Repaying loans with mobile money: impacts on female microfinance clients in Tanzania

Mobile money services can help households smooth shocks and increase women’s control over their finances, but, despite their popularity, they are used by only 33% of women in Tanzania and by less than 10% of people for savings or business transactions. We will carry out a pilot Randomised Control Trial (RCT) to evaluate whether introducing repayment of microfinance loans using mobile money creates an opportunity for learning and habit formation that increase adoption and use of mobile money services for the business. We will randomly assign 750 female microfinance clients of the NGO BRAC in Tanzania to either 1) a control group maintaining repayment of the loan with cash at weekly group meetings, 2) a treatment arm repaying the loan weekly using mobile money alongside weekly group meetings or 3) a treatment arm repaying the loan weekly using mobile money but shifting to fortnightly group meetings. We will examine the impact of the treatments on use of mobile money services, business outcomes, microfinance group cohesion and repayment rates and women’s empowerment using a combination of survey questions, incentivized games and administrative data. The pilot will allow us to test important issues relating to take-up of mobile money repayment, the expected size of any impacts and the optimal frequency of group meetings in preparation for a future RCT, nested within BRAC Tanzania’s planned rollout of mobile repayment, that examines the impact of mobile money repayment of microfinance loans on women’s business, household welfare and empowerment outcomes.