Despite several regulatory reforms such as simplifying tax systems and reducing the costs and time needed to register a business, informality is still pervasive in lower-income countries. While the benefits of mobile money on individuals and households is well documented, there is a lack of evidence on its potential to bring small, unregistered firms into the formal system. The existence of a mobile money account designed for informal firms (bronze account) and a mobile money account for only registered firms (gold account) in Burkina Faso offers an interesting context for this project. While a bronze account ensures a service is available for informal firms, there are several advantages to a gold account relating to the cost of withdrawal restrictions and ability to link it to a bank account. This project will evaluate the determinants of adopting and using a mobile money merchant account, its impact on business performance, and whether uptake among informal firms and the distinct benefits of a gold account can influence their decision to formalise.
To investigate willingness to adopt and barriers to the uptake of merchant mobile money accounts, the project will conduct an RCT with 1,280 firms in the informal sector. Half will be allocated to a treatment group that will receive incentives and be offered assistance to adopt a bronze merchant account. After several months, the treatment group will be provided with explanations on the benefits of a gold merchant account and informed of the requirement to formalise in order to upgrade. The researchers will trace the adoption rates of the two accounts and the outcomes of all firms across this period to determine the impact of mobile money on business performance and formalisation.
This project matches well Burkina Faso's agenda to foster financial inclusion. The World Bank recently approved a credit of $100 million to support the country’s efforts in increasing access to digital financial services and addressing the key constraints faced by women and women-led enterprises to access financial services. As such, the results from this research will have significant policy implications by providing insights about preferences and barriers small firms typically face to adopt mobile money technology and register their businesses with the government.
