Case Study of Airtel Money

MAKERERE UNIVERSITY

AN EVALUATION OF CONSUMER SKEPTICISM TOWARDS MOBILE BANKING PRODUCTS: CASE STUDY OF AIRTEL MONEY

NALUMANSI LILLIAN

A RESEARCH PROJECT REPORT SUBMITTED TO THE COLLEGE OF BUSINESS AND MANAGEMENT SCIENCES IN PARTIAL FULFILMENT FOR THE AWARD OF THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION OF

MAKERERE UNIVERSITY

December 2014

DECLARATION

I, NALUMANSI LILLIAN, declare that the work presented in this research project is my original work. It has never been presented to any other University or Institution of higher learning for the award of any academic qualification.

Signature:……………………………Date......

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APPROVAL

This is to certify that this research report has been submitted for examination with our approval as University supervisor.

Signature:…………………………….. Date: …………………….

Dr.Turyakira Peter

(Supervisor)

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DEDICATION

I dedicate this thesis to my family for the support it has given me to where I am today and my Boss for knowing that there is someone out there who looks out for you.

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ACKNOWLEDGMENT

My greatest gratitude to the Director Vine Pharmaceuticals ltd. and staff who have supported me throughout my education. This has given me the opportunity to grow professionally and personally.

To all my colleagues (MBA CLASS 2012) who have shared their knowledge, opinions and experiences, without your encouragement and support, I would not have been able to go this far. Special thanks to Mark Rujumba, Stephen Omojong and Mutimba Isaiah for all the endless efforts and support.

I will forever be indebted to my supervisor Dr. Turyakira Peter - with his intelligent insightful feedback that has skilfully guided me in my work and has been of valuable input and inspiration.

Recognition to the Mobile money operators I interviewed, for the time and access to your places of work, simultaneously greeting me with warmth and making me feel genuinely welcome.

To my family, thank you for the unconditional love and belief in me. “THANK YOU FOR EVERYTHING”, you have made me a better person.

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TABLE OF CONTENTS Page

DECLARATION------I APPROVAL ------II DEDICATION ------III ACKNOWLEDGMENT------IV TABLE OF CONTENTS ------V LIST OF TABLES ------VII LIST OF FIGURES ------VIII ABSTRACT ------IX CHAPTER ONE ------1 1.0 INTRODUCTION ------1 1.1 BACKGROUND TO THE STUDY ------1 1.2 STATEMENT OF THE PROBLEM ------2 1.3 PURPOSE OF THE STUDY ------3 1.4 SPECIFIC OBJECTIVES ------3 1.5 RESEARCH QUESTIONS ------3 1.6 SCOPE OF THE STUDY ------3 1.6.1 SUBJECT SCOPE ------3 1.6.2 GEOGRAPHICAL SCOPE ------3 1.7 SIGNIFICANCE OF THE STUDY------3 CHAPTER TWO ------5 2.0 LITERATURE REVIEW ------5 2.1 INTRODUCTION ------5 2.1 CONSUMERS’ ATTITUDES TOWARDS USING MONEY PRODUCTS ------5 2.2 THE ROLE OF CONSUMER SKEPTICISM IN INFLUENCING USAGE OF MOBILE BANKING PRODUCTS ------7 2.3 STRATEGIES TO IMPROVE USAGE OF MOBILE MONEY PRODUCTS ------8 2.4 SUMMARY OF LITERATURE REVIEW ------10 CHAPTER THREE ------12 3.0 METHODOLOGY ------12 3.1 INTRODUCTION ------12 3.2 RESEARCH DESIGN ------12 3.3 STUDY POPULATION ------12 3.4 SAMPLE SIZE ------13 3.5. SAMPLING TECHNIQUES AND PROCEDURES ------13 3.6 DATA SOURCES AND COLLECTION METHODS ------14 3.6.1 DATA SOURCES ------14 3.6.2 DATA COLLECTION TOOLS ------14 v | L illian 2014

3.7 VALIDITY AND RELIABILITY OF DATA ------14 3.8 DATA PROCESSING AND ANALYSIS ------15 CHAPTER FOUR ------17 4.0 PRESENTATION, INTERPRETATION AND DISCUSSION OF RESEARCH FINDINGS ------17 4.1 INTRODUCTION ------17 4.2 DEMOGRAPHIC CHARACTERISTICS OF THE RESPONDENTS ------17 4.2.1 AGE RANGE ------17 4.2.2 GENDER ------19 4.2.3 LEVEL OF EDUCATIONAL ATTAINMENT ------20 4.2.4 WORKING EXPERIENCE ------22 4.2.5 THE RELATIVE COST OF MOBILE MONEY TRANSACTIONS ------22 4.3 CONSUMERS’ ATTITUDES TOWARDS USING AIRTEL MONEY IN UGANDA. ------24 4.3.1 MARKET SHARE OF MOBILE MONEY SERVICES ------24 4.3.1.1 WHY MTN DOMINATES THE MOBILE MONEY MARKET ------25 4.3.2 TELECOM MARKET SHARE IN THE VOICE MARKET ------28 4.3.3 TELECOM MARKET SHARE IN THE DATA MARKET ------33 4.3.4 REASON FOR CHOICE OF ORANGE DATA SERVICES ------34 4.4 THE ROLE OF CONSUMER SCEPTICISM INFLUENCING USAGE OF MOBILE BANKING PRODUCTS ------35 4.4.1 SCEPTICISM TOWARDS MOBILE BANKING PRODUCTS ------36 4.5 STRATEGIES TO IMPROVE USAGE OF AIRTEL MOBILE PRODUCTS IN UGANDA 38 4.5.1 RECOMMENDED STRATEGIES FOR IMPROVING USE OF MOBILE MONEY ------38 CHAPTER FIVE ------41 5.0 SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS ------41 5.1 INTRODUCTION ------41 5.2 SUMMARY OF STUDY FINDINGS ------41 5.3 CONCLUSIONS ------43 5.4 RECOMMENDATIONS ------43 5.5 AREAS FOR FURTHER RESEARCH: ------43 REFERENCES ------45 APPENDIX 1: THE QUESTIONNAIRE ------48 APPENDIX 2: THE INTERVIEW GUIDE ------50

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LIST OF TABLES Page

Table 1: Selection of respondents …………………………………………… ….. . 14

Table 2: The age groups of respondents …………………………………….….…...17

Table 3: The Educational attainment of respondents …………………….….…….. 20

Table 4: The working experience of respondents ……………………………….…..22

Table 5: Showing the comparisons in prices ………………………………………...23

Table 5: Reason for choice of MTN Mobile Money service ………………………..23

Table 6: Reason for choice of MTN Mobile Money service ………………………..25

Table 7: Reason for choice of Airtel Money service …………………..……………27

Table 8: Telecom market share for Voice services ……………………..…………..28

Table 9: Reason for choice of MTN Voice service ……...………………..………..29

Table 10: Reason for choice of Orange Voice services ……………………..……...30

Table 11: Reason for choice of UTL Voice services ………………………..…...... 31

Table 12: Reason for choice of Smart Telecom Voice services ….…………………31

Table 13: Reason for choice of K2 Telecom Voice services …………….…………32

Table 14: Reason for choice of MTN Data services……………….……….……….34

Table 15: Reason for choice of UTL Data services ………………………………..35 Table 16: Respondents’ skepticism towards mobile money……………….……….36

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LIST OF FIGURES Page

Figure 1: The gender distribution of the respondents …………………………....…19

Figure 2: The Mobile money market share ……………………………………..…..24

Figure 3: Telecom of choice for data ……………………………………….……….32

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ABSTRACT

The study was conducted to evaluate the consumer scepticism towards the uptake and use of mobile banking products in Airtel money. The study had three objectives namely to establish consumers’ attitudes towards using Airtel Money in Uganda, to evaluate the role of consumer scepticism in influencing usage of mobile banking products and to design appropriate strategies to improve usage of Airtel mobile products in Uganda.

From the findings, the results prove that scepticism plays a role in determining usage of Airtel Money but also highlight other intervening factors that exacerbate the lack of trust among some users. These factors include; past changes in brand names, small agent network, downtime and security concerns.

For telecoms like Airtel to promote their mobile money services and challenge MTN’s dominant position in the mobile money market, it is recommended that; they consider cost reduction on transactions especially the lower bands, Improve service uptime, conduct cost effective Sales Promotions that concentrate on below the line initiatives, Emphasize customer care throughout their agent network, improve on the communication network in their areas and extend mobile money nearer to the people by enlisting more agents as well as ensuring that the agents are motivated and well financed in terms of float.

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CHAPTER ONE

1.0 INTRODUCTION

This chapter covers the background, statement of the problem, general purpose of the study, objectives of the study, research questions, and scope of the study, significance of the study and definition of terms.

1.1 BACKGROUND TO THE STUDY

Scepticism is the theory that certain knowledge is impossible. Scepticism effectiveness of a company’s advertising campaign, thereby preventing it from achieving its intended objective. The common objectives of advertising campaigns (Burnett and Moriarty, 1998) include increasing or maintaining sales; building customer loyalty or trust; encouraging brand switching; getting shelf attention; and prompting trial by new users. Hence, consumer scepticism prevents the realisation of these objectives in a way that highly sceptical consumers would be more likely to respond less favourably towards advertising campaigns.

Mohretal (1998) defines consumer scepticism as the disbelief or questioning a company’s motivation to conduct a customer relationship management (CRM) campaign. According to this definition, the market doubts that the campaign is truly aimed at the cause stated by the campaign messages or otherwise aimed at self-interests that benefit the company. Obermiller and Spangenberg (1998) also define scepticism as the general tendency of disbelief about advertising claims.

The Ugandan Mobile Money market was dominated by four Mobile Network Operators that offer mobile money services. These are; MTN Mobile Money from MTN, M-Sente from UTL, Airtel Money/Warid Pesa from Airtel and Orange Money from Orange. According to the Inter-media report (2012), MTN was the first to launch mobile money services in 2009 and remains, by far, the market leader. The Inter-media report (2012) further reported that the low uptake of Mobile money by the target users was linked to incomplete understanding of the available services among mobile money users and non-users. The dominance of MTN in the mobile money market continues regardless of the efforts from competitors to offer competitive products like Warid pesa and Airtel money. A comparison of the mobile money transaction rates reveals that Airtel money levies slightly lower charges on users than MTN and yet this has not undone MTN’s dominance.

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IFC report (2011) explained that promotions, particularly during the introduction of mobile banking, are critical to foment regular usage. However, Airtel Money has been aggressively marketed using both below the line and above the line marketing techniques with little success. IFC report (2011) further explains that mobile money services are often used by Innovators and early adopters rather than the early majority, late majority or laggards. According to IFC report (2011), the latter categories are more cautious and sceptical towards the true benefits of an innovation. Therefore, gauging from the early success of MTN Mobile Money, it was possible that owing to the first mover advantage, the service reached most of the early adopters and innovators. This could have left the services like Airtel Money or Warid Pesa that were introduced later in the market with a problem of having to sell to sceptical clients belonging to the laggard and late adopter category.

Airtel Uganda became the second largest telecom in terms of client base following its acquisition of Warid in March 2013. It boasts of a subscriber base of approximately 7.4 million people (Airtel annual report, 2013). Hipipo.com ranked Airtel as the 2nd leading advertiser in Uganda in 2011 and this trend has continued based on observation over the years. Yet in spite of the intensity of consumer promotions Airtel money has not been as successful as MTN Mobile Money.

Orotin (2013) provided evidence that there was a low adoption of Airtel Money among Ugandans. Orotin (2013) reported that out of the total of over 6 million Mobile Money users in Uganda by close of the year 2012, MTN had a market share of about 4 million with 7,336 MTN mobile money agents, Uganda Telecom (UTL) had 520,000 users with 3,500 M-Sente mobile money agents, Airtel had 120,000 users with 120 Airtel money agents, and Warid Telecom had 2 million users with 44 Warid Pesa mobile money agents. On the basis of poor performance by Airtel mobile money, a deeper investigation was warranted.

1.2 STATEMENT OF THE PROBLEM

There has been a mismatch between Airtel’s market share of Voice subscribers and its market share of mobile money users. To- date, no specific study has been conducted in Uganda to ascertain the influences of scepticism on the uptake and usage of mobile money services with regard to Airtel Mobile Money. Hence, this study intends to evaluate the consumer scepticism towards mobile banking products with specific reference to Airtel mobile money.

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1.3 PURPOSE OF THE STUDY

The purpose of the study was to evaluate the consumer scepticism towards the uptake and use of mobile banking products in Airtel money.

1.4 SPECIFIC OBJECTIVES

1) To establish consumers’ attitudes towards using Airtel Money in Uganda.

2) To evaluate the role of consumer scepticism in influencing usage of mobile banking products.

3) To design appropriate strategies to improve usage of Airtel mobile products in Uganda.

1.5 RESEARCH QUESTIONS

1) What are the consumers’ attitudes towards using Airtel Money in Uganda? 2) What role does consumer scepticism play in influencing the usage of mobile banking products? 3) What strategies can be employed to improve usage of Airtel mobile products in Uganda?

1.6 SCOPE OF THE STUDY

1.6.1 SUBJECT SCOPE

The study focused on evaluating consumer scepticism towards the uptake and use of mobile banking products.

1.6.2 GEOGRAPHICAL SCOPE

The study was conducted in Airtel Mobile Money branches in Kampala.

1.7 SIGNIFICANCE OF THE STUDY

 The study was expected to benefit Airtel Mobile Money to understand the underlying hindrances to the success of their drives to increase subscribership and usage of their service.

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 The study also highlighted the strategies for improving Airtel Mobile Money use in Uganda from an empirical stand point. This information was expected to be valuable to the sales and marketing department of Airtel and the telecommunication sector as a whole.

 This study contributes to the general body of knowledge by unearthing the influence of scepticism on the use of Mobile Money.

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CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 INTRODUCTION

This chapter presents relevant literature written by different authors about the subject, based on the study objectives.

2.1 CONSUMERS’ ATTITUDES TOWARDS USING MONEY PRODUCTS

Consumption attitudes are consumer context-specific dispositions that link personal values to actual consumption behaviours (Wang, Dou and Zhou, 2008). Eagly and Chaiken (1993) define a consumption attitude as a psychological tendency that is expressed by evaluating a particular consumption-related entity with some degree of favour or disfavour.

According to Wang et al.(2008), consumption attitudes have significant effects on new product adoption. Consumers’ adoption of market innovations is associated negatively with their attitude toward existing products and positively with independent decision making and preference for high-tech products. Wang et al (2008) further found out that the magnitude of the effects of consumption attitudes depends on consumers’ demographic characteristics. The effects are stronger among consumers who are older and have lower income. Considering the young population one would consider the adoption of mobile money to be bound to be high. However, the same population was also dominantly poor. Thus, this literature was defied by Uganda’s context in terms of understanding the attitudes as wells and the extent to which they influence Mobile Money adoption.

Federal Reserve Bank report (2014) reports that mobile phone usage remains high and consistent across demographic and socioeconomic groups; it demonstrates the extent to which they have become engrained in modern culture. Consistent with the propositions of Wang et al (2008) where older persons have more negative attitude towards adoption of new products, the Federal Reserves report (2014) reported higher penetration among young persons than among the older ones.

Mobile financial products are viewed by users as easier alternatives to mainstream banking. To support this argument, the Federal Reserve Report (2014) pointed to the fact that users were increasing usage of mobile based financial products, as people look outside mainstream

5 | L illian 2014 financial products to meet their financial needs. This was not unique to the US since the recent FINSCOPE report (2014) indicates that the percentage of Ugandans accessing financial products through Mobile money was higher than those accessing them from formal financial institutions.

Sayid and Echchabi (2013) indicate that perceived ease of use has a significant positive influence on the perceived usefulness of mobile banking services, and both the variables have a significant positive influence on the attitude towards mobile banking. Furthermore, attitude and perceived usefulness are found to have significant positive influence on the Somali customers’ intention to adopt mobile banking services.

Islam and Hossain (2013) also support conclusion that ease of use was an important driver in attitude towards a mobile product and its eventual adoption. This argument extends to the gender differences where ease of use has a stronger influence on female respondents than male, whereas relative advantage has a stronger effect on perception of usefulness on male respondents. Social norms or the importance of others in the decision, also influence adoption more strongly among female respondents than male.

Riquelme and Rios (2014) further documents the gender differences in relation to adoption and attitude towards m-commerce products. Males are more inclined to adopt bank technology than females, thus males are more positive about m-commerce than females. Yang (2005), in an exploratory study of m-commerce, found that gender influences perceived ease of use and usefulness but in a negative way, contrary to expectations. In relation to mobile banking, it has been found that females are more concerned by security issues than males, whereas males pay more attention to effectiveness.

Among the mobile phone users however, some consumers are adamant to try out or use mobile financial products. Their main reasons for not using these services according to the Federal Reserves report (2014) were; they believe that their banking needs are being met without mobile banking, they don’t see any reason to use mobile banking, and they are concerned about security. Some of the consumers cited a lack of trust in the technology to process transactions properly and the difficulty associated with using mobile banking.

The above reasons indicate that to an extent consumers’ preference to use or not to use a mobile financial product like Mobile money can be influenced by real lack of need, perceived lack of need or the fear of the unknown. Wang et al (2008) also indicated that the negative

6 | L illian 2014 attitude could also be demographic specific and affected by other factors like attitude toward existing products, the independence of decision making and the preference for high tech products. It was not clear in the literature whether these factors were universal and could also apply to the Ugandan situation or mobile money in particular.

Wambari and Mwaura (2009) further document the increasing trend of use of mobile and online banking services. They forecast a 34% change in the use of online banking in a space of 1 year between 2009 and 2010. Similar evidence was reported by the Federal Reserve Bank report (2014) which found evidence that adoption of mobile banking had continued to increase in the past years. Just over 33% of mobile phone users in the survey report that they used mobile banking in the past 12 months. This represented an increase from the nearly 28% of mobile phone users who indicated that they used mobile banking in the 2012 survey, and 21% in the 2011 survey.

2.2 THE ROLE OF CONSUMER SKEPTICISM IN INFLUENCING USAGE OF MOBILE BANKING PRODUCTS

Burgess, Battersby, Gebhardt and Steven (2005) note that scepticism in form of distrust of technology and scepticism about the ability to work properly is an inhibitor of technology. A developing market like Uganda is often deficient of the latest technology. Once a new technology like Mobile money comes in such a market, the developers, users, regulators and other stakeholders are often sceptical of whether that technology will actually do what its purported to do and do it properly.

Makore (2010) highlights the fact that respondents interviewed revealed that despite the fact that facilitating transactions via the phone were easy; some elderly women were technologically challenged. The study finds that their interaction with the mobile phone was merely for answering phone calls and for other services like text messages or buying electricity most of them are assisted by their children or grandchildren.

Riquelme and Rios (2010) cite that despite the wide adoption of mobile phones in several countries around the world, only half of the current internet banking users would begin to use the mobile service by 2010. This pessimistic prediction was based on the developed world’s scepticism towards mobile banking. Gillespie (2007) Consumer scepticism about mobile banking – Gillespie indicated in 2007 – was driven by lack of availability, poor wireless product quality and insufficient technology.

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The literature reviewed highlights higher levels of pessimism and scepticism towards mobile banking in the developed world as opposed to the developing economies. For example, Riquelme and Rios (2010) show that despite all the benefits, consumers have been reluctant to adopt mobile banking services, in part because customers have grown comfortable with already a low cost service online and because of inferior user experience compared with fixed internet. Hence, the conclusion that in the developed world where consumers already have an alternative to mobile banking, consumers are more sceptical about making the leap into using mobile banking.

This incidence of scepticism in the developed world towards the use of mobile was driven by the existing satisfaction with internet banking; this does not mean that scepticism does not exist in the developing markets where internet banking was generally low. For example, Gitu (2013) states that while people are comfortable with the financial services they receive from their banks inside banking halls and through ATM‟s they were willing to take advantage of M-Pesa with a little convincing. Surprisingly, users of M-Pesa were the most sceptical of m- banking services with majority answering in the negative. This can be attributed to the fact that most of them were still uncertain of whether the service was viable over the long- term due to its newness.

2.3 STRATEGIES TO IMPROVE USAGE OF MOBILE MONEY PRODUCTS

The strategies to drive usage of mobile money should directly address the critical stages the market goes through to adopt a new technology service like mobile money. Davidson and McCarty (2012) identify these progressive stages of adoption of a new technology service as; customers being aware of the mobile money service, but not understanding how it could be beneficial to them, customers getting bogged down in the registration process and never try the product, customers don’t understand the mechanics of performing transactions and are apprehensive to try something so novel as mobile money and customers not trusting the operator’s brand or network and are hesitant to conduct financial services on the platform.

The World Bank retail banking report (2013) highlights the fact that customer preferences on banking channels may shift based on any one of a number of factors, such as location, the amount of time they have, or the type of product they are seeking. In effect, the drivers of the optimal customer experience differed by individual, product, and channel. Understanding

8 | L illian 2014 how these drivers interact is a multi-layered, multi-faceted process. The “any approach” delivering any product at any time through any channel – was no longer sufficient.

Earnest & Young (2013) recommend a segmented model for promoting mobile financial services. Earnest and Young (2013) adopted this from the MTN banking approach where MTN adopts varied strategies for different segments in the country with half of the population unbanked. For the unbanked, MTN Banking provides a basic bank account at very low cost while for the high-income group; it offers an innovative, multi-access payment solution. In the Ugandan example, there was clear evidence of the differentiation of mobile money.

Earnest & Young (2013) further highlight that one of the strategies for enhancing growth in the mobile money market was through collaboration. The industry was supposed to choose collaborators wisely. The large number of participants potentially involved in the mobile money value chain has complicated the assigning of both costs and benefits. Careless collaborations could lead to poor business economics and short-lived services that will leave the field open to other parties (Earnest & Young, 2013).

Mulwa and Ndati (2012) document that one of the drivers of M-pesa’s world renown success are the IMC strategies befitting their target market compared to its competition to diffuse information on the M-PESA innovation and thus the success of its adoption could partly be attributed to the unique IMC strategies. These strategies include;

 Advertising: Safaricom continuously printed T-shirts, caps and bags. It also invested heavily in TV and radio advertising to inform the publics of M-PESA.

 Personal selling: to attract many users the company embarked on a registration campaign through road shows; incentives to register were also given through free registrations and SIM swaps.

 Sales promotions: at the beginning, the company provided almost everything the agents needed to operate, including phones and branding of shops. One could become an agent without restrictions. Further an interested investor could start with one shop instead of three. Capital did not necessarily need to be Ksh 100,000 per outlet. (The requirements are followed to the letter in current applications).

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 Public relations: Safaricom also invested a lot in making sure the publics maintained a positive image of the company. Competition wars between the company and Zain were occasionally clarified in full page advertorials in the leading national newspapers.

 Direct Marketing: - the most popular mode of IMC that the company was using was the SMS, all new products and M-PESA developments are directly communicated to the users via SMS.

CITI USAID report (2012) provides 10 ways to accelerate mobile money the report refers to these as accelerators. They include; Ensuring that Mobile Money Transfers Are Safe and Transparent, Establishing an Inter-agency Government Process to Coordinate Mobile Money Decisions, Leveraging Mobile Money for Government and Donor Payments and Collections, Getting Food and Household Product Retailers to Accept Mobile Money, Promoting Open- Architecture Policies and Interoperability Within and Across Ecosystems, Allowing Mobile Money Transfers to Move Seamlessly Across Borders and Mobile Networks, Piloting Programs to Test Innovative Approaches, Create Impact Analysis, and Develop Replicable Opportunities for Scale, Protect People through Client Education and Consumer Protection Measures, Facilitate the Ability of People to Put Cash In and Take Cash Out of Their Mobile Wallets, and Tackling the Identity Issue for the Unbanked. These accelerators focus on the supply side of Mobile money by recommending the service design, regulatory framework and market set up.

2.4 SUMMARY OF LITERATURE REVIEW

The literature reveals that consumer attitudes and scepticism towards mobile money and mobile financial services in general depends on a number of factors. Chief among them were client demographics and other conceptions some of which are driven by real fear or ill perceived facts.

The literature suggests multiple approaches for driving growth of mobile money growth. The primary consensus was that the players understand the real challenges and that they do not go with the one fixes it all approach.

The conclusions drawn by the different scholars are different in both context and motivation from the one proposed by this study most are international studies choosing case studies and

10 | L illian 2014 topics that loosely relate to consumers scepticism particularly to mobile money service in Uganda.

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CHAPTER THREE

3.0 METHODOLOGY

3.1 INTRODUCTION

The chapter contains the research design, study population, sample size and sample selection, sampling procedure, data collection methods, measurement, procedure, data processing and analysis, validity and reliability of data, and anticipated problems.

3.2 RESEARCH DESIGN

The study used a cross-sectional survey design whereby, data was elicited regarding wide range of variables at the same point in time rather than attempting to investigate the facts over time. The survey adopted the mixed research approach by using both qualitative and quantitative methods. The mixed method has been found to yield confidence on the researcher when the more the methods of data collection contrast with other (Cohen, Manion and Morrison, 2008:141). The goal of mixed methods research was not to replace either of these approaches but rather to draw from the strengths and minimize the weaknesses of both in single research studies and across studies. According to (Creswell, 2003) the bias of one method can be cancelled by the strength in another.

3.3 STUDY POPULATION

The study population is a collection of individuals or objects that is the main focus of a scientific study. The study population was composed of all mobile telephone subscribers in Kampala. These were being considered because every Mobile phone user is a potential user of any of the Mobile Money services available on the market. Hence the results obtained from these were used to ascertain the extent and causes of consumer scepticism towards Airtel Money.

The study population was categorised into two cohorts; first and largest portion of the study population was the registered users of Mobile Money in Kampala and the second are the Mobile money agents in Kampala. The registered Mobile money users made a choice of which Mobile Money service to use and hence registered for it, so the study sought to understand the influence of scepticism in such a choice. On the other hand, the Mobile Money agents served the users of Mobile Money on a day to day basis and provided valuable

12 | L illian 2014 insights regarding the market reactions to different aspects of mobile money services on the market. These were targeted with a special set of questions different from that of the regular mobile phone users.

In Uganda there are approximately 12 million users of mobile money and about 120,000 mobile money agents. Therefore, the study population was 12,120,000 individuals who used mobile phones as both regular users and as agents of mobile money.

3.4 SAMPLE SIZE

Based on a study population of 12,120,000, a sample size of 384 respondents was determined using the Morgan and Krejcie (1970) sampling frame.

3.5. SAMPLING TECHNIQUES AND PROCEDURES

The respondents of the survey were selected using a random sampling technique. Due to absence of a sampling frame, the randomisation was based on the willingness of respondents to participate in the survey. Therefore, the researcher approached random individuals in different areas of Kampala and requested them to participate in the survey. All approached willing participants were surveyed while the unwilling ones were dropped. The detailed sampling technique per respondent category is listed in table 3.1 below.

Table 1: Selection of respondents

Category of Sample Population Sampling technique Respondents Size

Mobile Money 120,000 38 10% Random sampling agents

Mobile money users 12,000,000 346 90% Random sampling (excluding agents)

Total 12,120,000 384 100%

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3.6 DATA SOURCES AND COLLECTION METHODS

3.6.1 DATA SOURCES

The primary data was obtained from Mobile Money agents and Mobile money users (non- agents). Secondary data was obtained from published materials like journals, annual reports and Uganda Communications Commission publications to collaborate the findings from the primary data.

3.6.2 DATA COLLECTION TOOLS

The data collection tools employed were of two forms corresponding to the study design. The questionnaires were used to collect quantitative information mainly of ordinal nature that required respondents to give evaluations and attitudinal rankings of different attributes listed on the questionnaire. The questionnaire was used to obtain responses from the users of mobile money (non-agents) because they were the ones who chose and experienced the mobile money services they used. Through the questionnaire the users were expected to give candid answers to the various questions. A 5-point Likert-type interval scale was used and interpreted as 1 = strongly disagree and 5 = strongly agree.

The qualitative information was obtained through key informant interviews with selected mobile money agents; the mobile money agents interact daily with the users of various mobile money services and act as first line support for the users because the delivery model of Mobile Money Services cedes the telecom to a back end role with no direct interaction with the users except through the agents. Therefore, through such interactions with users of mobile money, the agents were in position to provide the required information as key informants in the survey using an interview guide.

3.7 VALIDITY AND RELIABILITY OF DATA

Validity refers to the ability of a procedure or an instrument (tool) used in the research to be accurate, correct, true, and meaningful. While reliability refers to how consistent a results of the research procedure or instrument are. It is the degree of consistency demonstrated in a study.

Both content and external validity were evaluated using 2 ratters (fellow MBA students) to rate whether the selected variables were relevant or irrelevant to the research study. Campbell

14 | L illian 2014 and Stanley (1983) specified that external validity is the extent to which findings of an experiment could be applied to particular settings and internal validity as the extent to which extraneous variables have been controlled by the researcher. The validity in the study was thus be tested using the formula below;

Number of variables rated as relevat Content Validity Index = Total number of variables in the study

If the Index is equal to 0.9 and above, then the research design was considered valid.

On the other hand, reliability being the degree to which the information obtained consistently measured the attitudes of mobile phone users towards Airtel Money; was established using the Cronbach’s Co-efficient alpha which was used to test the validity and reliability of data. Any variable with Cronbach’s Co-efficient alpha test values less than 0.5 were not included in final analysis and conclusion. The Cronbach’s Co-efficient was obtained from the formula below;

2 퐾 1 − ∑ 푆푑푖 Reliability coefficient = ( 2 ) 퐾 − 1 푆퐷푡

Where;

K is the Number of variables in the data set

2 Sdi is the sum of variances of the individual variables in the data set.

2 SDt is the variance of the entire data set

According to Campbell & Stanley, (1983), a data set is considered reliable if the coefficient is at least 0.5.

3.8 DATA PROCESSING AND ANALYSIS

All filled questionnaires were returned, edited, cleaned, validated and checked for possible errors. Range consistency checking was performed before the actual data capture and analysis. The cleaned data was captured using Epidata statistical software and then exported for analysis to SPSS, which is preferred over other analysis software because it is easier to use especially for performing descriptive data analysis to generate frequencies, averages and other statistics from the data.

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The data analysis focused on eliciting patterns between variables using cross tabulations, frequency tables and chi-square tests. Visual data display graphs were also used to clearly present the findings of the study. These included pie charts, line graphs, bar charts and doughnut charts.

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CHAPTER FOUR

4.0 PRESENTATION, INTERPRETATION AND DISCUSSION OF RESEARCH FINDINGS

4.1 INTRODUCTION

This chapter presents the findings obtained from implementing the research methodology highlighted in chapter 3. The data collection tools employed was the questionnaires sand the interview modulated by an interview guide. The questionnaires yielded mainly quantitative data with a mix of ordinal Likert scale data and qualitative responses to some unstructured questions. The interview guides on the other hand, yielded information from respondents who were asked open ended questions on the interview guide combined with further probing in order to enrich the obtained responses.

The finding presented in this chapter are organised according to the research objectives and hence the research questions that the study set out to address. In section 4.2, the demographic characteristics of the respondents are highlighted in order to justify the subsequent finding.

4.2 DEMOGRAPHIC CHARACTERISTICS OF THE RESPONDENTS

This section presents the demographic characteristics of the respondents in terms of age, gender, level of education and work experience.

4.2.1 AGE RANGE

Table 2: The age groups of respondents

Age Frequency Percentage

Below 25 years 302 78.44%

25 – 29 years 43 11.17%

30 – 39 years 25 6.49%

40 – 49 years 4 1.04%

50 – 59 years 8 2.08%

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Missing 3 0.78%

Grand Total 385 100.00%

The majority of the respondents (78.4%) were below 25 years and 11.2% within the ages of 25 to 29 years implying that only 9.8% of the respondents had ages of 30 years and above. This implies therefore, that the feedback regarding the various services and the attitude towards them came from mainly this group of respondents. This age bracket is mainly sceptical due to the few service providers that are available in the different parts of the country and some of the agents are not always having enough float to cater for the demand. This has been commonly realised among the Airtel agents. In other words accessibility is still an issue of concern with Airtel mobile services and considering the level of accessibility, other factors like reliability and security are put to question. Therefore considering this age bracket as below 25 years, these in most cases are on the receiving end while utilising these services and therefore accessibility and liquidity among agents are a main issue of concern.

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4.2.2 GENDER

Figure 1: The gender distribution of the respondents

Missing 2%

Male Female 45% 53%

Figure 1 above shows the composition of the participants in the survey in terms of their gender. The gender split was slightly bent towards the female gender whereby the sample consisted of 53% female respondents and 45% male respondents. This implies that male individuals are more active customers in the telecom industry. The female respondents were more concerned about the certainty and ease of use of the Airtel mobile services and the future of the entire company at large. In other words considering that the company has gone through different phases of rebranding there is a big question on its survival and therefore being sceptical on the utilisation of their mobile services. However the male counter parts were generally more concerned about the Airtel network which is experienced to be on and off and therefore the issue of reliability was questioned and availability of float; more among the male respondents.

Yang (2005), in an exploratory study of m-commerce, also found that gender influences perceived ease of use and usefulness but in a negative way, contrary to expectations. In relation to mobile banking, it has been found that females are more concerned by security issues than males, whereas males pay more attention to effectiveness.

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Sayid and Echchabi (2013) indicates that perceived ease of use has a significant positive influence on the perceived usefulness of mobile banking services, and both the variables have a significant positive influence on the attitude towards mobile banking

4.2.3 LEVEL OF EDUCATIONAL ATTAINMENT

Table 3: The Educational attainment of respondents

Educational attainment Frequency Percentage

Primary level 14 3.64%

Secondary level 300 77.92%

Diploma level 27 7.01%

Degree level 31 8.05%

Post graduate level 2 0.52%

Others 5 1.30%

Missing 6 1.56%

Grand Total 385 100.00%

The majority of respondents (77.9%) had secondary level education followed by those with degree level and diploma level that made up 8.1% and 7.0% of the respondents respectively. The least groups of respondents in terms of educational classification were those with post graduate, Other forms and primary level respectively each contributing 0.5%, 1.3% and 3.6% to the sample respectively. Therefore, the majority respondents (77.9%) considered the charges, accessibility and how fast the network of the mobile money service provider is

20 | L illian 2014 hence influencing the level of scepticism in the use of Airtel money. In other words, these believed that the MTN network was faster and reliable compared to other networks and considered Airtel to be struggling to break through and therefore being sceptical about its use. However they considered all networks’ security to be at the same level considering that all networks have a provision for the sender and the recipient name provided. However the degree holders (8.1%) thought MTN is more reliable than Airtel because Airtel is not stable with its tariffs and therefore reliability was an issue that raised scepticism among these.

In relation to this, United Nations Publications, (2012) states that Critical to the success of any mobile money service is the agent network (of people, ATMs, branches) that provides an interface through cash-in and cash out functions. Many people cite the extensive agent network that is visible at almost every street corner in Nairobi as one of many reasons behind M-PESA’s success. As at the end of March 2012, M-PESA’s network in Kenya stood at almost 37,000 agents servicing a base of close to 15 million registered users. Compare this to MTN Mobile Money’s network in Uganda of some 3,000 agents serving about 1.6 million registered users at about the same time. The ratio of agents to customers tends to remain constant across the two implementations as the MNOs seek to grow their agent network in tandem with new customers to avoid diminishing agent incentives and causing dropouts. For aspiring small mobile sector enterprises, a prospective mobile money agent needs as a minimum 1) a legally registered business that should have been operational in the last six months, 2) a permanent physical address as well as 3) some cash to invest as float. Such stringent requirements limit participation of many small businesses that could have otherwise benefited from such an opportunity. For most mobile money platforms, with the exception of Airtel money, agent commissions are paid in arrears, usually on a monthly basis and via the mobile money platform as opposed to after every transaction and in cash (as in Airtel money’s model). For a number of reasons, most MNOs prefer paying agents their commission in one lump sum at the end of the month using the mobile money platform. Agents are likely to value a bigger lump sum compared to many frequent but smaller payments. Moreover, agents are more likely to convert the commission into float, thereby improving the liquidity of the individual agent as well as of the platform as a whole.

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4.2.4 WORKING EXPERIENCE

Table 4: The working experience of respondents

Experience Frequency Percentage

Less than 1 year 27 7%

1 – 5 years 32 8%

6 - 10 years 25 6%

More than 10 years 38 10%

No job 263 68%

Grand Total 385 100%

Because the sample had many youthful respondents, 68% of them had never had a job. Among the working class respondents, 10% had been in employment for over 10 years, 8% had worked in their current organisations for 1 – 5 years, 7% for less than a year and 6% for 6 – 10 years. Considering that the 68% had no jobs and are students, these mostly use the mobile services to receive the money being sent to them. Therefore, these considered the charges more important and the accessibility of the mobile money services. In other words, they thought that due to the scarcity of the Airtel money service providers, this might influence the increase in the charges for withdrawal and sending. However, the 10% who have worked for more than 10 years considered the security and reliability of the service providers as key issues that influenced the usage of the network.

4.2.5 THE RELATIVE COST OF MOBILE MONEY TRANSACTIONS

Table 4 below was adopted from the UNACTED (2012) publication to indicate the relative ricing of different mobile money services on the Ugandan market. The comparison reveals that MTN mobile money charges higher transaction charges for the different transaction bands. This implies that the reasons for its dominant market share are not necessarily price related since the other providers offered slightly more affordable transaction tariffs.

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Table 5: Showing the comparisons in prices

Mobile MTN Mobile Money Airtel Money UTL M-sente transfers USh Registered Unregistered Registered Unregistered Registered Unregistered

Below 5 000 250 250 500 1 500

5 000—30 000 800 1 600 250 250 500 1 500

30 001— 800 2 000 250 250 500 1 900 60 000

60 001— 800 3 700 250 250 500 3 500 125 000

125 001— 800 7 200 250 250 500 6 800 250 000

250,001— 800 10 000 250 250 500 9 500 500,000

500 001—1 800 19 000 250 250 500 18 000 000 000

Source: UNACTED (2012)

CGAAP (2014) reported that M-pesa in Kenya used price reduction as a counter competitive measure reacting to the price war sparked by Equity Bank’s Finserve service. Presenting evidence that providers of mobile money believe that price is a competitive area where providers need to bench mark with each other. Sendhil and Eldar (2013) however show that the sensitive segment of the market is that which is financially struggling. However, InterMedia report (2013) explains the paradox as to why Airtel Money has failed to control the market in spite of their lower prices. The InterMedia report (2013) reports that 55% of the users select their mobile money provider based on network coverage (both GSM network and agent locations and proximity) while 24% choose based on the cost of a mobile money service.

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4.3 CONSUMERS’ ATTITUDES TOWARDS USING AIRTEL MONEY IN UGANDA.

The findings in this section answer the question of what the consumers’ attitudes towards using Airtel money are in Uganda.

4.3.1 MARKET SHARE OF MOBILE MONEY SERVICES

In this study, mobile money has been limited to those money transfer services offered by the various telecoms in the country. It should be noted that the entry service to being a client of a telecom is often one’s subscription to their voice services and the other services like mobile money are complementary. However, from the results, it is implied that clients have multiple SIM cards which they use for different services. The results below show the reasons and attitudes of clients towards the mobile money services of the 4 telecoms that offer mobile money i.e. MTN, UTL, Airtel and Orange.

Figure 2: The Mobile money market share

60.0% 53.8%

50.0% 42.9%

40.0%

30.0%

20.0%

10.0% 1.6% 1.6% 0.0% 0.0% MTN Airtel Orange UTL Others

Figure 2 above shows the market share of each telecom among the group of respondents interviewed. The results show that MTN Mobile money leads the other telecoms in terms of mobile money subscribers with a 53.8% share followed by MTN Money.

FITS (2012) confirms this by stating that MTN is the leading provider of both mobile communication and m-money services. According to FITS (2012), 74% of the households

24 | L illian 2014 with registered mobile money users use MTN mobile money services. There was low prevalence of multiple mobile money service use in households for example, among the mobile money users, a significant 93% used only one m-money provider, 6% use two different providers and 1% use three m-money providers. There were no households with registered users of more than three different m-money providers (FITS, 2012).

This implies that regardless of the fact that section 4.3.2 shows Airtel leading the voice market and that the users have multiple SIM cards, the vice of choosing only one mobile money service works against Airtel Money by preventing users who had already chosen MTN mobile money from trying the services offered by Airtel money. Therefore, the mobile money customers are more loyal to their chosen provider and MTN having been the first to launch, it got the first mover advantage and now the converted users hardly consider using Airtel Money which they perceive as new, untested or not widely spread.

4.3.1.1 WHY MTN DOMINATES THE MOBILE MONEY MARKET

Table 6: Reason for choice of MTN Mobile Money service

Reason for choice of MTN Mobile Moneyservices Frequency Percentage

Reliable and secure 68 29%

Agents are everywhere you go 45 19%

Stable service with minimum downtime 32 14%

Easy to use and convenient 26 11%

Fast 25 11%

Affordable 19 8%

Best at customer care (agents and telecom) 7 3%

My choice and the best 3 1% complaints on MTN money are resolved quickly 2 1%

It is not found every where 2 1%

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Uniqueness of MTN are easily understood compared to others 1 0%

You can send money to a person on and another network 1 0%

Grand Total 231 100%

The leading reason for MTN’s dominance owes to its first mover advantage having been the first mobile money service to launch in 2009. 29% of the respondents believed that MTN’s service was reliable and secure. The feeling of reliability is often borne of the respondents having used the service successfully without any problems. These kinds of customers were resisting the idea of having to try another service due to the associated risk yet what they were using had not disappointed them. Therefore, this does not often imply that the other services are therefore, unreliable or not secure. The respondents believe that MTN has agents everywhere you go and this implies benefiting from multiple service points with variable working hours and the like. This means that 19% of the 53.8% who had chosen MTN mobile money over Airtel money did so because MTN had more agents in more places compared to Airtel Money or any other service. Therefore these respondents perceived Airtel Money as a mobile money service without properly spread agent locations/service points.

The above findings bring forth an important attitude critical for the success of a mobile money service; that of trust and the feeling of security. According to Davidson and McCarty (2012), Trust in the Mobile Money Customer’s Journey is a necessary precondition for trying mobile money, and it must be high, since for most users, their first interaction with a mobile money service will be to hand over cash. An association with a known mobile operator brand, extensive above-the-line advertising, trustworthy agents, and positive word of mouth all build trust. But the most effective way to gain a customer’s trust is to ensure that their experience with the service is a good one. If it’s not, it’s unlikely that the customer will ever become a regular user.

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Table 7: Reason for choice of Airtel Money service

Reason for choice of Airtel Money services Frequency Percent

Fast 45 25%

Cheap 35 19%

Available network 29 16%

Reliable 23 13%

Easy and I know how it works 18 10%

Secure 18 10%

Good Customer care 8 4%

Agents are every where 3 2%

Flexible and provides all important services 2 1%

Grand Total 181 100%

Most of the respondents who preferred Airtel Money preferred it because of its transactions being processed fast. The respondents especially applauded the confirmation messages that were delivered instantly compared to those that delay for other mobile money services. Fast service was cited by 25% of the respondents followed by cheap and affordable services with 195 and stable uptime with 16%. An equal percentage perceived Airtel Money as easy to use as it was secure.

Other reasons like being Easy to use and knowledge of how it works, security of funds, agents having good customer care and flexibility in terms of supported services did not rank high among the positive attitudes of respondents towards MTN Mobile money. This implies that they either believe the other mobile services like Airtel money also have those capabilities or these are not important in their choice of a mobile money service.

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4.3.2 TELECOM MARKET SHARE IN THE VOICE MARKET

Table 7 below shows the usage of each telecom’s voice services. Since some users use more than 1 telecom, the total percentage is above 100%.

Table 8: Telecom market share for Voice services

Telecom of choice for voice Frequency Percentage

MTN 202 43.91%

Airtel 218 47.39%

Orange 28 6.09%

UTL 7 1.52%

Smart Telecom 4 0.87%

K2 Telecom 1 0.22%

Total 460 100.00%

Airtel had the bigger share of the respondents using voice services of the various telecoms; Airtel had 47.39% followed by MTN which had 43.91%. All the other telecoms had less than 10% of the users reporting usage of the telecoms’ voice services. This implies that the telecom voice service landscape in Uganda is nearly oligopolistic with 2 dominant players and other small ones that do not have a controlling share of the market. This kind of market structure is the result of recent events in the industry for example, the takeover of Warid telecom by Airtel hence effectively merging the market share of the 2nd and third players; and the financial problems that have marred UTL following the changes in leadership in Libya (the Libyan government holds 49% of the stake in UTL).

The reason for the existing market structure in the telecom industry can be explained by the supply side factors mentioned above and some factors and perceptions of customers that influence their choices every day. The following section therefore elaborates the reasons that people gave for choosing the telecom they were using’

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The observed market share among the dominantly youthful respondents is the opposite of what was observed in the mobile money market share in figure 2 where MTN dominated the market. Instead, Airtel leads MTN in the voice market of the youth further supporting the conclusion that the respondents were Using MTN mobile money more than Airtel money not for the lack of Airtel SIM cards but because even if they had both Airtel and MTN SIM cards, they choose MTN mobile money over Airtel money and the reason is scepticism among others.

Table 9: Reason for choice of MTN Voice services

Reason for choice of MTN Voice services Frequency Percentage

Always available and network is stable 60 32.26%

Easy to use 30 16.13%

Because is cheap and affordable 26 13.98%

Fast connection 23 12.37%

Offers like call discounts, Facebook zero etc 13 6.99%

National coverage 9 4.84%

Best customer service 7 3.76%

Unique services like contact backup service & mobile money 4 2.15%

Flexible 3 1.61%

One is updated 3 1.61%

It is accessible 2 1.08%

Because of mobile money 1 0.54%

Came first 1 0.54%

International presence 1 0.54%

Discloses all terms and conditions 1 0.54%

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It’s used by many people 1 0.54%

Speed 1 0.54%

Total 186 100.00%

From Table 7 above, 32.26% of the clients choose MTN voice services because they perceive the MTN network as always available and stable, 16.13% find them easy to use, 13.39% find the services of MTN affordable and 12.37% see MTN as having fast voice network connection. These attitudes reflect what the bigger proportion of the market thinks about the voice services of MTN and those of their providers. For example the choice of MTN voice services due to the perceived ease of use implies that these respondents regarded other services difficult and cumbersome to use. This is classical evidence of scepticism since a 1 on 1 evaluation of the process maps for each of the products (Airtel voice and MTN voice) reveals that except the difference in short codes for loading airtime, making calls is always the same process and dependent on the mobile handset and not the telecom. Secondly, Airtel unlike MTN had a dedicated service code *100# where users can find all the Airtel related services while those of MTN were accessible on several different codes that users had to master.

The conclusion therefore is not that MTN voice services are overlay easier to use or that those Airtel are complicated, there is an element of fear of the perceived rather than the reality pointing towards scepticism among even these educated, trendy and youthful users.

Table 10: Reason for choice of Orange Voice services

Reason for choice of Orange Voice services Frequency Percentage

Affordable 7 27%

Because of their internet 3 12%

Promotional Offers like Tokota 1 4%

Stable network 1 4%

I know how to use orange 3 12%

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Friendly service 2 8%

Its Faster 4 15%

Its reliable 4 15%

Offers good services 1 4%

Grand Total 26 100%

7 out of the 26 views on why clients liked Orange voice services were related to cost. The respondents found the services of Orange affordable compared to those of others.

Table 11: Reason for choice of UTL Voice services

Row Labels Reason for choice of UTL Voice services

Cheap 5

Easy to use 2

Grand Total 7

UTL voice services are preferred by the users because of being affordable and easy to use.

Table 12: Reason for choice of Smart TelecomVoice services

Reason for choice of Smart Telecom Voice services Frequency

Cheap 3

Free offers 1

Grand Total 4

The two reasons given for customers choosing Smart Telecom’s voice services are related to cost. The leading reason is affordability with 3 occurrences and the free offers with 1 incidence.

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Table 13: Reason for choice of K2 Telecom Voice services

Reason for choice of K2 Voice services Frequency

Good customer care and service 1

Lowest cost per unit 1

Grand Total 2

K2 like Smart telecom is a relatively new and small player in the telecom industry. As such, few people had any reason for preferring their voice service. Out of the two who gave their views of the likeable attributes of K2, 1 appreciated their customer care and the other preferred their costs which are low.

Overall, the most preferred attributes of a voice service if network stability and coverage, service affordability, ease of use and speed. Some customers also preference services with good customer service, promotional offers. They also wanted services that they are already familiar with even if this accounted for a small proportion of the treasured attributes of the different services.

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4.3.3 TELECOM MARKET SHARE IN THE DATA MARKET

Figure 3: Telecom of choice for data

45.0% 41.6% 40.0% 36.6% 35.0% 30.0% 25.0% 20.0% 15.0% 11.7% 10.0% 5.0% 1.3% 0.0% 0.0% MTN Airtel Orange UTL Others

The data market also dominated by MTN however, their market share of 41.6% is only 5% more than that which Airtel commands. Orange telecom has 11.7% of the data market share while UTL the other telecom to have market share at all had 1.3%. Finding implies that unlike the mobile money market where trust and therefore skepticism is important, the data market is not for only the 2 leading players but a third player in Orange is tolerated in this market. Therefore, the respondents were willing to give smaller players like Orange a chance in this market but not in the mobile money market because as observed from the reasons for choice users are more sceptical about safety, security, availability and reliability of services of mobile money. However, since even the users of Airtel services perceived them to be secure, available and reliable the conclusion is that one’s choice depended so much on what they perceived and that which they feared.

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Table 14: Reason for choice of MTN Data services

Reason for choice of MTN Data services Frequency Percentage

A reliable network 11 7%

Cheap 22 13%

Every where 4 2%

Fastest internet 100 61%

Free MBS every month 8 5%

Good services and user friendly 7 4%

Offer gives morning free calls, MBs and Facebook zero 12 7%

Grand Total 164 100%

Most of the customers who used MTN data services preferred them because of their perception that MTN data is fast. Respondents with this notion were 61% of the MTN data customers in the sample. The next three important positive attitudes of customers about MTN data services were the affordability of the data bundles with 13%, the reliability of the network with 7% and the fact that MTN gives its customers free offers like free calls, free data bundles and Facebook zero; this attitude had 7% prevalence among the interviewed respondents. In total, 164 respondents had positive preference for MTN data services due to the listed 7 reasons.

4.3.4 REASON FOR CHOICE OF ORANGE DATA SERVICES

All of the 45 respondents who had positive attitudes about Orange data services (Internet everywhere), liked the service due to its speed. They all believed that Orange data was fast and made the browsing experience using any data connected devise an interesting experience.

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Table 15: Reason for choice of UTL Data services

Reason for choice of UTL Data services Frequency

IT IS CHEAP 1

ITS FASTER 4

Grand Total 5

Only 5 respondents presented their views on the data services of UTL. These mainly believed that the data service of UTL was fast and quick while only one though that the UTL data was cheap and affordable.

Other telecoms (Smart Telecom and K2 Telecom)

None of the respondents presented any positive or negative attitudes toward the data services of either Smart telecom or K2 telecom. An independent check by the researcher revealed that these telecoms have not yet launched data services in the market hence explaining why the customers had not experienced them and therefore had no views on how they are.

4.4 THE ROLE OF CONSUMER SCEPTICISM INFLUENCING USAGE OF MOBILE BANKING PRODUCTS

The findings in this section answer the question of what role consumer scepticism plays in influencing usage of mobile banking products.

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4.4.1 SCEPTICISM TOWARDS MOBILE BANKING PRODUCTS

Table 16: Respondents’ scepticism towards mobile money

Statements

Strongly Disagree Strongly disagree Neutral Agree agree Average Overall

MTN mobile money is user friendly. 39 52 39 147 93 4 Agree

MTN mobile money is reliable. 26 73 61 131 70 3 Neutral

The uptime of MTN money is assured. 53 56 100 102 51 3 Neutral

I always find an MTN money agent in my locality. 65 89 59 93 58 3 Neutral

One’s money is secure with MTN money. 31 31 51 120 124 4 Agree

MTN money agents are the best at customer service. 37 52 68 122 73 3 Neutral

I cannot send money to a wrong recipient on MTN Money. 56 98 62 87 54 3 Neutral

Any complaints on MTN money services are resolved quickly. 47 72 71 91 82 3 Neutral

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Many people do not use MTN money due to unfounded fear. 85 98 83 64 29 3 Neutral

I trust another mobile money service more than MTN money. 69 91 59 101 39 3 Neutral

MTN Money makes an effort to effectively promote the service. 37 41 48 134 102 4 Agree

I know the uses of MTN money. 32 43 54 123 110 4 Agree

I know how to use MTN money. 46 43 51 121 102 4 Agree

I understand the uniqueness of MTN money compared to other Mobile money services. 42 63 65 94 91 3 Neutral

Overall, the respondents agree with the following perceptions implying that these perceptions about the market leader discourage them from choosing otherwise since they may have differing views about other mobile money providers as already highlighted in section 2.3.1.1 and 2.3.1.2;

 MTN mobile money is user friendly.  One’s money is secure with MTN money.  MTN Money makes an effort to effectively promote the service.  I know the uses of MTN money.  I know how to use MTN money.

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They are neutral about the following statements meaning that those aspects of sceptical reasoning do not necessarily influence their choice of a mobile money service they use.

 MTN mobile money is reliable.  The uptime of MTN money is assured.  I always find an MTN money agent in my locality.  MTN money agents are the best at customer service.  I cannot send money to a wrong recipient on MTN Money.  Any complaints on MTN money services are resolved quickly.  Many people do not use MTN money due to unfounded fear.  I trust another mobile money service more than MTN money.  I understand the uniqueness of MTN money compared to other Mobile money services.

4.5 STRATEGIES TO IMPROVE USAGE OF AIRTEL MOBILE PRODUCTS IN UGANDA

The findings in this section answer the question of the strategies that the telecoms can employ to improve usage of Airtel mobile products in Uganda.

4.5.1 RECOMMENDED STRATEGIES FOR IMPROVING USE OF MOBILE MONEY

Regarding the strategies for improving the use of mobile money, respondents were asked to give their recommendations based on their daily experiences and how they thought the telecom providers like Airtel can better reach out to them to encourage them to use mobile money more and better. The following recommendations and strategies emerged from the study findings.

Reduction on cost of transactions; mobile money serves both commercial and non- commercial users in Uganda and elsewhere in Africa and Asia where it has taken centre stage in the financial system. Both of these users indicated preference for mobile money services that they perceive as cost friendly. They therefore recommended that if telecoms are to on- board more clients and drive usage of their services, they should charge competitive and pocket friendly rates. The classical example is a transfer of say UGX 2 million from a user in Jinja to user in Lugazi. The end to end cost of this transaction can cost over UGX 10,000 yet the physical delivery of such can cost about UGX 6,000 including the return journey.

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Therefore, in some cases, the cost of transacting on mobile money outweighs the time saving and other costs that clients would have to otherwise incur. This is often exacerbated by the relatively low trust in the service owing to occasional loss of money to push the opportunity cost and the transactional cost of mobile money or equal footing especially for big transactions. The respondents particularly referred their recommendation to the withdraw charges which they perceived as high.

Improving service uptime; the users considered these on and off spells of the various mobile money services a real menace. They tended to trust the services that were on most of the time and noted availability as a key pull factor to choosing a given mobile money service. Therefore, they recommended that for mobile money services to appeal to them more the providers must work on improving the uptime or communicating anticipated down time in time.

Sales Promotion; the respondents also mentioned the need for periodic promotions that appreciate the regular users of mobile money services and promote usage among the laggards. The effectiveness of sales promotions was observed from the responses of the respondents where some of them admitted to choosing particular services of various telecoms due to the promotional offers thereon.

Emphasize customer care; Since the mobile money model is built around agents of telecoms as the major delivery channel of the mobile money service whenever clients want to deposit or cash out their money, the vast nature of the agent networks often puts the telecom in a precarious position where they can hardly control the customer experience in each of their agents’ locations. The clients interviewed alluded to the fact that some agents are rude, serve them poorly; get involved in fraud while others over charge the clients. Unfortunately, during the research, it was evident that telecoms can lose clients due to the mishandling of clients by agents. Hence the telecoms should improve on agent monitoring and client feedback collections as well as acting on such feedback in order to improve user experience at the agents’ location.

The clients further highlighted that especially in more remote locations where gents establish a sort of spatial monopoly, the clients get the worst experience that in areas where there several agents of the same mobile money service. Therefore, the other key to improving user

39 | L illian 2014 experience can be in the ability for the telecoms to recruit multiple agents in the same locations to create useful competition among agents.

Improving on the communication network in their areas; for mobile money services to work, the mobile users must be able to get the GSM network reception on their handsets. The respondents recommended that for telecoms to reach out and attract them better, they must ensure that their coverage is national.

Extending mobile money near to people; outreach in all financial services is important especially because the key distinguishing feature of Mobile money and the other financial services is related to access. The customers believe that mobile money providers can better appeal to them through spreading their agency networks to places within the clients’ vicinity.

The above recommendations are based on the findings of the survey and cross references. For example, from the survey, most respondents hinged their choice and appreciation of the mobile money services they used on real service issues and less on awareness. For Airtel Money to win over the mobile money market, its focus should be more on improving user experience, ease of access, reliability of service and coverage and less focus on marketing and promotions. For example, the InterMedia report (2013) found that only 5% of the mobile money users in Tanzania chose their providers due to adverts, bonuses and promotional offers. The 95% chose them due to network coverage (34%), agent network and proximity (21%) and security/trust in the service (11%).

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CHAPTER FIVE

5.0 SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

5.1 INTRODUCTION

This chapter presents the summary of the finding of the study, the conclusions regarding the study objectives and the areas for further research.

5.2 SUMMARY OF STUDY FINDINGS

The following findings are presented based on the study objectives;

Objective one: To establish consumers’ attitudes towards using Airtel Money in Uganda.

The key finding under this objective is the based on the fact that even if Airtel voice services are widely used; clients are not comfortable with its mobile money services. Therefore, one can have both Airtel and MTN SIM cards; use Airtel for voice and MTN for mobile money. The reasons for this are majorly explained by the following attitudes that clients had about Airtel Money;

Clients perceived Airtel money as only second best compared to MTN in terms of the attributes they desired about a mobile money service. The clients viewed Airtel Money as less secure, less reliable and their agents less spread compared to MTN mobile money.

These attitudes were not directed to Airtel as a brand but Airtel money service because the choice of the different telecom services was influenced by different factors therefore the telecoms had deferring shares of the market for the different product markets evaluated that is voice, Mobile Money and data.

The client perceived Airtel money as user friendly and secure. They felt confident about their knowledge regarding the services and user experience of Airtel money and thought that Airtel money was promoting its service adequately.

The customer however, did not see Airtel money as a unique and distinct service from MTN Mobile money. They were neutral about the question whether they saw Airtel money as a unique product in the market.

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Objective two: To evaluate the role of consumer scepticism in influencing usage of mobile banking products.

In terms of scepticism, the clients were indifferent about refuting or accepting the fact that; it is easy to find Airtel money agents, that the Airtel money service up time is good, that Airtel money agents have good customer service, that the service is reliable and that the complaints are resolved fast.

Objective three: To design appropriate strategies to improve usage of Airtel mobile products in Uganda

The key strategies fronted by this survey for a telecom like Airtel lagging behind in terms of mobile money market share mainly revolve around catching up with the market leader in terms of reliability of the service, accessibility in terms of agent network among other aspects as summarised below;

Reduction on cost of transactions; if telecoms are to on-board more clients and drive usage of their services, they should charge competitive and pocket friendly rates.

Improving service uptime; for mobile money services to appeal to them more, the providers must work on improving the uptime or communicating anticipated down time in time.

Sales Promotion; there is need for periodic promotions that appreciate the regular users of mobile money services and promote usage among the laggards.

Emphasize customer care; the telecoms need to monitor customer service among their agents and regularly act on any negative feedback, they also the telecoms need to recruit multiple agents in the same locations to create useful competition among agents. Mazzeo (2003) found supporting evidence for this strategy whereby airline routes were found to have poor service quality and competition positively influenced on time performance.

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5.3 CONCLUSIONS

The attitudes of clients towards Airtel money were to an extent influenced by advertising campaigns. For example the common advertising phrase of fast, reliable and secure was echoed by many users.

From the findings, the results prove that scepticism plays a role in determining usage of Airtel Money but also highlight other intervening factors that exacerbate the lack of trust among some users. These factors include; factors like past changes in brand names, small agent network, downtime and security.

The respondents gave recommendations for telecoms reaching out more to them and enticing them to use the Mobile money services especially Mobile money and the recommendations point to improving service quality, accessibility and customer service.

5.4 RECOMMENDATIONS

The leading recommendation emerging out of the findings is the one regarding improving outreach Airtel Money in terms of their agents reaching more remote areas. Even in areas they already have agents, it was recommended that multiple agent create competition that improves customer service.

The marketing communication of Airtel Money must emphasise product knowledge and assuring users that the service is stable, secure and reliable.

5.5 AREAS FOR FURTHER RESEARCH:

The research did not draw a nationally representative sample and concentrated on the relatively young literate segment of the market. Further research can be undertaken in understanding whether other market segments also perceive the mobile money market space in the same manner.

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Further research can also be undertaken to assess the effect of Airtel’s transformations in the past on its brand equity in the market.

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REFERENCES

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APPENDIX 1: THE QUESTIONNAIRE

Dear Respondent,

I am conducting research as a requirement for the award of Masters in Business Administration of Makerere University.

Please complete this questionnaire independently and without consultation with other colleagues.

The results of this survey may provide you with useful information on consumer skepticism towards mobile banking products in Uganda.

Although no confidential information is required, your responses will be treated with utmost confidentiality and only used for this study.

Thank you very much for your willingness to contribute to the success of this important research study.

Thank you for your cooperation.

Lillian Nalumansi

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SECTION A: DEMOGRAPHIC DATA

1) Name of the Department/Agency

…………………………………………………………………………………………..…..

2) Age range

a. Below 25 years e. 50 – 59 years

b. 25 – 29 years f. 60 – 69 years

c. 30 – 39 years g. 70 – 79 years

d. 40 – 49 years

3) Gender

a. Male

b. Female

4) Level of Educational attainment

a. Primary level e. Post graduate level

b. Secondary level f. Others (specify)……………………….… c. Diploma level …………………………………… d. Degree level ………………………

5) How long have you been working in your organization?

a. Less than 1 year

b. 1 – 5 years

c. 6 - 10 years

d. More than 10 years

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6) What is your current job status?

…………………………………………………………………..

7) Which Mobile network do you use for the following?

Voice Reason for your choice Data Reason for your choice

MTN MTN

Airtel Airtel

Orange Orange

UTL UTL

Smart Other Telecom K2 Telecom

Other

Mobile money Reason for your choice

MTN Mobile Money Airtel Money/Wpesa Orange Money

M-sente

Other

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SECTION B: STATEMENTS RELATING TO CONSUMER SKEPTICISM TOWARDS MOBILE BANKING PRODUCTS

Please indicate/tick the extent to which you agree with the statements where (1=Strongly disagree; 2=Disagree; 3 = Neutral; 4 = Agree and 5 = Strongly agree)

S/No Statements 1 2 3 4 5

8 Airtel mobile money is user friendly.

9 Airtel mobile money is reliable.

10 The uptime of Airtel money is assured.

11 I always find an Airtel money agent in my locality.

12 One’s money is secure with Airtel money.

14 Airtel money agents are the best at customer service

15 I cannot send money to a wrong recipient on Airtel Money.

16 Any complaints on Airtel money services are resolved quickly.

17 Many people do not use Airtel money due to unfounded fear.

18 I trust another mobile money service more than Airtel money.

19 Airtel Money makes an effort to effectively promote the service.

20 I know the uses of Airtel money.

21 I know how to use Airtel money.

22 I understand the uniqueness of Airtel money compared to other Mobile money services.

23. How should mobile money companies reach out to its clients in order to drive sales?

......

THANK YOU

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APPENDIX 2: THE INTERVIEW GUIDE

1. What are the consumers’ attitudes towards using Airtel Money in Uganda? a. Are their attitudes different about different mobile money services? b. What influences the differences if any? c. As an agent, what is your own view about these expressed attitudes? 2. What role does consumer scepticism play in influencing usage of mobile banking products? a. What fears do people have about mobile money? Are these general or specific to different mobile money services? b. Did these fears by yourself and others influence your choice of which telecom to become and agent for? c. What factors apart from your fears influence the people’s choice to use a given mobile money service? 3. What strategies can be employed to improve usage of Airtel mobile products in Uganda? a. As an agent, what do you think the telecoms like Airtel need to do to promote the use of their mobile money services? b. How effective are the current strategies they are using?

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