Does mobile network coverage increase the performance of informal firms? Evidence from sub-Saharan Africa

• The paper examines the impact of mobile technology diffusion on informal firm performance in eight African countries. • Historical exposure to lightning strikes is used as an instrument for mobile network coverage to address endogeneity. • Mobile network expansion increases informal firms’ sales and profits, with limited heterogeneity across firm characteristics. • Effects are strongest among firms using mobile technologies for business purposes. This paper investigates whether mobile network coverage affects the performance of informal firms in Africa. Using business surveys conducted by Research ICT Africa in 2017–18 in eight sub-Saharan African countries, we rely on historic exposure to lightning strikes as an instrument for mobile network coverage to address endogeneity issues. Our findings show that firms with access to mobile connectivity report significantly higher sales and profits, supporting theoretical predictions on the overall positive effects of digital technology diffusion. As expected, this effect is even stronger for informal firms that actively leverage mobile technologies in their business operations, reflecting the direct benefits of purposeful adoption. These findings suggest that, while mobile network coverage and mobile phone ownership have expanded rapidly across Africa, effective adoption of mobile technology remains a key priority. Significant challenges persist regarding digital inequalities in usage, driven by affordability and skill gaps, highlighting the need for public policies to ensure that informal firms have equitable access to the economic opportunities offered by digital infrastructure.