ROLE OF MOBILE MONEY IN ENHANCING BUSINESS PERFORMANCE
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Background to the study
Businesses, which involve individuals, groups of individuals, companies or corporations in public and private sectors play an important role in the economic development of a given country. In this era of globalization, the demands for goods and services lead to an intense competition especially among Small and Medium Enterprises (SMEs) operations in information technology, which supports efficient functioning of enterprises through management procedures and quality of operations (Januszewska, et al., 2015; John, et al., 2018).
Mobile money services can be broadly categorised into three groups: m-transfers, mpayments and m-financial services. M-transfers involve money transfer from one user to another, normally without any accompanying exchange of goods or services (Jenkins, 2008). These are also referred to as person-to-person (P2P) transfers and may be domestic or international (Jenkins, 2008). M-payments involve money exchange between two users with an accompanying exchange of goods or services. M-financial services are mobile money services in which mobile money may be linked to a bank account to provide the user with a whole range of transactions that they would access at a bank branch. Users access financial-related services like insurance and micro-finance among others via their mobile phones (Jenkins, 2008).
Empirical studies on mobile money services (e.g. Ngilangwa and Venkatakrishnan, 2013; Ngaruiya, et al., 2014) show that an increase of the usage of ICT by enterprises, as a new way of doing business in the 21st century, has brought benefits to SMEs. Such benefits include; availability of money transfer at lowercoststhan those offered by the traditional banking system. In the latter, some transactions are done within the premises of the bank and hence involve travel at time costs. In related perspective, Mbogo (2010) observes that mobile money services by micro businesses tend to enhance their success and growth. In the same context,Madila and Msamba(2016)argue that business success is facilitated by socio-economic context and the level of science and technology of the time. The state of art technology, which is used in a particular business supports efficient functioning of enterprises through linkages with customers and suppliers and hence attain more business success (Njau and Njuga, 2015).Technology usage can provide an avenue for SMEs to have competitive advantages by either increasing sales volume or customer base, which in turn helps to improve business prospects.
Globally, mobile money services (MMS) usage has increasingly become a facilitating condition for the formation and operation of SMEs, contributing to their progression and eventually becoming profitable income generating entities (Elms and Low, 2013, John, et al., 2018). In the same vein, many economies are getting away from cash payment due to proliferation of financial institutions and the increase in financial inclusion, which involves the use of credit and debit cards via mobile phones (TCRA, 2018). It is apparent that, MMS usage has widened the chances for business firms to increase their shares in the market, efficiency and effectiveness in the market, and hence promoting business transactions and meeting business prospects (Merritt, 2010; Chale and Mbamba, 2014). MMS usage has enabled new types of money flow, has enhanced interoperability particularly for unbanked members of the society, has led to the emergence of local lending businesses, and hence it has improved the employment level (Dick and Camer, 2014; Gilman, 2016).
Moreover, MMS usage has extended SMEs’ business linkages with a broad range of customers and suppliers of various goods and services (Donovan, 2012; Irura and Munjiru, 2013). MMS are available in two-thirds of low- and middle-income countries (LMICs) and have greatly been used by the populationsthat lackdirect access to formal Financial Institutions (FIs) (Ardjouman, 2014; John, et al., 2018). The usage of Mobile Money Services (MMS) in facilitating money transfer transactions is found to have a number of advantages, including (i) improving access to and the use of information, thereby reducing search costs; (ii) improving coordination among agents and increasing market efficiency; enhancing money circulation, reducing economic vulnerability, fostering entrepreneurship, increasing savings, promoting financial autonomy, enhancing money security and facilitating social capital accumulations (Aker and Mbiti 2010, Simiyu and Oloko, 2015). On these grounds, a technology is considered successful when it is well and used by the intended users and or hascontributed to the progression of enterprises into income generating and profitable.
Mobile money services (MMS) usage is a major source of enhancing competitive advantage as well as a cost effective means through which the SMEs can reach customers globally and compete with their global counterparts. In this regard, the Government of the United Republic of Nigeria is committed to actively ensure that the MMS ecosystem is running smoothly and assists SMEs to use it in their businesses operations.
MMS usage has played a vital role in improving business operation;however there are conflictingopinions about SMEs involvement in mobile business technology. For instance, Salah and Irwin (2010), revealed that although SMEs in Nigeria are aware of the benefits of mobile technology, very few have adopted it and hence they experience low uptake of MMS in business operation. According to Meena (2014),theMMS usage has boosted SMEs business success through reduced cost in performing financial transactions. The benefits have thus influenced their SMEs to continue using MMS in their business orientation.
In the same contexts, theories and studies on technology usage have inconsistent conclusions on factors influencing the usage of mobile technologies in Africa. However, studies done outside Africa have had contrastive findings; for example,Li’s, et al. (2014) study on the adaption of mobile payments shows that the number of merchants, the scope of services, the perceived ease to use, and compatibility of electronic systems have a significant influence on mobile payments in China. In another study on the receptiveness of mobile banking by Malaysian local customers in Sabah (Amin, et al., 2012) it was found that the perceived credibility, the perceived enjoyment, and the perceived self-efficacy are important determinants in predicting the intentions of Malaysia’s customers’ of using mobile banking.
Furthermore, Al-Fahim, et al. (2014) in a study on the adoption of internet banking services by Small and Medium Sized- Enterprises in Yemen, indicated that competitive pressure was the highest predictor followed by regulatory support and financial institution support while ICT readiness was insignificant. Merrit (2010) also conducted a study on Mobile Money Transfer Services,the Next Phase in the Evolution in Person-to-Person Payments in America and found that Money transfer services for both domestic and international remittances are shifting from traditional providers to wireless carriers who are able to compete for consumer market share on the basis of technological ubiquity and lower costsof services. Given the reflections from these few studies outside Africa it is apparent that there are unique characteristics that influence the adoption of mobile banking and MMT.
In the African context, Kuyoro, et al. (2013) conducted a study on ICT solution to Small and Medium Scale Enterprises (SMEs) in Nigeria.The findings indicate that ICT helped SMEs to create business opportunities, to combat pressures from competition and assisted to cut costs by improving their internal processes. ICT also helped SMEs to improvetheir products through faster communication with their customers and to promote and distribute their products through online channels. Crabbe, et al. (2009) on their study of usage of mobile banking in Ghana, established that social and cultural factors such as perceived credibility, facilitating conditions; and demographic factors do play a significant role in the adoption of MMS in SMEs operations.
Paucity of evidence on the influencing factors of MMS usageamong SMEs has motivated more studies in this particular aspect (Kimani, et al., 2016).The current study therefore aimed at filling the existing gap by identifying and analysingthe factors that influence the usage of mobile money services in SMEs Operations in Nigeria. Thus the study provides a framework for better understanding factors influencing mobile money services usage on SME business undertakings in Nigeria.
1.2 Statement of `Problem
From last decade, Nigeria has witness rapidly increase of the use of Mobile Money transfer in urban and rural areas. The service has stimulated the growth and expansion of small and medium enterprises. Today, more than one million of people from informal sector where SMEs belong use this service to transfer, drawn and deposit money in banks and from bank to simcard (TCRA/2018). The mobile money transfer has gained popularity because are accessible 24 hrs does not need document to open account and accessible even to rural/ remote areas where the majority of the population reside. Mobile money transfer can cause significant benefits for the SMEs through improved access to information, enable cheap and reliable money transfer service through mobile phones at low cost. The mobile money transfer has been a key engine towards the socio-economic development as it contributes to the increases government revenue through the payment of the income and annual tax. Not only that the mobile money transfer services has contributed towards the creation of employment opportunities to the business people who conduct mobile money transfer services (Okutoyi, 2013). The SMEs used to spend most of their time in banks and incur a lot of cost when transfer, deposit and receiver money from one personal account to another banking account. Although mobile money transfer has noticeable contribution towards the SMEs, there are several problems associated with mobile sector such low security system. Also lack of trust and worries of hacker on their personal account.
1.3 Objective of the study
The main objective of the study is to examine the the role of mobile money in enhancing business performance. Specifically,the study aims;
- To determine if mobile money increases productivity
- To examine if mobile money transfer facilitates increase in sales volume.
- To examine the impact of Mobile Money on business market share
1.4 Research question
The study aims to answer the following research questions
- Does mobile money increase productivity of the business?
- Does mobile money increase the business sales volume?
- Does mobile money increase the business market share?
1.4 Significance of the study
The study seeks to determine the role the mobile money services play in the growth and development of SMEs in Nigeria. So far there has been no clear insight into the role that mobile payments play in the development of SMEs. As such this study will help technology providers, government agencies and development partners to understand the contribution of mobile money service technology on the growth of SMEs. This will help them provide better technical support and advice to their clients as well as providing new innovations. The government will further provide the required regulations and other interventions that are necessary to ensure smooth operations for all concerned parties. Further the study will assist the SMEs operators to fully understand the entrepreneurial impact of this technology on their business so as to cope with the increasing developments in the mobile services on one hand, and the challenges of the micro business operating environment, on the other hand. The study will also be useful to future scholars who may use findings of this study as the basis for their studies.
1.6 Scope of the study
The study was limited to the influence of mobile money services on the business performance of SMEs in Lagos Nigeria. Lagos was considered to be appropriate for this study since it is ranked highly among the fastest economically growing city in Nigeria. In addition, the city has a big number of SMEs that have provided the much needed employment to the majority of residents in the area. Further, there are many mobile money services agents in city signifying that this is a common service demanded by a majority of residents in the area thus providing a fertile ground for this study. The entire study is primarily focused on the exploring the role of the mobile money transfer in promoting small medium enterprises in Nigeria.
1.7 Limitation of the study
Time constraints will the hindrance factor for the success of this research project. The time scheduled towards the completion of this research project is not enough as indicated by principal researcher, therefore the allocated time for data collection and report writing is also not enough. However, the budgetary allocation prepared to accomplish the research project is also not enough to enable the researcher to collect data under the assistance of assistant researcher who will be paid by principal researcher and also all stationeries cost requires money where by the researcher has no enough fund that can help to pay all stationeries cost accordingly.
1.8 Operational Definition Of Terms
Mobile Banking: It is the use of a mobile telecommunications network as a platform to perform traditional banking activities such as performing balance checks, transferring money between accounts and making payments (Paul & Henry 2013).
Mobile Money: Mobile money refers to service whereby customers use their mobile devices to send and receive or transfer money electronically (Senso & Venkatakrishana, 2013).
Mobile Payment: Mobile payment is the payment of products and services. This can be C2B money transfer, from a customer to a business as when paying utility bills and for purchases from a business, or B2C money transfer, where a business disburses funds to customers for instance when a microfinance institution disburses loans to customers (Paul & Henry 2013).
Perceived Ease of Use (PEU): Is defined as the degree to which a person believes that using a particular system would need little effort or no effort in using technology (Eramus et al., 2015).
Perceived Usefulness: Refers to the degree to which a person believes that using a particular system would enhance his or her performance (Erasmus et al., 2015).
SMEs: In the United States and European Union (EU) countries, SMEs are enterprises with employees under 500 while in developing countries any enterprise employing below 100 employees would constitute an SME (UNCTAD, 2001).
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