Determinants of Mobile Phone Penetration: Panel Threshold Evidence from Sub-Saharan Africa

Asongu, Simplice and Nwachukwu, Jacinta (2016): Determinants of Mobile Phone Penetration: Panel Threshold Evidence from Sub-Saharan Africa.

Abstract

Despite the evolving literature on the development benefits of mobile phones, we still know very little about factors that influence their adoption. Using twenty five policy variables, we investigate determinants of mobile phone penetration in 49 Sub-Saharan African countries with data for the period 2000-2012. The empirical evidence is based on contemporary and non-contemporary OLS, Fixed effects, System GMM and Quantile regression techniques. The determinants are classified into six policy categories. They are: (i) macroeconomic, (ii) business/bank, (iii) market-related, (iv) knowledge economy, (v) external flows and (vi) human development. Results are presented in terms of threshold and non-threshold effects. The former has three main implications. First, there are increasing positive benefits in regulation quality, human development, foreign investment, education, urban population density and internet penetration. Second, there is evidence of decreasing positive effects from patent applications. Third, increasing negative impacts are established for foreign aid and return on equity. Non-threshold tendencies are discussed. Policy implications are also covered with emphasis on policy syndromes to enhance more targeted implications for worst performing nations.

• Item Type: MPRA Paper
• Language: English
• Keywords: Panel data; Mobile phones; Development; Africa
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L96 - Telecommunications; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa

References

Abu S. T., & Tsuji, M., (2010). “The Determinants of the Global Mobile Telephone Deployment: An Empirical Analysis”, Informatica Economică, 14(3), pp. 21-32.

Aker, J. C., & Fafchamps, M., (2010). “How Does Mobile Phone Coverage Affect Farm-Gate Prices? Evidence from West Africa”, Department of Economics and the Fletcher School, Tufts University.

Ajzen, I., (1991). “The theory of planned behaviour”. Organizational Behavior and Human Decision Processes, 50(2), pp. 179-211.

Ajzen, I., & Fishbein, M. (1980). Understanding attitudes and predicting social behavior. Englewood Cliffs, NJ: Prentice-Hall.

Akpan, U. S., Isihak, S. R., & Asongu, S. A., (2014). “Determinants of Foreign Direct Investment in Fast-Growing Economies: A Study of BRICS and MINT”, African Governance and Development Institute Working Paper No. 14/002, Yaoundé.

Al Surikhi, H. F., (2012). “Knowledge and Financial Management in Households: An Examination of Married Women’s Perspectives in Chadbourn, North Carolina”, Capstone Collection, Paper No. 2489, SIT Graduate Institute, Brattleboro.

Arellano, M., & Bover, O., (1995). “Another Look at the Instrumental Variable Estimation of Error Component Model” .Journal of Econometrics, 68(1), pp. 29-52.

Asongu, S. A., (2013). “How has mobile phone penetration stimulated financial development in Africa”, Journal of African Business, 14(1), pp. 7-18.

Asongu, S. A., (2015a). “The impact of mobile phone penetration on African inequality”, International Journal of Social Economics, 42(8), pp.706 - 716.

Asongu, S. A., (2015b). “Reinventing foreign aid for inclusive and sustainable development: Kuznets, Piketty and the great policy reversal”, Journal of Economic Surveys: DOI /10.1111/joes.12109.

Asongu, S. A., (2015c). “Conditional Determinants of Mobile Phones Penetration and Mobile Banking in Sub-Saharan Africa”, Journal of the Knowledge Economy. http://link.springer.com/article/10.1007%2Fs13132-015-0322-z

Asongu, S. A., (2015d). “On Taxation, Political Accountability and Foreign Aid: Empirics to a Celebrated Literature”, South African Journal of Economics, 83(2), pp. 180–198.

Asongu, S. A., (2015e). “Knowledge Economy Gaps, Policy Syndromes and Catch-Up Strategies: Fresh South Korean Lessons to Africa”, Journal of the Knowledge Economy http://link.springer.com/article/10.1007%2Fs13132-015-0321-0

Asongu, S. A., (2014a). “Financial development dynamic thresholds of financial globalization: evidence from Africa”, Journal of Economic Studies, 41(2), pp. 166-195.

Asongu, S. A., (2014b). “The impact of health worker migration on development dynamics: evidence of wealth-effects from Africa”, The European Journal of Health Economics, 15(2), pp. 187-201.

Asongu, S. A., & De Moor, L., (2015). “Recent advances in finance for inclusive development: a survey”, African Governance and Development Institute Working Paper No. 15/005, Yaoundé.

Asongu, S. A., & De Moor, L., (2016). “Financial globalisation dynamic thresholds for financial development: evidence from Africa”, The European Journal of Development Research, DOI:10.1057/ejdr.2016.10.

Asongu, S. A., & Kodila-Tedika, O., (2015). “Conditional determinants of FDI in fast emerging economies: an instrumental quantile regression approach”, African Governance and Development Institute Working Paper No. 15/003, Yaoundé.

Asongu, S. A., & Nwachukwu, J. C., (2015). “Drivers of FDI in Fast Growing Developing Countries: Evidence from Bundling and Unbundling Governance”, African Governance and Development Institute Working Paper No. 15/001, Yaoundé.

Asongu, S. A., & Nwachukwu, J. C., (2016a). “The role of governance in mobile phones for inclusive human development in Sub-Saharan Africa”, Technovation, 55-56(September-October), pp. 1-13.

Asongu, S. A., & Nwachukwu, J. C., (2016b). “Foreign Aid and Inclusive Development: Updated Evidence from Africa, 2005-2012”, Social Science Quarterly, DOI: 10.1111/ssqu.12275.

Asongu, S. A, & Nwachukwu, J. C., (2016c). “The Mobile Phone in the Diffusion of Knowledge for Institutional Quality in Sub Saharan Africa”, World Development, 86 (October), pp. 133–147.

Asongu, S. A, & Nwachukwu, J. C., (2016d). “Foreign aid and governance in Africa”, International Review of Applied Economics, 30(1), pp. 69-88.

Bagozzi, R., (1982). “A field investigation of causal relations among cognitions, affect, intentions, and behaviour”, Journal of Marketing Research, 19 (4), pp. 562-584.

Baltagi, B. H., (2008). “Forecasting with panel data”, Journal of Forecasting, 27(2), pp. 153-173.

Bauer, S., De Niet, J., Timman, R., & Kordy, H., (2010). “Enhancement of care through self-monitoring and tailored feedback via text messaging and their use in the treatment of childhood overweight”, Patient Education and Counseling, 79 (2010), pp. 315-319.

Beck, T., Demirgüç-Kunt, A., & Levine, R., (2003), “Law and finance: why does legal origin matter?”, Journal of Comparative Economics, 31(4), pp. 653-675.

Billger, S. M., & Goel, R. K., (2009). “Do existing corruption levels matter in controlling corruption? Cross-country quantile regression estimates”, Journal of Development Economics, 90(2), pp. 299-305.

Blas, J., (2014). “Inequality mar Africa’s rise”, Financial Times (October 5th). http://www.ft.com/intl/cms/s/0/9e74aa50-1e4d-11eab5200144feabdc0.html#axzz3GWsY4I91 (Accessed: 18/10/2014).

Chan, A., & Jia, T., (2011). “The Role of Mobile Banking in Facilitating Rural Finance: Reducing Inequality in Financial Services between Urban and Rural Areas”, Accenture Banking Services, http://www.accenture.com/SiteCollectionDocuments/PDF/PoV-Mobile-Banking-051611-EN.pdf (Accessed: 17/03/2015).

Da Costa, T. M. Salomão, P. L., Martha, A. S., Pisa, I. T., & Sigulem, D., (2010). “The impact of short message service text messages sent as appointment reminders to patients’ cell phones at outpatient clinics in São Paulo, Brazil”, International Journal of Medical Informatics, 79 (2010), pp. 65-70.

Davis, F., (1989). “Perceived usefulness, perceived ease of use, and user acceptance of information technology”, MIS Quarterly, 13(3), pp. 319-340.

Dewan, S., & Ramaprasad, J., (2014). “Social media, traditional media and music sales”, MIS Quarterly, 38(1), pp. 101-128.

Doshi, K. P., & Narwold, A., (2014). “Determinants of Mobile Phone Penetration Rates in Asia and Africa: A Panel Data Analysis”, Proceedings of 9th International Business and Social Science Research Conference6 - 8 January, 2014, Novotel World Trade Centre, Dubai, UAE.

E-agriculture (2012). “Using ICT to enable Agricultural Innovation Systems for Smallholders”, e-source book, ICT In Agriculture, Connecting Small Holders to Knowledge, Networks and Institutions, (Forum 4, September 2012). http://www.fao.org/docrep/018/ar130e/ar130e.pdf (Accessed: 18/03/2015).

Fishbein, M., & Ajzen, I. (1975). Belief, attitude, intention, and behavior: An introduction to theory and research. Reading, MA: Addison-Wesley.

Fosu, A., (2013). “Growth of African Economies: Productivity, Policy Syndromes and the Importance of Institutions”, Journal of African Economies, 22(4), pp. 523-551.

Hoffman, J. A., Cunningham, J. R., Suleh, A. J., Sundsmo, A., Dekker, D., Vago, F., & Munly, K., (2010). “Mobile Direct Observation Treatment for Tuberculosis Patients A Technical Feasibility Pilot Using Mobile Phones in Nairobi, Kenya”, American Journal of Preventive Medicine, 39(1), pp. 78-80.

Jonathan, D., & Camilo, T. (2008). “Mobile banking and economic development: Linking adoption, impact and use”. Asian Journal of Communication, 18(4), pp. 318-322.

Kirui, O. K., Okello, J. J., Nyikal, R. A., & Njiraini, G. W., (2013). “Impact of Mobile Phone-Based Money Transfer Services in Agriculture: Evidence from Kenya”, Quaterly Journal of International Agriculture, 52(2), pp. 141-162.

Kliner, M., Knight, A., Mamvura, C., Wright, J., & Walley, J., (2013). “Using no-cost mobile phone reminders to improve attendance for HIV test results: a pilot study in rural Swaziland”, Infectious Diseases of poverty, 2(12), pp. 1-7.

Koenker, R., & Hallock, F. K., (2001). “Quantile regression”, Journal of Economic Perspectives, 15(4), pp.143-156.

Love, I., & Zicchino, L., (2006). “Financial Development and Dynamic Investment Behaviour: Evidence from Panel VAR” .The Quarterly Review of Economics and Finance, 46(2), pp. 190-210.

Madden, G., Coble-Neal, G., & Dalzell, B., (2004). “A dynamic model of mobile telephony subscription incorporating a network effect”, Information Economics and Policy, 28(2), pp. 133-144.

Madden, G., & Coble-Neal, G., (2004). “Economic determinants of global mobile telephony growth”, Information Economics and Policy, 16(4), pp. 519-534.

Maurer, B. (2008, May). Retail electronic payments systems for value transfers in the developing world. Department of Anthropology, University of California.

Micheal, H., (2013). “Mobile penetration in Africa is now at 80% and growing fast”, Phone Area, http://www.phonearena.com/news/Mobile-penetration-in-Africa-is-now-at-80-and-growing-fast_id50014 (Accessed: 19/03/2015).

Mishra, V., & Bisht, S. S., (2013). “Mobile banking in a developing economy: A customer-centric model for policy formulation”, Telecommunications Policy, 37(6-7), pp. 503-514.

Mlachila, M., Tapsoba, R. & Tapsoba, S. J. A., (2014): “A Quality of Growth Index for Developing Countries: A Proposal”. IMF Working Paper No. 14/172, Washington.

Mosheni-Cheraghlou, A., (2013). “Mobile Banking: Who is in the Driver’s Seat?”, Working for a World Free of Poverty, The World Bank, http://blogs.worldbank.org/allaboutfinance/mobile-banking-who-driver-s-seat (Accessed: 19/03/2015).

Mpogole, H., Usanga, H., & Tedre, M., (2008). “Mobile phones and poverty alleviation: a survey study in rural Tanzania”, Proceedings of M4D 2008, Karlstad University, Sweden, pp. 62-72.

Muto, M., & Yamano, T., (2009). “The Impact of Mobile Phone Coverage Expansion on Market Participation: Panel Data Evidence from Uganda”, World Development, 37(12), pp. 1887-1896.

Nguena, C. L., Tchana, T. F., & Zeufack, A., (2015). “Housing Finance and Inclusive Growth: Benchmarking, Determinants and Effects’, AAYE Policy Research Working Paper Series, No. 15/027, Yaoundé.

Ojo, A., Janowski, T., & Awotwi, J., (2012). “Enabling development through governance and mobile technology”, Government Information Quarterly, 30 (2013), pp. S32-S45

Ondiege, P., (2013). “Fostering financial inclusion with mobile banking”, African Development Bank. http://www.proparco.fr/webdav/site/proparco/shared/PORTAILS/Secteur_prive_developpement/PDF/SPD16/SPD16_Peter_Ondiege_UK.pdf (Accessed: 03/02/2015).

Ondiege, P., (2010). “Mobile Banking in Africa: Taking the Bank to the People”, Africa Economic Brief, 1(8), pp. 1-16.

Okada, K., & Samreth, S. (2012). “The effect of foreign aid on corruption: A quantile regression approach”, Economic Letters, 115(2), pp. 240-243.

Penard, T., Poussing, N., Yebe, G. Z., & Ella, P. N., (2012). “Comparing the Determinants of Internet and Cell Phone Use in Africa : Evidence from Gabon ”, Communications & Strategies, 86, 2nd Quarter 2012, pp. 65-83.

Perez, F., Gonzalez, C. J., & Aaronson, X., (2011). “Village banking development model: FINCA Costa Rica”, Journal of Business Research, 64 (3), pp. 316-324.

Qiang, C. Z., Kuek, S. C., Dymond, A., & Esselaar, S., (2011). “Mobile Applications for Agricultural and Rural Development”, ICT Sector Unit, World Bank http://siteresources.worldbank.org/INFORMATIONANDCOMMUNICATIONANDTECHNOLOGIES/Resources/MobileApplications_for_ARD.pdf (Accessed: 17/03/2015).

Roodman, D., (2009a). “A Note on the Theme of Too Many Instruments”, Oxford Bulletin of Economics and Statistics, 71(1), pp. 135-158.

Roodman, D., (2009b). “How to do xtabond2: An introduction to difference and system GMM in Stata”, Stata Journal, 9(1), pp. 86-136.

Singh, A. B., (2012). “Mobile banking based money order for India Post: Feasible model and assessing demand potential”, Procedia - Social and Behavioral Sciences, 37(2012), pp. 466-481.

Ssozi, J., & Asongu, S. A., (2015). “The Effects of Remittances on Output per Worker in Sub-Saharan Africa: A Production Function Approach”, South African Journal of Economics, DOI: 10.1111/saje.12100.

Tseng, F-M & Lo, H-Y., (2011). “Antecedents of consumers’ intentions to upgrade their mobile phones”, Telecommunications Policy, 35(1), pp. 74-86.

UNCTAD. (2002). World Investment Report: Transnational Corporations and Export Competitiveness. New York: United Nations.

Wang, Y-S., Wu, M-C., & Wang, H-Y., (2009). “Investigating the determinants and age and gender differences in the acceptance of mobile learning”, British Journal of Educational Technology, 40(1), pp. 92-118.

Warren, M., (2007). “The digital vicious cycle: links between social disadvantage and digital exclusion in rural areas”. Telecommunications Policy, 31(6-7), pp. 374-388.

West, D. M., (2013). “Improving Health Care through Mobile Medical Devices and Sensors”, Centre for Technology and Innovation at Brookings, http://www.brookings.edu/~/media/research/files/papers/2013/10/22%20mobile%20medical%20devices%20west/west_mobile%20medical%20devices_v06 (Accessed: 19/03/2015).

Yousafzai, S. Y., Foxall, G. R., & Pallister, J. G., (2010). “Explaining Internet Banking Behavior: Theory of Reasoned Action, Theory of Planned Behavior, or Technology Acceptance Model?”, Journal of Applied Social Psychology, 2010, 40(5), pp. 1172-1202.