Mobile Phone Technologies and their Impacts on Household Welfare and Rural Development in Uganda

In the past two decades, since around 1995, mobile phone (MP) technologies have been widely adopted in developing countries – with the highest penetration rates in Sub-Saharan Africa, to levels of about 89% for adults. Previous research has shown MP use to enhance market access through information exchange and market price integration – availing timely updates on prices of inputs and outputs. Various applications of MP technologies, for instance mobile money (MM) services, where money is transferred electronically between the sender and the receiver using mobile phones, have also cropped up and are widely predicted to have life-enhancing effects for rural households. More specifically, the available literature has shown that MM services can contribute to welfare gains in smallholder farm households via several pathways. One important pathway for MM-related welfare gains are higher remittances received by MM users from relatives and friends. However, the impact of MP use and many of its key applications, like MM services, on several smallholder welfare aspects has barely been investigated. In particular, we are not aware of any studies that have analyzed the effects of MP use on gender equality and nutrition – two welfare dimensions that are of particular importance in the context of the United Nations’ Sustainable Development Goals (SDGs), that aim at ending hunger, achieving food security and improved nutrition, as well as attaining gender equality and women empowerment. Furthermore, there is yet no study examining the role of MM services and its several impact pathways on household welfare. These are significant gaps in the literature given that mobile phone technologies are so widely adopted among rural and urban households in the developing world. The impacts of MP technologies are predicted to be higher in developing countries than in the developed world, given that the infrastructure for other communication technologies and related services is much less developed in the developing world. We address these research gaps by using panel data from smallholder farm households in Uganda. Specifically, we examine the impact of MP use on household incomes, gender equality, and nutrition. Furthermore, the impact of MM services on household welfare and impact pathways are examined, especially focusing on agricultural marketing and off-farm economic activities. Using panel regression models, we find that MP use has positive influence on household income, gender equality, and dietary diversity. Gender-disaggregated data analysis shows that female MP use bears stronger influences on household incomes, gender equality, and nutrition than male MP use. Using simultaneous equations, we establish that female MP use’s positive nutrition effects are channeled through increased incomes and gender equality. These effects are due to lower transaction costs and better access to information through MP use. Furthermore, regression models show that the adoption of MM technology has contributed to higher household incomes and consumption levels. Off-farm income gains are also identified to be an important pathway through which MM services enhance household income, even when excluding remittances from the calculation of off-farm income. Other off-farm income sources include small businesses in trade (like retail shops, sale of forest products), transport (like motor cycle riding services for transportation of goods or humans), and handicrafts (like brick laying, mats making, clothes sewing, and carpentry services). These economic activities benefit from novel savings and money transfer opportunities through MM services. In terms of agricultural marketing, MM users sell a larger proportion of their coffee as shelled beans (a high value form of coffee, sold after processing) to buyers in high-value markets, instead of selling to local traders immediately after harvest. MM services also help to reduce cash constraints and facilitate quick and reliable transactions with buyers from outside local regions. We conclude that the use of MP technologies contributes to a broader inclusive and comprehensive rural development and poverty reduction, encompassing improved household income, food security, and gender equality. We also conclude that MM services can contribute to rural development through various important pathways – especially enhancing volumes of off-farm incomes earned by rural households. The observed adoption patterns suggest that MM services are socially inclusive. In terms of policy recommendations, we conclude that gender-sensitive dissemination policies for mobile phones and related technologies could broaden household income and nutrition welfare effects.