Can Mobile Money Adoption Affect Environmental Sustainability in Energy Transition Context ?

Although mobile money has been hailed as a serious innovation in the pursuit of financial inclusion and poverty reduction ; however, its impact on the environment and energy transition is not yet fully understood. This study takes this thorny path by analysing the impact of mobile money adoption on greenhouse gas and CO2 emissions in 41 African countries over the period 2002-2020. Using the entropy balancing method, I find that the adoption of mobile money contributed to an increase in emissions of 0.41 and 0.51 percentage points of greenhouse gases and CO2, respectively in African countries. After checking the robustness of these results, I show that the main drivers of the destabilizing and amplifying effect of mobile money on the environment are fossil fuel energy consumption, agricultural value added, and financial development. In addition, the heterogeneity tests performed show the sensitivity of the result to the type of mobile money and some structural and institutional factors, including inflation, renewable energy consumption, rural population growth, remittance inflow, and rule of law. The main conclusions of the paper argue for more stringent environmental policies. This should encourage countries to invest in renewable energy to take advantage of the positive impact of mobile money on the environment and the energy transition.