THE EFFECT OF SOCIO-ECONOMIC DETERMINANTS OF MOBILE BANKING ADOPTION AMONG SMALLHOLDER FARMERS IN TANZANIA

Abstract

This study examined the socio-economic determinants influencing mobile banking adoption among smallholder farmers in Lushoto District, Tanga Region, Tanzania. The specific objectives were: (i) to assess the influence of demographic factors on mobile banking adoption among smallholder farmers in Lushoto District; (ii) to analyze the effect of economic factors on mobile banking adoption among smallholder farmers in Lushoto District; and (iii) to explore the role of social factors on mobile banking adoption among smallholder farmers in Lushoto District. The study employed a mixed-methods approach under a convergent parallel design, involving a population of rural smallholder farmers across five villages in Lukozi Ward. A sample of 367 respondents was drawn from a total population of 4,372 using stratified random sampling. In addition, focus group discussions and key informant interviews were conducted with mobile agents and cooperative leaders. Data were collected using structured questionnaires and FGD guides; quantitative data were analyzed using descriptive statistics, correlation, and multiple regression analysis, while qualitative data were analyzed thematically. The findings revealed that education level (β = 0.49, p < 0.01) and age (p < 0.05) significantly influenced adoption, while gender differences were statistically insignificant. Economically, income level, access to credit, and transaction costs had strong effects, as 61.6% of farmers earned below TZS 300,000 monthly and 43.9% cited high transaction fees as barriers. Socially, 68.2% of respondents indicated that trust and peer influence enhanced adoption, whereas misinformation and limited cooperative participation hindered it. Overall, 64.3% of farmers used mobile banking for transfers and payments, but only 28.7% utilized it for savings or credit access. The study concludes that education, income stability, and institutional trust are key predictors of mobile banking adoption. This study recommends strengthening digital literacy programs, reducing transaction costs, expanding access to rural credit, and promoting cooperative-based awareness initiatives to enhance financial inclusion and support rural economic transformation in Tanzania