The Impact Of Mobile Money Services On The Performance Of Small And Medium Enterprises In An Urban Town In Kenya

Abstract

Since the launch of mobile money services in Kenya in 2007, the number of subscriptions has grown to approximately 48% of entire the Kenyan population. This overwhelming uptake has been attributed to the affordability and accessibility of the service, especially among low income earners. The main challenges of mobile money technology include; the requirement of cash tellers or agents at convenient locations to allow easy access to cash when needed, the rising number of fraudulent cases through the service and the lack of interest earned on money deposited in mobile money services frameworks. Mobile phone operators seem to be doing their best to address these challenges. Amidst these challenges it is useful to know how mobile money services influence or impact SMEs industry in urban towns in Kenya. The objectives of this study are; to investigate current awareness and uptake of various mobile money services, to determine if mobile money services uptake has any impact on SMEs growth through increased sales or savings and loan accessibility, establish if mobile money service qualities of low cost, convenience and accessibility result in increased SMEs performance and establish if mobile money services are considered efficient and reliable by SMEs in Naivasha Town. The study found that mobile money has made a significant contribution to the SME sector. Majority of the traders rely on it as opposed to the formal banking sector for their day to day transactions. Secondly, it is evident that all the respondents in this study had a clear understanding of the basic functions of mobile money services. Mobile money services have a positive impact on sales. Efficiency and reliability contribute more to mobile money utility and SMEs growth. It is worth noting that majority of the respondents had reservations on the convenience and cost of the service as a result of problems associated with the functionality of the service. Delays were a major concern of the respondents but only a few people had experienced it. Thirdly, many of the players in the SME sector do not use the service for savings, to access loans or have bank accounts hence creating a major potential for mobile money. From the findings, it is evident that, mobile money users are not conversant with mobile-bank transactions on loan applications and repayment and prefer the normal banking system to mobile banking when it comes to loans and advances.