The Impact of e-Payments on the Economic Growth of Lesotho

Abstract

This study examines the impact of e-payments on the economic growth of Lesotho. Time series secondary data covering quarterly range of 2017 till 2024 obtained from the Central Bank of Lesotho (CBL) was used whereby an ARDL model was employed to uncover the relationship between real GDP as a proxy for economic growth, and various types of e-payments activity as dependent variables. These independent variables constituted: ATM deposits, ATM withdrawals, Mobile money transfers, Mobile money deposits, Mobile money withdrawals, Mobile money payments, EFT Payments, and POS Payments. In this study, ATM withdrawals volumes and EFT Payments volumes were found to be highly significant with a positive relationship to real GDP growth, and similarly value amounts for mobile money transfers, mobile money withdrawals, and Mobile money payments were also found to be highly significant with a positive relationship to the model. However, Mobile money payment values and POS Payments volumes were found to be highly significant but contribute with a negative relationship to the model. The variables exhibiting positive relationship imply those electronic payment types are crucial for economic development thus necessitating increased enhancement and maturing. On the other hand, the two variables which exhibit a negative relationship suggest that there is potential inefficiencies which may hider economic development. A recommendation to policy makers, both in private and public organizations, is that infrastructure and technology for Mobile Money deposits and POS payments should be prioritised for improvements to uplift customer experience as an attempt to address negative impact of economic growth. Another recommendation to stakeholders such as regulators and investors is that innovation must be encouraged and incentivized towards development of more efficient electronic payments.