Long-term impacts of mobile money on expenditure, poverty, and inequality in Tanzania

In this paper, we examine the association of mobile money and expenditure patterns, poverty, and inequality following heatwave. This research extends the literature on the consumption smoothing framework of mobile money adoption to its capacity to moderate inequality across local communities. We use household survey data from the Tanzanian National Panel Surveys (TZNPS) between 2010 and 2020. The study explores the spatial distribution of drought shocks from extremely high temperature patterns and low rainfall across waves of panel localities while investigating adaptation mechanisms through increased mobile money agent distribution over the same period. Our findings show that during a drought incidence, mobile money access is found to increase food expenditure and per capita expenditure, and reduce poverty incidence compared to those without access. Also, while increased drought exposure increases the likelihood of inequality, mobile money access reverses this effect. Inequality results are linked to improved financial inclusion.