1.1 Background of the Study
In the past few years, mobile communications and microfinance have emerged as two industries that have witnessed remarkable progress and influence in developing nations. These sectors are now recognized as significant drivers of economic growth and societal advancement, offering novel prospects to both urban and rural inhabitants. Mobile telecommunications companies, in particular, are witnessing a surge in adoption rates in emerging markets that surpass all expectations, despite the low levels of literacy and technological expertise in these regions.
Despite developing for distinct reasons and separately from each other, the mobile communications and microfinance industries share a vital feature: they extend the scope and availability of their corresponding services - communication and financial inclusion - to individuals who previously lacked access or the means to afford them (Simiyu and Oloko, 2015). As a result, it is not surprising that initiatives have been launched to connect mobile communications and microfinance through the creation of mobile money services such as mobile banking.
Mobile money banking refers to the utilization of a mobile telecommunications network to conduct conventional banking functions such as checking account balances, transferring funds between accounts, and making payments (Chen, 2020). It combines the accessibility and convenience of mobile communications with the financial services offered by microfinance institutions, banks, and other financial service providers. This technology enables users to access financial services without the need for physical bank branches (Rajczyk, 2021), which is especially vital in regions where conventional banking infrastructure is lacking.
The expansion of mobile money banking has been recognized as a crucial factor in promoting financial inclusion and stimulating economic growth in developing nations (Aijaz et al., 2022). Over the past three years, mobile money has expanded from East to West Africa. For instance, in Senegal, mobile money ownership increased from 6% to 32%, with comparable progress observed in Burkina Faso. In Ghana, 39% of adults now have a mobile money account, a significant increase from 13%, and is now on par with Tanzania.
In Kenya, more than 70% of adults utilize a mobile money account, and over 30% of adults employ mobile phones to make payments from a conventional bank account. The proliferation of mobile money has resulted in an increase in bank account ownership. In total, account ownership in seven sub-Saharan African nations now exceeds 50%, and three regional economies have reached 80%. Mobile money can broaden financial inclusion, which can aid in poverty reduction. For instance, mobile money helped 194,000 households in Kenya escape poverty, facilitated women's transition from farming to business and retail, and allowed families to accumulate savings (Klapper and Popovic, 2018).
Despite having the largest unbanked population in Africa, Nigeria has not experienced the same rapid growth in mobile money adoption as its neighboring countries, and its penetration levels lag behind the regional average (Ajifowoke, 2021). Nevertheless, according to Pinheiro-Aina (2023), the situation is gradually changing, and mobile money is gaining momentum in the country.
The potential for mobile money banking in Nigeria is substantial particularly for small and medium-sized businesses (SMEs), such as those operating in Ikeja, one of the busiest commercial centers in Lagos State. SMEs are largely considered as the bedrock of economic growth in all countries (Rajesh et al., 2008).
Small and medium-sized enterprises (SMEs) in Nigeria are estimated to contribute around 40% of the country's Gross Domestic Product (GDP) and are responsible for 70% of industrial employment (Eniola, 2014). Meanwhile, according to Inah (2021), the Nigerian Minister of State for Industry, Trade and Investment, Amb. Mariam Katagum, stated that the latest SMEDAN/NBS MSME Survey reveals that SMEs in Nigeria now account for almost 50% of the country's GDP and over 80% of its employment. .
With 97.2% of companies in Nigeria classified as SMEs, they are vital to the country's development and play a significant role in reducing poverty and unemployment levels, positively impacting the distribution of income in both nominal and functional terms (Uzor, 2004).
However, SMEs in Nigeria encounter a variety of challenges, such as inadequate access to financial services, credit shortages, and excessive transaction costs. Implementing mobile money banking services could alleviate these issues and increase SMEs' overall efficiency. However, the level of acceptance, perception, and knowledge of mobile money banking operations among SMEs in Nigeria, particularly in Ikeja, Lagos State, is unclear. Therefore, this study aims to investigate this issue.
1.2 Statement of the Problem
Nigeria boasts one of the largest economies in Africa, and its SME sector is recognized as a crucial driver of development, thanks to its large number and ability to create employment and contribute significantly to the country's GDP (Adeyipo, 2021). Mobile money banking services have emerged as a solution to help SMEs conduct their financial transactions more efficiently and conveniently, without having to visit physical bank branches.
However, while many studies have examined mobile banking from an individual perspective, there has been limited research on SMEs' acceptance of mobile banking. Simply offering the service does not guarantee its adoption by SMEs in Nigeria, making it essential to understand their level of acceptance of mobile banking and to determine their perception and knowledge of mobile money banking operations, with a particular focus on SMEs in Ikeja, Lagos State.
The study aims to fill a gap in the existing literature by providing insights into the acceptance, perception, and knowledge of mobile money banking operations among SMEs in Nigeria, particularly in Ikeja, Lagos State. This information will be useful in developing mobile money banking systems that meet the needs of SMEs and identifying barriers that hinder their use of current mobile money banking systems. To the best of the researcher's knowledge, there has been no prior research on this topic in Nigeria.
1.3 Aim of the Study
The study aims to assess the level of acceptance, perception and knowledge of mobile money banking operations among SMEs in Nigeria with a specific focus on SMEs in Ikeja, Lagos State.
1.4 Objectives of the Study
The study had the following specific objectives:
- To examine the level of acceptance and knowledge of mobile money banking operations among SMEs in Ikeja.
- To assess the perception of SMEs in Ikeja towards the use of mobile money banking operations in their businesses.
- To identify the factors that influence the adoption and usage of mobile money banking operations among SMEs in Ikeja.
- To provide recommendations for policymakers and financial institutions to increase the adoption and usage of mobile money banking operations among SMEs in Nigeria.
1.5 Research Questions
- What is the level of acceptance and knowledge of mobile money banking operations among SMEs in Ikeja?
- What is the perception of SMEs in Ikeja towards the use of mobile money banking operations in their businesses?
- What are the factors that influence the adoption and usage of mobile money banking operations among SMEs in Ikeja?
- What are the recommendations for policymakers and financial institutions to increase the adoption and usage of mobile money banking operations among SMEs in Ikeja?
1.6 Research Hypothesis
H0: There is no significant relationship between the adoption of mobile money banking and the acceptance, perception, and knowledge of mobile money banking operations in Ikeja, Nigeria.
Ha: There is a significant relationship between the adoption of mobile money banking and the acceptance, perception, and knowledge of mobile money banking operations in Ikeja, Nigeria.
1.7 Justification of the Study
This study aims to offer valuable insights into the acceptance, perception, and knowledge of mobile money banking operations among SMEs in Ikeja, providing benefits for SMEs, mobile money banking operators, policymakers, and researchers alike. SMEs stand to benefit from this research by gaining information on the benefits of mobile money banking and the factors that impact its acceptance, perception, and knowledge.
Similarly, mobile money banking operators can benefit from this study by gaining a better understanding of the factors that influence the adoption of their services among SMEs. Policymakers can utilize the results of this study to inform policies aimed at promoting the adoption of mobile money banking among SMEs. Additionally, this study will contribute to the existing body of knowledge on mobile money banking in Nigeria, making it a valuable resource for researchers in the field.
1.8 Scope of the Study
The scope of this study is limited to SMEs in Ikeja, a major commercial hub in Lagos State, Nigeria. The study aims to investigate the acceptance, perception, and knowledge of mobile money banking operations among SMEs in this area. The study will cover a sample of SMEs in Ikeja who have used or are currently using mobile money banking services.