Investigating the Economic Dynamics of Mobile Money in Post-Conflict Economies: Empirical Evidence from Somalia

Abstract

This study investigates the economic dynamics of mobile money in Somalia, focusing on its transformative potential to impact economic activities in the short and long term. Adopting a quantitative research design, the study utilizes secondary data from 2010 to 2022. The autoregressive distributed lag (ARDL) approach is employed to assess the impact of mobile money on household consumption, real income, exports, and imports. Theoretical insights from the quantity theory of money further guide the examination of how mobile money influences economic activities. The findings demonstrate that mobile money has a significant positive effect on household consumption, real income, export growth, and import activity both in the short and long term. The study reveals that mobile money not only facilitates financial transactions but also enhances trade efficiency and promotes financial inclusion, thereby stimulating economic activities and growth. The study underscores the need for a supportive regulatory environment for mobile money services. It highlights that financial institutions and mobile money service providers should expand innovative services to include the unbanked population. By doing so, they can leverage mobile money to foster greater economic engagement and empowerment. Policymakers are encouraged to develop strategies that promote financial inclusion and economic development to harness the full potential of mobile money. This study enriches the existing literature by uniquely investigating the economic impacts of mobile money in Somalia, a post-conflict setting, thereby broadening the understanding of how financial technologies can catalyze economic activities and growth in similar contexts.