Influence of Mobile Banking Services on Performance of Micro Businesses in the Informal Sector in Kenya: A Case Study of Jua Kali Artisans in Nairobi County

Abstract

The general objective of this study was to examine the influence of mobile banking services on performance of micro businesses in the informal sector in Kenya. To achieve the general objective, the study focused on three specific objectives; to find out the effect of mobile banking cash management on the performance of micro businesses, to determine the impact of mobile banking credit accessibility on performance of micro businesses, and to determine whether mobile banking convenience influences performance of micro businesses in the informal sector. The study applied a cross sectional research design. The research design was of intrigue in light of the fact that the study aimed to establish the relationship between the autonomous factors and execution of miniaturized scale organizations in the casual segment. The target population of the study was the 1850 micro enterprise traders in Nairobi’s Gikomba market, in Kamukunji sub County while applying Slovin formula to come up with 100 participants. Primary data was collected using questionnaires while secondary data was be gathered using publications from World Values Surveys, government records, non-profit organisations (NGOs) records and media articles related to the topic under investigation. Chi square (χ2) and Pearson’s correlation analyses were applied in this study to establish the effect of mobile banking services on performance of micro businesses in the informal sector. On mobile banking cash management, the study found that mobile banking services has enhanced micro businesses by minimising cost of sending money via traditional means which is tedious and involves logistical costs. Findings revealed that more than half of the respondents stated that mobile banking helped them in sending money; saving/depositing money, withdrawing money from mobile bank account, receiving money, checking account balance with the bank and paying bills. On mobile banking credit accessibility, the study found that micro businesses in the study area were able to access a short-term loan on their mobile phone account which meant that the micro businesses will continue thriving if they continue embracing mobile banking services. On mobile banking convenience, the study established that more than three thirds of the micro enterprises were of the view that time taken to transact business with Mobile banking is short which suggest that micro enterprises in the study area will continue to thrive if this environment of mobile banking services continue in the future. Further findings indicated that mobile banking is easy to use and it takes a few seconds to deposit, or withdraw money. Correlation results indicated that M-banking Services and Performance of Micro businesses have a positive linear correlation as well as significant association between Mobile banking services and performance of micro businesses in the informal sector in Kenya. The study concluded that micro businesses in the study area will continue thrive if they continue embracing mobile banking services. In addition, accessing low interest credit is considered to be an important factor in increasing the performance of micro businesses. The study also concluded that m-banking services and performance of micro businesses have a positive linear correlation as well as significant association between Mobile banking services and performance of micro businesses in the informal sector in Kenya. The study recommends that in order to achieve cash management, mobile banking services need to offer diverse services ranging from account information, by alerting customers on the updates and transactions on their account through their phones in real time. It is also recommended that the mobile banking platform should offer more unsecured mobile loans to help boost upcoming micro, small and medium enterprises. To achieve this, this study recommends that the costs and risk involved in handling cash should be shifted to the service providers to enhance development of Micro businesses.