Mobile Banking Utilization and Growth of Small and Medium Sized Enterprises in Kisumu County, Kenya

Abstract

The retail industry in Kenya which is majorly comprised of Small and Medium-sized Enterprises (SMEs), is facing several challenges particularly in growth. SMEs in the retail industry in Kenya have closed down citing a drop in the amount of revenue. Managers of SMEs have made numerous efforts in a bid to revive SMEs and the most notable improvements is the use of mobile banking. Mobile banking has been widely utilized since its inception in Kenya in 2007. The utility of mobile banking by SMEs needs to be investigated on whether it contributes to drop in the amount of sales or whether it contributes to increase in amount of sales. Mobile banking has been adopted by a large number of SMEs, it is therefore important that the effect of utilization of mobile banking on the growth of SMEs is analysed in order to ensure success of the SMEs. The purpose of this study was to investigate whether mobile banking utilization led to the growth of SMEs in Kisumu County, Kenya. The study specifically aimed at; evaluating the effect of use of mobile payments on the growth of Small and Medium-sized Enterprises in Kisumu County, Kenya; evaluating the effect mobile banking transaction charges on the growth of Small and Medium-sized Enterprises in Kisumu County, Kenya; evaluating the effect of duration of m-banking transactions on the growth of SMEs in Kisumu County, Kenya and to evaluate the effect of ease of mobile banking on the owners of the SMEs on growth of Small and Medium-sized Enterprises in Kisumu County Kenya. The study applied descriptive research design. The population of the study size consisted of 964 registered SMEs as per the Kenya National Chamber of Commerce and Industry (KNCCI) Kisumu chapter (2013). The sample size consisted of 91 small and medium-sized enterprises. The sample was obtained through simple random sampling technique. Data was obtained through self-administered structured questionnaires. Analysis was done in form of descriptive and inferential statistics. Descriptive statistics included the means, standard deviations, frequencies and percentages while inferential statistics included, correlation and multiple regression analysis. Analysis of multiple regression model was used to indicate the effect of the use of mobile payments, mobile banking transaction charges, ease of mobile banking on the owners of SMEs and effect of duration of transactions on the growth of SMEs taken together on the growth of SMEs in Kisumu County. Data presentation methods used were statistical tables accompanied by relevant discussions. The study found out that the utilization of mobile money payments led to a significant increase in sales while mobile banking transaction charges, ease of mobile banking owners of SMEs and the duration of transaction had an insignificant reduction in revenue. Multiple regression analysis indicated that the effect of use of mobile payments, mobile banking transaction charges, ease of mobile banking on the owners of SMEs and duration of transaction taken together were significant in explaining the variation in growth of SMEs in Kisumu County, Kenya. The study concluded that mobile banking utilization has a significant influence on the growth of SMEs in Kisumu County, Kenya. The researcher recommended that the SMEs incorporate the mobile banking system in their business as a way of tapping the clients who don’t carry cash with them. The owners of the SMEs should ensure that they subscribe to service providers with low transaction charges. The owners of the SME should also ensure that they are properly trained in order to minimise delays and errors during the payment process