1.1      Background to the Study

Micro enterprises play an incredibly important role in the economic development of a country. Muchira (2012) disclosed that micro enterprises play a very substantial role in the economic growth and sustainability of every country. In fact, micro enterprises have worldwide been recognized as the stepping stones for industrialization. Fredric (2005) noted that the development of many countries' economies is not entirely provided by the big businesses alone but further disclosed that micro enterprises and business owners have boosted the economies of nations like USA, UK, Japan, Germany, China, Brazil, among others developing nations in terms of job creation, poverty alleviation, wealth creation and economic growth and development.

The growth in the economy of any type of developing nation has a solid connection with the nature and growth of micro business. For example, micro enterprises in South Africa contribute over 55% of employment available in the nation and 22% of the GDP (Commonwealth of Australia, 2010), over 50% of new jobs created in Kenya are offered by micro enterprises (Economic Survey, 2006) and in Nigeria, Yahaya, Geidam and Usman (2016) attested that the contribution of micro business to GDP based on the sector discloses that industry is 41%, agriculture is 32% and service is 27% while employment is 95% of the workforce. An intervention program of the Federal Government of Nigeria has put measures in place geared towards the advancement and promotion of micro business by creating enabling environment in an effort to completely take advantage of the economic benefits of micro enterprises on the Nigerian Economy.

The apex bank, Central Bank of Nigeria (CBN) has as well licensed operators in the financial sector to improve their fiscal services in with the hope of helping the operations of micro enterprises in Nigeria. While the CBN had given licenses to people to establish microfinance banks with the goal of providing financial services and giving loans to micro enterprises without demanding for collateral, Nigerian Banks are likewise progressively offering micro finance to micro enterprises. This suggests that the restrictions formerly experienced by majority of micro enterprises in accessing finance in Nigeria are controlled. With empirical evidences, micro enterprises in Nigeria are still confronted with the risk of failure despite the assistance given to them (Akande and Alabi, 2015; SMEDAN, 2015 and Longenecker, Carlos, William, Leslie and Joseph, 2006) suggesting that majority of micro enterprises in Nigeria face hindering factors and close shops within a short time. To corroborate this, SMEDAN (2015) revealed that 80 per cent of micro business in Nigeria die within seven years of their establishment.

Poor management of finance has been noted as the primary reason for failure of micro business (Longenecker, et al., 2006). In the opinion of Bowen (2009), there is a significant correlation between organizational performance and the level of training in the management of organization especially in financial bookkeeping. A similar view to that was provided by Muchira (2012) who disclosed that business management includes appropriate recordkeeping of transactions. Consequently, the essential factors that positively affect the growth and sustainability of micro enterprises are skills and knowledge in bookkeeping as well as abilities to make use of the modern technology by incorporating the new trend of electronic banking into your business. As opined by Germain (2009), poor bookkeeping of financial transactions brings about total collapse of businesses within a couple of years of its establishment. It is therefore necessary to examine the electronic payments and bookkeeping practices of SMEs in Lagos.

1.2      Statement of the Problem

According to Bowen et al. (2009) as much as 50% of SMEs in operation have a deteriorating performance and are claimed to stagnate at small level thus do not gradually grow into large enterprises. Available studies on bookkeeping and SMEs have revealed that about 60% of small businesses fail within the very early years of their operation (Boachie-Mensah and Marfo-Yiadom, 2005). Majority of these small-scale companies are really running at loss in their presumed generated profits because of lack of understanding and applications of fundamental bookkeeping terms such as capital, drawings, assets, liabilities, depreciations, provisions, reserves and others; not having sufficient records of their payables and receivables also present a challenge in monitoring debtors and creditors balance. Likewise, these groups of business are financially incapacitated and they could not source for finance properly because of lack of proper records of their financial transactions as requirements for granting credit facilities by the banks (Williams et al.,2008). Additionally, recent literature disclosed that a lot of the SMEs are not keeping appropriate financial records that are essential to proposal writing and presentation to financial houses for easy access to funds. It can be inferred from the above claims that lack of proper booking keeping has been hindering the successful performance of the SMEs in Nigeria. Based on this claim, this study will examine electronic payments and bookkeeping practices of SMEs in Lagos.

1.3   Objectives of the Study

        The main goal of this study is to examine electronic payments and bookkeeping practices of SMEs in Lagos. The specific objectives are:

i)             To understand the types of book keeping among the SMEs in Lagos.

ii)           To determine whether SMEs in Lagos use electronic payments as well as bookkeeping as accounting tool to ascertain the financial position of their businesses.

iii)         To examine how entrepreneur background characteristics influence electronic payment adoption in SMEs in Lagos.

1.4   Research Questions

i)             What are the types of bookkeeping among the SMEs in Lagos?

ii)           Do SMEs in Lagos use electronic payments as well as bookkeeping as accounting tool to ascertain the financial position of their businesses?

iii)         How does entrepreneur background characteristics influence electronic payment adoption in SMEs in Lagos?

1.5   Significance of the Study

        The significance of the study is to draw awareness on the importance of bookkeeping in businesses. Lack of data hampers a comprehensive analysis, and would subject businesses to the risk of hitting cash flow crisis, misappropriation of funds and businesses may slip off many opportunities to grow and expand. It will also reveal why it is good to follow the new trend in technology by adopting electronic payment which will help business performance in the long run.

        It will as well contribute to body of knowledge i the area of electronic payment adoption along with bookkeeping among SMEs. It could also serve as a bench mark or guide for other work or study. The knowledge and use of electronic payment and bookkeeping is not just important or relevant for SMEs alone but also to every individual in any profession or career as it helps to make them better understand the usefulness of digital economy and bookkeeping, misinformation and inappropriateness of bookkeeping can then be corrected.

1.6   Scope of the Study

        This study on examining electronic payments and bookkeeping practices of SMEs in Lagos was carried out in Lagos Mainland Local Government Area of Lagos State with selected SMEs as the case study.

1.7   Limitations of the Study

        Among many constraints that served as limitations of this study, only the followings were considered to be the major ones but the research was able to find a way around them and achieved success at the end.

Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

1.8   Definition of Terms

The terms used in this study have been explained below

Bookkeeping: Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business. Transactions include purchases, sales, receipts, and payments by an individual person or an organization/corporation.

Small and Medium-scale Enterprise (SME): Small and medium-sized enterprises or small and medium-sized businesses (SMBs) are businesses whose personnel numbers fall below certain limits.

Electronic Payments: Electronic payments allow customers to pay for products or services electronically. Electronic payments are what allow you to purchase products and services by making payment online.