Utilization Of Mobile Financial Services Among Small Scale Businesses In Kiambu County, Kenya.

ABSTRACT

The Kenyan government has been implementing policies to expand financial access including promoting mobile enabled financial services to those excluded by formal banking sector. Despite the efforts, 65 percent of Kenyans have no access to a bank account due to limited bank branches in rural areas and information asymmetry about the sector. To facilitate financial inclusion and reach out to rural areas historically marginalized by convectional banking, mobile network operators have made huge investment to create network and ease access to money. While invention of Mobile money offers financial alternative, small scale businesses in rural areas have not seized the opportunity due to lack of collateral, lack of regular income and inability to maintain a formal account. In light of this, the study focused on utilization of mobile financial services among small scale businesses in rural areas. Specifically, the study sought to, examining the level of utilization of Mobile financial services and investigate determinants of mobile financial services utilization among small scale businesses in Kiambu County. Primary data was obtained through interview administered questionnaire from 123 small scale businesses in Kiambu County. Descriptive statistics and the logit model were utilized in the analysis .The study found out that businesses that utilized mobile financial services were 48.8 percent while those that did not use Mobile financial services were 51.2 percent. Some of the utilized mobile financial services included; mobile money in phone, Pay bill, till number and mobile money bank account. Majority of the businesses preferred mobile money in phone transactions at 65 percent compared to other modes of mobile financial service transactions. The logit regression analysis indicated that; size of business, age of business, distance to bank, transport cost, business type and sex of business owner were significant determinants of mobile financial service utilization by small scale businesses. However, number of employees, level of education, pressure to use mobile enabled financial services and non-business income were not significant factors in determining use of mobile financial services. The study concluded that mobile financial services are compliments of other financial sectors and a means of extending financial services to the unbanked. This study recommends, infrastructure development by the government to facilitate movement in rural areas and to encourage financial service providers to penetrate with ease, provision of an encouraging environment for business to thrive and improvement of mobile financial services by the mobile network operators.