Role of Financial Capabilities in Harnessing Digital Mobile Payments for Enterprise Success in Starehe Constituency Nairobi County

Abstract

This paper sought to find out the role of financial capabilities of managers/owners in harnessing use of mobile payments and the relationship this has with the enterprise success in Starehe constituency Nairobi County. This was done by establishing the elements of financial capabilities by owners/ managers of the MSEs; the elements of success of MSEs that operate within the digital finance platform of payments Lipa Na M-Pesa and the relationship between the financial capabilities and enterprise success. Despite MSEs critical role in the creation of employment and sustaining of livelihoods which thereby contribute to the well-being of entrepreneurs, the MSEs have been previously financially excluded due to their small size from the formal financial institutions and financial services. Digital finance has played a major role in increasing financial inclusion in MSEs. The range of financial products available to MSEs is now wide. In general, research shows that access to innovative products and their use thereof has enabled the growth of businesses and hence enhancing sustainable economic development. Financial capability theory matrix, which this study is anchored on, is however not complete with the products only, but there is a need for a person running an enterprise to have financial literacy and desirable financial behavior in order to achieve success. The study adopted descriptive research design. A quantitative survey through the tools of structured questionnaire interviews, was carried out to the owners/managers of MSEs. Qualitative data was collected by the information given during the survey, by further probing the respondents after the collection of the quantitative data. A total sample of 103 enterprise owners/managers drawn from a population of 344 were interviewed. The study found out that overall, financial capability measure of financial behavior had the greatest significance to enterprise success. The measures of the capability of financial knowledge, financial skills, and financial behavior had a significant correlation with the level of use of the digital financial service of Lipa Na Mpesa. Additionally, the findings showed that there was a significant relationship between financial capabilities and enterprise success at a confidence level of 95%. Therefore, the study rejected the null hypothesis that financial capabilities do not lead to enterprise success. The regression model was developed and the analysis of variance showed that the model was significant. However, the model indicated a weak relationship between financial capabilities and enterprise success; with the model having financial capabilities explain enterprise success at just 19.2 percent. This study therefore tentatively concluded that there are other factors that lead to enterprise success apart from financial capabilities.