Assessing the performance of mobile money business in Uganda: a case study of Mbarara city, Uganda

Abstract

This research study was conducted in Mbarara City, Uganda located in the Western region of Uganda. The main objective of the study was to assess the factors responsible for the performance of mobile money business in Uganda using a case study of Mbarara City. The study majorly investigated the effect of transactional tax, mobile banking, withholding tax and number of transactions on the performance of mobile money businesses. The study employed a cross sectional study design and using a sample of 291 respondents determined using Krejcie and Morgan table of 1970 and applying simple random sampling to select the mobile money agents. The study indicated that 68% of the respondents were females and only 32% were males, 32% of the respondents were aged 23 – 27 years, 29% were aged 18 – 22 years and 25% were aged above 32 years and 43% of respondents had attained secondary education, 27% had primary education whereas 23% had acquired university education. The study findings indicated that 81.3% agreed that withholding tax increases the cost of doing business, 85.2% agreed that withholding tax discourages people from doing MM business. However, the study found out that withholding tax has no effect on performance of mobile money business (p-value>0.05). Findings also indicated that 72.9% of the respondents have ever heard about mobile banking, 63.4% disagreed that they transact with mobile banking. The study found out that mobile banking influences performing of mobile money business (p-value<0.05) and adoption of mobile banking is likely to increase performance of mobile money business by 0.291 units. The study findings indicated that 95.1% agreed that they handle more of the deposit transactions while 89.8% agreed that they handle more of the withdraw transactions. The study found out that number of transactions influence the performance of mobile money business (p-value<0.05) and a unit increase in the number of transactions increases the performance by 0.301 units. The study findings also indicated that 88.0% of the respondents disagreed that customers tell them they don’t feel the tax burden of paying it. The study found out that transactional tax has an impact on performance of mobile money business (p-value<0.05) and a unit increase in transactional tax is likely to decrease performance of the business by 0.114 units. The study concluded that number of transactions, transactional tax and mobile banking influences the performance of mobile money business whereas withholding tax does not. The study recommended that government should reduce or remove completely transactional tax since it discourages people from using mobile money.