Modelling the earnings of mobile money agencies in rural and semi-urban Malawi using panel data approaches

The mobile money business has drawn a plethora of profit-seeking agencies to tap gains from this innovative financial enterprise. Notwithstanding the gross adoption of the mobile money innovation by the general clientele of customers, the uptake of mobile money facilities has lagged in developing countries including Malawi. This study explores the expanse of the mobile money transactions in terms of their consumption by customers and how this relates to the effective earnings made by the facilitating agents in the form of commissions. The study applies an Arellano-Bond dynamic panel data model using data collected from the Semi-Urban and Rural area of Thyolo District in Malawi relate the transactional activities within the framework of mobile money to the commissions earned by the agent. The study finds that the scope of consumption of mobile money services is narrow and concentrated among cash-in and cash-out transactions. Indirect mobile money products like power utility credits do not influence earnings while bundle purchases and airtime have strong influences. Though by construction cash-in and cash-out transactions have direct variation to the earnings, the economic significance is very low thus prompting the agents to process high levels of transactions with the aim of being profitable. The results indicate a need to understand economic benefits as a driving force of agent choice of location.