Greenacre on the Potential of “Mobile Money in Africa” to Support Development
On January 29, 2024, Jonathan Greenacre, Assistant Professor of International Relations at Boston University’s Frederick S. Pardee School of Global Studies, spoke at the Africa Studies Centers Water Rodney seminar series on “Mobil Money in Africa.” Professor Greenacre drew from the book his is authoring on the same subject to explore the potential impact of bridge contracts to facilitate money movement in Africa and unlock the entrepreneurial power of people living in rural areas that are underserved by formal financial service systems.
In African countries Professor Greenacre has studied, local communities often face challenges related to poor infrastructure (from roads to weak internet), poverty and exclusion of sectors of the population – especially women – based on unfair gender norms. Under such conditions, the movement of money for business and personal reasons can be inefficient and open to potential exploitation or corruption. For instance, Professor Greenacre explained, in the absence of “mobile money,” people often resort to handing envelopes with cash in them to bus drivers with the anticipated dangers. Mobile money systems use phones to jump over those hurdles.
Greenacre’s research underlines the critical role that bridge contracts play in successful efforts to build mobile money networks. Applying contract and network theory to the data he has collected in the field, Professor Greenacre has that bridge contracts with key features facilitate the building of highly efficient mobile money systems. These contracts are often characterized by decentralized systems and incentives, high degrees of flexibility and the ability to tap into local social networks. Citing work done by Safaricom in Kenya, these bridge contract systems have facilitated expansion of mobile money systems in rural areas. The systems work by empowering a local merchant, often a gas station or local market. To accept and dispense funds through as demanded through the telephone network. The M-Pesa electronic money system was launched by Vodaphone in 2007 and grew to 30 million users today. Bridge contracts bridge the way from larger firms and banks on the one hand to local cash merchants and excluded communities on the other.
Professor Greenacre also noted that similar bridge contract systems can facilitate local entrepreneurs, citing the development of a “Hello Tractor” system that has become a kind of Uber for tractors in rural areas where farm machinery might be scarce.
In Africa, this emerging mobile money bridge contract system is succeeding in decentralizing the movement of money and supporting economic development through a technological and market leap.
Professor Greenacre is a scholar and policy advisor. He works in the field of New Institutional Economics. He has provided legal and regulatory advice to the United Nations, International Monetary Fund, World Bank, and central banks in Africa and the Pacific. His work focuses on developing new regulatory frameworks for the digital revolution, particularly fintech payment systems/cryptocurrencies, artificial intelligence, transportation, and the internet of things. Learn more about Professor Greenacre on his faculty profile.