EFFECT OF MOBILE MONEY TRANSFER SERVICES AND FINANCIAL GROWTH OF SMALL AND MEDIUM ENTERPRISES IN BUSIA TOWN, KENYA

Abstract

The onset of mobile money services was foreseen to be a great driver of growth among Small and Medium Enterprises (SMEs) in different economies. Service delivery was enhanced and access was improved. However, there is no quantifiable data to proof the gains or losses actualized so far in the sub sector. This is what necessitates this study to endevour to examine the effect of mobile transfer services on the financial growth of SMEs in Busia town, Kenya. Entrepreneurship and Innovation Theory and Technology Acceptance Model were used to guide the study. Descriptive survey research design was adopted. The target population included 2,700 registered SMEs in Busia Town and a sample size of 271 SMEs was selected. Purposive sampling technique was used to pick out the SMEs. Questionnaires were used to collect primary data. The questionnaire was pilot tested on the 10% of the sample population to enable the study evaluate the reliability and validity of the questionnaires. The collected data was filtered, organized and coded before data analysis. Statistical Package for Social Sciences (SPSS) version 24 software was used for data analysis. Data was analysed through descriptive and inferential statistics. Descriptive statistics included the means, standard deviations, frequencies and percentages while inferential statistics included correlation and regression analysis. Findings were presented in frequency tables and Pie charts. From the findings, money transfer services had significant effect on the financial Performance of SMEs. The study concluded that if money transfer services like M-Pesa, M-shwari and mobile banking were enhanced, these would boost financial performance of SMEs in Busia Town since these would enable quick response to customers’ needs and allow one to save money from the business proceedings and these methods are safe and convenient. Compliance to government regulations was found key to ensure smooth running of the SMEs. The study recommended that SMEs should to invest in mobile money savings and transfers in their operations since the research has found that it has a high effect on financial performance of SMEs. Based on the research findings, for mobile money services to improve in their financial performances, they embrace effective application of new modern technologies, effective mobile money transfer Services and efficient mobile money credit Services and comply to government regulations.

Key Words: Mobile Transfer Services, Financial Growth of Small and Medium Enterprises, Busia Town