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Tech advancement crucial in financial inclusion—study

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Study by some economic experts from constituent colleges of the University of Malawi has established that financial education reinforced with text message reminders is an effective way to improve knowledge and uptake of mobile money services among rural masses.

This follows a recent national policy research dissemination conference organised by the Economics Association of Malawi (Ecama) to disseminate findings of the study.

Titled Promoting Mobile Money Use through Training and Text-messages in Malawi, the study further highlights that integrating mobile money into Village Savings and Loan Associations (VSLAs) improves access to financial services among unbanked people and potentially improves VSLA operations.

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The study, thus, recommends that initiatives to encourage the digitisation of financial transactions should combine training with text message reminders and that Mobile money services should target established and trusted groups, such as VSLAs.

The study focused on 342 members of 21 VSLAs in Machinga and Mangochi districts who received financial literacy and mobile money training, reinforced by weekly text message reminders as the treatment group and another 298 individuals from 21 other VSLAs constituted the control group.

“The intervention was more effective in less-developed areas. Comparing the effects of the training and text message program between the less economically developed district of Machinga, and the more-developed district of Mangochi revealed some significant differences.

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“Treated VSLA members in Machinga were more percent likely to have a bank account, compared with their counterparts in Mangochi. By the same measure, they were also more likely to save with banks by 3 percent, microcredit groups by 4.7 percent and mobile money by 7.4 percent.

“Similarly, more treated individuals in Machinga reported that they had learned mobile money could be used to pay bills at 6.8 percent, save money 9.9 percent, and obtain a loan at 6.7 more,” reads the study in part.

It further says that the effectiveness of the intervention was linked to trust in mobile money where participants who indicated their trust in mobile money services during the baseline survey were more likely to own and use a mobile money account at the end of the intervention.

Ecama Executive Director, Kettie Nyasulu, said the study brings to light efforts that are effective towards financial innovation as well as financial inclusion of the unbanked poor.

“During this digital era, it is quite important that we embrace a cashless society in order to enhance effective payment services for expanding economic and financial transactions in Malawi,” Nyasulu said.

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