The Impact of Mobile Money on Measuring the Informal Economy

Colin Ellis

World Economics, 2026, vol. 27, issue 3, 1-18

Abstract: The paper examines how the rapid rise of mobile money in frontier economies complicates traditional monetary approaches to measuring the informal economy, which typically rely on excess cash demand (as in Tanzi's currency-demand method) to infer hidden activity. It analyses data from 2010-2023 across nine countries-Kenya, Ghana, Uganda, Tanzania, Rwanda, Cambodia, the Philippines, Pakistan, and Bangladesh-comparing broad money aggregates with mobile money transaction values relative to GDP. Two measures are constructed: a conventional cash-intensity benchmark (Measure A) that ignores digital payments, and an adjusted version (Measure B) that explicitly controls for mobile money intensity, both derived from within-country regressions and calibrated to existing informal economy benchmarks. Results show that including mobile money often produces only modest, country-specific, and episodic differences rather than systematic shifts in estimated informal shares, suggesting digitisation has a second-order rather than transformative effect on these proxies. The analysis concludes that while monetary methods remain useful, reporting both measures alongside their gap adds transparency without implying a dramatic reassessment of informality across these economies.

Date: 2026
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