Pilot study on impact of mobile money service on micro-entrepreneurs in rural Cambodia

Delivering financial services through mobile phone technology: a pilot study on impact of mobile money service on micro-entrepreneurs in rural Cambodia
(International Journal of Information Systems and Change Management; Vong, J., Fang, J., and Song, I (2012))

Abstract

Abstract: Mobile technologies are powering up economic and social development in developing countries. This pilot study aims to generate a set of preliminary results that will contribute to advancing research on the impact of mobile money services on micro-enterprises and micro-entrepreneurs. The location of the study is set in rural Cambodia.

Introduction

The pilot study evaluates the impact of mobile money services on micro-entrepreneurs in rural Cambodia. In particular, it is to examine how the business behaviour of micro-entrepreneurs have changed as a result of having easier access to money, as based on the social inclusion dimension framework of Burchardt et al. (2002) and later extended by Hasse and Walsh (2007).

Researchers of poverty are provided with deeper insights on microenterprise behaviour in rural and remote areas and thus further identify entrepreneurial and economic implications for poverty reduction using mobile technology. This pilot study will help researchers of financial inclusion to develop new approaches to bring financial services to the unbanked population of the world.

A World Bank Group/World Resources Institute commissioned report estimated that about 80% of the world’s population (four billion people) still has annual incomes below US$3,000 in local purchasing power (Hammond et al., 2007).

The International Telecommunications Union (ITU) reported global mobile phone subscriptions accelerating from 2.2 billion in 2005 to over five billion in 2010 reaching 87% of the total global population and 79% of the total developing world population (see Figure 1).

This phenomenon is set to grow to six billion by end 2011 (ITU, 2011). Chaia et al. (2009), CGAP (2010) and Ardic et al. (2011) suggested that as at end 2009, there was an estimated 2.75 billion people out of five billion people (that is, 56% of global population) who does not have access to formal financial services for saving, borrowing or transacting.

With this backdrop, the pilot study focuses on Cambodia where the World Bank Group reported that only about 6% of the total population of 14.5 million (or about 900,000 people) use financial services from banks and microfinance institutions (Sereivathana et al., 2008).

As of 2010, financial services penetration rate is about 2.2 out of 14.5 million people (NBC, 2010). The total number of Cambodian bank branches is 568 which only reached 3.92 per 100,000 people as compared to 38.67 Australian bank branches per 100,000 people (CGAP 2010; Connolly et al., 2011). In 2010, Cambodian mobile phone subscriptions have a penetration rate of about 57% or 8.2 million.