Factors Affecting the Revenue of M-Pesa Service Agents in Kenya

Abstract

The purpose of this study was to assess the factors affecting the revenue of M-PESA service agents in Kenya. This study was guided by the following four research questions: how access to finance affects the revenue of M-PESA agents; how competition affects the revenue of M-PESA agents; how business location affects the revenue of M-PESA agents and; how business skills affect the revenue of M-PESA agents. The researcher used a combination of Descriptive and Causal research designs in order to summarize the findings and draw correlations and inferences between the factors that affect the income of M-PESA agents. The target population for this study was the 4,381 M-PESA agents running SME's in Nairobi province, Kenya. Seven respondents were randomly selected from each constituency for interviewing, making a total sample size of 56 M-PESA agents. Cluster sampling technique was used to divide Nairobi into the existing 8 administrative constituencies namely Langata, Dagoretti, Makadara, Westlands, Kasarani, Embakasi, Kamukunji and Starehe. Primary data collection method was used in the study. Data was collected using a structured questionnaire that was developed by the researcher on the basis of the research questions. The data collected was analyzed using correlation, simple regression and multiple regression to give a clear picture of the research findings. The major findings of this study were as follows. For the first research question on how access to finance affects the revenue of M-PESA agents, it was discovered that the availability of a credit reference bureau to provide business credit history not only correlated with but was also a significant predictor of M-PESA agents' business revenue. For the second research question on how competition affects the revenue of M­ PESA agents, it was observed that Safaricom's brand reputation and large market share correlated with and predicted their businesses income. For the third research question on how location of the business affects M-PESA agents' revenue, it was discovered that the current location of the business correlated with and was a significant predictor of the agents' revenue. For the last research question on impact of business skills on M-PESA agents' revenue, it was noted that none of the factors correlated with the income of M­ PESA agents.The major conclusions of this study were that access to finance does affect the revenue of M-PESA agents'. Also, though competition does affect the income of SME M-PESA agents, the impact has been more beneficial to the agents due to the competitive advantages associated with the Safaricom M-PESA service. Furthermore, it was determined that location is important and affects the revenue of businesses. However, zoning carried out by Safaricom influences or restrains the choice of location, therefore introducing a control measure that affects the factor of business location. Lastly, personal demographics of M-PESA agents such as work experience and education level do affect the revenue of the agents. Based on the research findings and conclusions, the mam recommendations for Improvement includedthe following; Safaricom should play an active role in ensuring that there is adequate access to finance for M-PESA agents for inception and for growth of their businesses. The GoK should also promote the entrenchment of the use of the credit reference bureau and SME insurance to facilitate and ease access to finance for SME's. Safaricom should also continue to improve andinnovate further the M-PESA service to maintain its dominance in the industry. As for location, M-PESA agents should attempt to set-up their business in city centers or residential areas with busy flow of people to maximize their revenue. M-PESA agents and other SME entrepreneurs should furthermore increase their knowledge and education levels as it has an impact on the success. of their businesses. Finally, the GoK has made tremendous progress in decreasing gender disparity in education and access of finance for business start-up and growth, and should ensure that this impact is felt across the entire country so that every Kenyan can benefit from these measures.