Murendo, Conrad Wollni, Meike de Brauw, Alan Mugabi, Nicholas
Year of Publication:
GlobalFood Discussion Papers 58
Social networks play a vital role in generating social learning and information exchange that can drive the diffusion of new financial innovations. This is particularly relevant for developing countries where education, extension and financial information services are underprovided. The recent introduction of mobile money in Africa represents a case where imperfect financial markets, weak extension services and information asymmetries limit the ability of rural households to make informed decisions to take advantage of mobile money innovation. This article identifies the role of social networks in the adoption of mobile money in Uganda. Using data from a survey of 477 rural households, a probit model is estimated controlling for household characteristics, correlated effects, and other possible information sources. Results suggest that learning within social networks helps disseminate information about mobile money and has enhanced its adoption. Compared to poor households, non-poor households rely more on social networks for information about mobile money. Mobile money adoption is likely to be enhanced if promotion programs reach more social networks.