Impact of Mobile Money Microcredit on Financial Performance of Small Business In Iringa Municipality, Tanzania.
DOI:
https://doi.org/10.264371Keywords:
Affordability; accessibility; convenience; flexibility; mobile money; small businessAbstract
Purpose: Small businesses in Tanzania's economy were examined in this paper to determine their use of mobile money microcredit and how it impacts their profitability.
Design/Methodology/Approach: A cross-sectional design was adopted to collect quantitative data from 240 small business owners/managers through a structured questionnaire and qualitative data from mobile money services providers using an interview guide. The reliability test using Cronbach’s Alpha was conducted and the coefficient (0.851) signifies that the data collection instrument was reliable. The collected data were analysed using descriptive statistics and a multiple linear regression model.
Findings: The results of this study indicate that mobile money microcredit accessibility, affordability, convenience and flexibility were found to have a positive and significant impact on small businesses' financial performance. This means accessibility, affordability, convenience and flexibility of mobile money microcredit are important predictors of small businesses' profitability.
Implications/Research Limitations: The present study focused on the performance of small businesses concerning mobile money microcredit systems.
Practical Implications: The findings of this paper would be useful for mobile money microcredit service users, specifically small business owners/managers, and mobile money providers as well as institutions involved in the facilitation and regulation of mobile money microcredit services to put in place appropriate strategic frameworks to promote the adoption and use of mobile money microcredit service.
Social Implications: Formulated policies should take into account the impact of accessibility, affordability, convenience and flexibility of mobile money microcredit to ensure increased small firm productivity, efficiency and profitability.
Originality/Value: Past studies have not extensively covered the impact of mobile money microcredit on the performance of small businesses in the Tanzanian context. Based on prior empirical and theoretical research, the findings of this study contribute to a better understanding of the impact of mobile money microcredit on the performance of small businesses.
References
Agarwal, S., Qian, W., Yeung, B. Y., & Zou, X. (2019). Mobile wallet and entrepreneurial growth. AEA Papers and Proceedings, 109, 48–53.
Ahmad, A.H., Green, C. & Jiang, F. (2020). Mobile money, financial inclusion and development: a review with reference to African experience. Journal of Economic Survey, 34(4), pp. 753–792
Akinci, S.¸Aksoy, A. & Atilgan, E. (2014). Adoption of Internet banking among sophisticated consumer segments in an advanced developing country. International Journal of Bank Marketing, 22(3), pp. 212-232
Akyoo, S. E. & Sife, A. S. (2015). Mobile Money Services and the Performance of Microenterprises in Moshi District, Tanzania. African Journal of Finance and Management, 24(1-2), pp. 42-50.
Amos-Abanyie, D. (2019). The Impact of Mobile Money Services on Small and Medium Scale Enterprises (SMEs) in Tema Municipality [Doctoral dissertation, University of Ghana]. http://ugspace.ug.edu.gh/bitstream/handle/123456789/31981/
Baganzi, R., & Lau, A. K. (2017). Examining trust and risk in mobile money acceptance in Uganda. Sustainability, 9(12), pp. 22-33.
Bangens, M. & Soderberg, P. (2015). Modelling consumer choice of distribution channels: an illustration from financial devices. International Journal of Bank Marketing, 20(4), pp.161-73.
Bollen, K.A. & Pearly, J. (2013). Eight Myths About Causality and Structural Equation Models. In Handbook of Causal Analysis for Social Research (pp. 301-328). http://doi.org.10.1007/978-94-007-6094-3 15
Chamboko, R., Heitmann, S. & Westhuizen, M.V.D. (2018). Women and Digital Financial Services in Sub-Saharan Africa: Understanding the Challenges and Harnessing the Opportunities. Field Note 10. Anna Koblanck.
Chandra, S., Srivastava, S., & Theng, Y.L (2010). Evaluating the role of trust in consumer adoption of mobile payment systems: An empirical analysis. Journal of Communication of the association for information systems, 27(1), pp. 561-588.
Chiemo, P. (2020). The influence of mobile money services on business performance among small and medium enterprises (SMEs) in Tanzania. The case of micro and small entrepreneurs in Dar es Salaam City [Masters’ Dissertation, Mzumbe University]. http://scholar.mzumbe.ac.tz/bitstream/handle/11192/4718/MSc-A%26F-DCC_Pamela%20Chiemo_2020.pdf?sequence=1
Creswell, J. W. (2014). Research design: Qualitative, Quantitative, and Mixed Methods Approaches: Sage.
Cronbach, L. J. (1951). Coefficient alpha and the internal structure of tests. Psychometrika, 16, pp. 297-334
Dayour, F., Adongo, C. A., & Agyeiwaah, E. (2020). Continuous intention to use mobile money (MM) services: Driving factors among small and medium-sized tourism and hospitality enterprises (SMTHEs). Africa Journal of Management, 1-30
Delaporte, A. & Naghavi, N. (2019). The promise of mobile money for further advancing women’s financial inclusion. https://www.gsma.com/mobilefordevelopment/blog/the-promise-of-mobile-money-for-further-advancing-womens-financial-inclusion/
Demertzis, M., Merler, S., & Wolff, G. B. (2018). Capital markets union and the fintech opportunity. Journal of Financial Regulation, 4(1), pp. 157-165.
Demirg ̈uc ̧-Kunt, A., L. Klapper, D. Singer, S. Ansar, and J. Hess (2018). The Global
Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution. World Bank.
Demombynes, G. & Thegeya, A. (2012). Kenya’s mobile revolution and the promise of mobile savings. Policy Research Working Paper, No. 5988. The World Bank.
Dhakal, C.P. (2016). Optimizing multiple regression models for rice production forecasting in Nepal. [Doctoral thesis]. Tribhuvan University Nepal.
Dhakal, C.P. (2018). Interpreting the Basic Outputs (SPSS) of Multiple Linear Regression. International Journal of Science and Research, 8(6), pp. 1448-1452.
Disse, S. & Sommer, C. (2020). Digitalisation and its impact on SME finance in Sub-Saharan Africa: Reviewing the hype and actual developments. DIE Discussion Paper, No. 4/2020, ISBN 978-3-96021-115-0, Deutsches Institut für Entwicklungspolitik (DIE), Bonn.
Donovan, K. (2011). Mobile Money in the Developing World: The Impact of M-PESA on Development, Freedom, and Domination. [Unpublished dissertation]. Georgetown University.
Frederick, Y. (2015). U.S. Mobile makeup compact. Patent Application, 29(44), pp. 58-75.
Hodgson, G. M. (2012). Veblen, Commons and the theory of the firm. In Handbook on the Economics and Theory of the Firm, ed. Michael Dietrich and Jackie Krafft. Edward Elgar, pp. 55–61.
Islam, A., Muzi, S. & Meza, J.L.R. (2018). Does mobile money use increase firms’ investment? Evidence from enterprises surveys in Kenya, Uganda and Tanzania. Small Business Economics, Springer, 51(3), pp. 687-708
Issaya, H. (2017). Determinants of Human Resource Retention for Healthcare in Tanzania’s Public Health Facilities (Thesis of Doctor of Philosophy, Mzumbe University)
Jo, T-H. (2018). The Institutionalist Theory of the Business Enterprise: Past, Present, and Future. MPRA Paper No. 84036. https://mpra.ub.uni-muenchen.de/84036/
John, E. K., Gwahula, R., & Msemwa, F. M. (2018). The influence of perceived risk on the uptake of Mobile Money Services by SMEs operations in Karagwe district, Tanzania. International Journal of Advanced Engineering, Management and Science, 4(9).
John, E.K. (2018). The influence of mobile money services usage on small and medium enterprises operations in Tanzania [Doctoral Thesis]. The Open University of Tanzania.
Kiiru, J.M.M. (2007). The impact of microfinance on rural poor household's income and vulnerability to poverty: a case study of Makueni District, Kenya. [Masters Dissertation, Rheinische Friedrich-Wilhelms-Universität Bonn].
Online-Ausgabe in bonndoc: https://nbn-resolving.org/urn:nbn:de:hbz:5N-11816
Kim, H. S. (2013). Online remittance system and method using mobile terminal to provide tipping service or support service. U.S. Patent Application, 13(7), pp. 11-18
Kiplagat, J.J. (2015). Utilization of M-pesa and performance of small and medium scale businesses in Nakuru town. A Research Project Submitted to the School of Business and Economics in Fulfillment of the Requirements for the Award of Master of Business Administration Degree of Kabarak University.
Lorenz, E., & Pommet, S. (2020). Mobile money, inclusive finance and enterprise innovativeness: an analysis of East African nations. Industry and Innovation, 1-24.
Mararo, M.W. (2018). Influence of mobile money services on the growth of SMEs in Nakuru Town Kenya. [Masters dissertation]. Jomo Kenyatta University of agriculture and technology
Masocha, R., & Dzomonda, O. (2018). Adoption of Mobile Money Services and The Performance of Small and Medium Enterprises. Zimbabwe: Academy of Accounting and Financial Studies Journal, 22(3), pp. 1-11.
Matthias, B.M. (2019). Assessment of the ICT utilization on microfinance institutions performance in Tanzania: a case study of opportunity microfinance Tanzania limited [Masters Dissertation]. College of Business Education
Mbiti, I. & Weil, D. N. (2015). The Impact of M-Pesa in Kenya. NBER Working Paper, No. 17129. http://www.nber.org/papers/w17129
Mbogo, M. (2010). The Impact of Mobile Payments on the Success and Growth of Micro-Business: The Case of M-Pesa in Kenya. The Journal of Language, Technology & Entrepreneurship in Africa, 2(1): pp. 182-203.
Mishra, R. K. (2014). A Simple and Convenient Fund Transfer Payment Service Model of Commercial Banks: A Study on IMPS System. Siddhant-A Journal of Decision Making, 14(4), pp. 257-267.
Morrissey, M.B. & Ruxton, G.D. (2018). Multiple Regression Is Not Multiple Regressions: The Meaning of Multiple Regression and the Non-Problem of Collinearity. Philosophy, Theory & Practice in Biology, 10(003). https://doi.org/10.3998/ptpbio.16039257.0010.003
Mrindoko, A. (2021). Impact of Credit Risk Management on the Financial Performance of Commercial Banks in Tanzania [Unpublished PhD Thesis, The Open University of Tanzania]
Mutalemwa, D. K. & Anthony, D. (2014). Factors influencing the Use of Mobile Payments in Tanzania: Insights from. Journal of Language, Technology & Entrepreneurship in Africa, 5(2), pp. 69 –90.
Mutio, F.M. (2019). 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. [Masters Dissertation, United States International University- Africa]. https://www.semanticscholar.org/paper/Influence-of-Mobile-Banking-Services-on-Performance-Mutio/9d65a58c73010e27c2ad3dca5de8f627c6ef5a69
Nkwabi, J., & Mboya, L. (2019). A Review of Factors Affecting the Growth of Small and Medium Enterprises (SMEs) in Tanzania. European Journal Of Business And Management, 33(1), pp. 1-8.
Nyaga, K.M. (2013). The Impact of Mobile Money services on the Performance of Small and Medium Enterprises in an urban town in Kenya. [Unpublished Masters thesis]. KCA University.
Okurut, F.N., Kagiso, M., Ama, N.O., & Okurut, M.L. (2014). The Impact of Microfinance on Household Welfare in Botswana. Botswana Journal of Economics, 12(1)
Olweny, T. (2012). Dividend Announcement and Firm Value: A Test of Semi Strong Form of Efficiency at the Nairobi Stock Exchange. Asian Journal of Social science, 8(1), 161. http://.doi.org.10.5539/ass.v8n1p161
Pousttchi, W. (2013). Linkages, Access to Finance and the Performance of Small-scale enterprises in Kenya. Research Paper No.2009/06. United Nations University.
Salonen, T. A. (2017). Promoting Wellness to a Rural Area through Recreation Facility and Programming. Culminating Projects in Kinesiology,10.
Serugga, M. (2019). Analysis of the effect of mobile money transfer facility on business performance of mobile money agents: A case study of Kikuubo traders in Kampala [Doctoral dissertation, Makerere University].
Siau, K., & Shen, Z. (2003). Building customer trust in mobile commerce. Communications of the ACM, 46(4), pp. 91–94.
Thakor, A. V. (2019). (in press). Fintech and banking: What do we know? Journal of Financial Intermediation. doi:10.1016/j.jfi.2019.100833
Tineishemo, R. J. (2018). The effectiveness of mobile money services on performance of small and medium enterprises (SMEs) in Tanzania. A case of Dar es salaam city [Masters dissertation, The University of Dodoma]. University of Dodoma institutional repository. http://hdl.handle.net/20.500.12661/1384
Torres-Reyna, O. (2007). Panel Data Analysis Fixed and Random Effects Using Stata (v. 4.2). Data & Statistical Services, Princeton University.
Ugiagbe, E. O. (2014). A Survey of the Perception of the Services of Micro Finance Institutions by the Female Service Users in Benin City, South-South, Nigeria. International Journal of Finance & Banking Studies, 3(2).
Veblen, T. B. (1904). The Theory of Business Enterprise. Charles Scribner’s Sons
Wambari, K. (2016). Factors Influencing the Adoption of Mobile Banking Services at the Bottom of the Pyramid in South Africa. A Research Report submitted to the Gordon Institute of Business Science, University of Pretoria, South Africa.
Wambura, M.M. (2020). Roles of mobile financial services in promoting financial inclusion among SMEs in Tanzania: A case of Dodoma City Council [Masters’ Dissertation, Mzumbe University]
World Bank. (2012). Information and Communications for Development 2012: Maximizing Mobile. Washington, DC: World Bank. DOI: 10.1596/978-0-8213-8991-1. Retrieved June 18, 2014 from http://www.worldbank.org/ict/IC4D2012.
Wray, L. R. (2007). Veblen’s theory of business enterprise and Keynes’s monetary theory of production. Journal of Economic Issues, 41(2), pp. 617-624.
Yunus, M. & Weber, K. (2007). Creating a world without poverty: Social business and the future of capitalism. The Microcredit Revolution, pp. 43-76. Public Affairs, USA
Zumanu, V. O. (2019). Performance of SMEs in Ghana: Do Mobile Money Payments Matter? [Doctoral dissertation, University of Ghana].
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2022 AFRICAN JOURNAL OF APPLIED RESEARCHBy submitting and publishing your articles in the African Journal of Applied Research, you agree to transfer the copyright of the Article from the authors to the Journal ( African Journal of Applied Research).
