Audience Scapes 2010).
Neither did the rural residence deny the population to access the mobile phones. It is
evidenced that 54% of the rural households have access to mobile phones, 54% use
mobile phones at least weekly and 53% own their own mobile phones (Audience Scapes
2010). Have the same trend been followed by the mobile money adoption? That could be
a different question to answer.

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CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Research Design
This study is about the contribution of mobile money into financial inclusion to the rural
and poor urban residents. Therefore, it is intended that, the data will be collected from the
rural residents, the urban dwellers, the mobile money service providers including agents
and the business operators.
The design for this study is induction. The researcher will empirically study the subject in
some districts of Mbeya region and generalize the outcomes for Tanzania as a whole.
3.2 Research Techniques
This is a social science study, so it is natural that, it will use a great deal of quantitative
techniques. However, due to the nature of the study itself, the qualitative technique will
also be applied.
3.2.1 Quantitative Techniques
The researcher intends to use the quantitative technique to measure all the empirical data
which is intended to be collected. The data will be collected in forms of questionnaires
and interviews to be analyzed and presented in the research report later.
3.2.2 Qualitative Technique
This approach will be used for information which cannot be mathematically presented.
The researcher expects to collects some observable information which the comparison
and sound judgment approach will be used to decide on them.
3.3 Population
This study focuses on two major groups that the researcher wants to measure the
contribution of mobile money into financial inclusion to them-the poor urban dwellers
and the rural residents. The population of this study therefore covers all rural residents
and poor urban residents in Mbeya region.

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3.3.1 Area of Study
The area of this study is divided into two. One, Mbeya urban areas whereby Mbeya City
will be used to represent all the urban areas in the region, and two, the rural areas
whereby one village will be used in each of the two Districts- Mbarali and Rungwe as
study area to cover for all Mbeya region‘s rural.
3.3.2 Unit of Inquiry
Persons will form a major unit of inquiry of this study. The urban poor persons and the
rural residents will be used as the correspondents of this study. Also, the representatives
of mobile money services providers and their agents along with some business enterprises
will form another part of the respondents.
3.4 Sampling Techniques.
For the population of this study is large and diverse, the specific sample will be taken to
represent the population. And for the comprehensiveness of the study and the divergence
of the area of study and its unit of inquiry, this study will not base on only one sample
technique and method. The sampling methods and size are explained in following
sections.
3.4.1 Sample Size
The whole study will have 100 people as sample of the rural and poor urban residents.
From the rural sides 50 persons will be used as a sample for all rural residents and from
the urban poor dwellers 50 persons will be used as a sample for poor urban dwellers.
The study will also need information from the mobile money platforms representatives.
For that case the study will choose four mobile money platform branches in Mbeya City,
and two in each of the two districts Mbarali and Rungwe- to have a sum of 8 platform
branches.
The study will need information from the mobile money agents. The sum of 16 agents
will be a sample, 10 in Mbeya City and 3 in each of Mbarali and Rungwe‘s chosen
villages to cover for agents who serve for rural areas.

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Business enterprises will be also needed. The sum of 16 business enterprises will be
needed as a sample for all Mbeya regional enterprises, 10 in Mbeya city and 3 in each of
Mbarali and Rungwe‘s chosen villages.
3.4.2 Sampling methods
The study will randomly choose 50 respondents in the two randomly chosen villages. The
random sampling is used in this method because this part focuses on the rural residents
and intends to avoid the complications of gender, age and income levels.
To get the respondents from the urban poor population the researcher will need to
identify the income status of the respondent-which is complicated task, to avoid that the
study will randomly choose the people from the poor working groups of the rural
dwellers. Therefore, the study will choose its 50 urban poor dwellers respondents
randomly from the groups of street worker and street peddlers who are easily accessible
and nobody will raise a question about how poor they are.
Regarding the business enterprises, the study will specifically choose those which accept
mobile money payments in both rural and urban areas. The mobile money services
argents will be randomly chosen everywhere. The researcher will choose four different
Main branches of the mobile money platforms in Mbeya City and the same thing will be
done to the other four in Mbarali and Rungwe although will be randomly selected.
3.5 Types of Data collected
The study requires both primary and secondary data, for that reason the researcher
intends to use both types for the data.
3.5.1 Primary Data
Primary data will be collected in forms of questionnaires from the 100 rural and poor
urban respondents. Observations and interviews will be used for the managers of the
business enterprises, and the mobile money agents.

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3.5.2 Secondary Data
Secondary data will be obtained from the reports, manuals and any other literatures found
with and recommended by the mobile platform branches, the agents and business
enterprises, the agents from mobile money services and the correspondents in the mobile
money platform branches.
5.6 Data Management and Analysis
Again, this is a social science study. The data collected will be empirically analyzed. The
Statistical Package for Social Science (SPSS) will be used to analyze and present the data
in standard scientific form.