Does mobile money enable women-owned businesses to invest? Firm-level evidence from Sub-Saharan Africa

Plain English Summary Women-owned businesses lag behind their male counterparts in many ways in Sub-Saharan Africa. Digital technologies such as mobile money can provide opportunities for women-owned businesses to bridge this gap. Our study finds that mobile money adoption increases the investment of women-owned business but not necessarily for men-owned businesses. This is especially the case for small and medium-sized enterprises. Part of the reason may be because mobile money allows women-owned businesses to build supplier and customer relationships and thus better access to liquidity. It also increases their demand for credit. Thus, the principal implication of this study is that policymakers should encourage the diffusion of digital technologies, especially to women entrepreneurs, to narrow the gender gap. This study connects two important findings in Sub-Saharan Africa. First, digital technologies such as mobile money have become widespread and have increased investment by businesses, especially in East Africa. Second, women-owned businesses in the region significantly lag behind their male counterparts in capital investments. Using data for 16 Sub-Saharan African economies, the study finds a positive relationship between mobile money use and investment by women-owned firms; the relationship is statistically insignificant for men-owned firms. This relationship is stronger for women-owned small and medium-sized enterprises. Potential channels are explored. Women-owned firms that use mobile money to transact with suppliers are more likely to invest. Mobile money use is also associated with a greater provision of customer credit and generally greater demand for more credit by women-owned firms. Such patterns are not observed for men-owned firms.