Role of mobile money services on financial inclusion among small and medium-sized enterprises in Mavoko sub-county

Abstract

Over the past years, many SMEs have found it very hard to access affordable financial products. However, the introduction of mobile-money services has made it easier and cheaper for SMEs and individuals to access the available financial products. The objective of this study was to examine the role that mobile money services has played in the financial inclusion among SMEs in Mavoko Sub County. The study also aimed to understand which product of the mobile-money services played a major part in ensuring that the sampled SMEs had access to the financial products offered in the market. This study relied on the following theories: Innovation Diffusion Theory (IDT) and Technology Acceptance Model (TAM). The design selected for this study was the descriptive design. The target population in this study was the SMEs in Mavoko Sub County who use mobile money services. This study used stratified sampling method. The target SMEs were stratified on the basis of nature of business and then samples were selected form the strata using simple random method to get a representative unit. The study relied on secondary data. Secondary data was obtained from the Communication Authority of Kenya. Data analysis involved quantitative data. Analysis was made using SPSS version 20. The results revealed that the R square was 0.801 which indicated that the three independent variables for mobile money services explains 80.1% of financial inclusion. The remaining 19.9% would be explained by other factors not included in the study. ANOVA show the F statistic was substantial at 5% level with p=0.000. Analysis revealed that mobile payments for goods and services by SMEs has a positive but insignificant relationship This implied holding all other factors constant, that a unit increase in the variable payment of goods and services would result in 0.11 increase in financial inclusion of SMEs but not significantly. with financial inclusion of SMEs. The results also indicated that account management through mobile banks by SMEs has a positive and insignificant relationship of 0.11 with financial inclusion of SMEs. However, credit facilitation of SMEs through mobile phones was found to have a positive and significant relationship with financial inclusion of SMEs. The study hence concluded that mobile banking services plays a positive role in financial inclusion of SMEs. The study recommended the owners of SMEs to increase their use of mobile phones in payments of goods and services, account management and credit facilitation for their businesses. The study also recommends banks to encourage their customers who own SMEs to apply for loans and make payments for the same through mobiles. The government through the SMEs regulator is also recommended to support SMEs in using mobiles in making transactions by training them on the same.