The Financial Inclusion Conundrum in Lesotho Is Mobile Money the Missing Piece in the Puzzle

THE PROLIFIC USE of mobile telephones in developing countries has given birth to financial innovations such as mobile money. As a result, the use of mobile money has expanded the grid of financial services to include previously unbanked populations in Africa.

This development is a harbinger for increased financial intermediation and positive spill-overs in terms of credit growth to entrepreneurs and faster economic growth. Based on monthly data for the period 2013m7 – 2015m12, this study employs time series techniques to unpack the proliferation of mobile money and its attendant impact on financial inclusion in Lesotho.

The findings reveal existence of long-run steady state relationship between financial inclusion and mobile money in Lesotho and that mobile money Granger causes financial inclusion both in the short-run and long-run in Lesotho. Therefore, financial inclusion policies should be directed towards leveling the playing ground for mobile money to flourish to create a more financially inclusive society in Lesotho.