Impact of mobile money services on financial performance of SMEs: the case of Douala, Cameroon

Abstract

Often effectively excluded by formal financial systems, small and medium-sized enterprises (SMEs) in developing countries have found in Mobile Money services an efficient and cost effective means of availing themselves of financial services without holding bank accounts. In order to provide meaningful recommendations to the stakeholders of the banking sector of Cameroon, small and medium-sized enterprises, Mobile Money service providers, and relevant state organs, this study was conducted to investigate the influence of Mobile Money services on the financial performance of SMEs in two markets in Douala in Cameroon. A mixed methods research design was employed to conduct the study. The quantitative data was collected through the administration of a survey questionnaire and the qualitative data from one-on-one in-depth interviews. By means of snowball sampling, a sample of 285 SMEs was obtained to respond to the survey questionnaire, while the researcher used purposive sampling to select the owners or managing directors of twelve of the respondents to participate in the interviews. Version 25 of the Statistical Package for the Social Sciences software was used to analyse the quantitative data, while the qualitative data was subjected to thematic analysis. Correlation and regression analyses yielded that independent variables pertaining to the adoption of Mobile Money services by the respondents to the questionnaire predicted of the order of 73 percent of variance with respect to increased sales turnover. Most of the twelve interviewees perceived that their business operations had improved significantly after they had begun making and receiving payments in the form of Mobile Money transactions. The participants in the study used Mobile Money mainly to receive money, send money, and buy airtime and a significant majority perceived that Mobile Money services were more cost effective than those of banks. Convenience, safety, and accessibility were the attributes of Mobile Money which the participants cited as having provided their principal motivations for electing to register as users of Mobile Money services. It could be concluded that Mobile Money services exerted a significant positive influence on the financial performance of the SMEs of the participants in the study. On the basis of the conclusions which were drawn from the findings, recommendations were made to the owners of SMEs in Douala, the Ministry of Small and Medium-sized Enterprises, Social Economy, and Handicrafts and Mobile Money service providers. The findings of the study underscore the role of Mobile Money services as an effective means of increasing financial inclusion and financial performance and could be useful to academics, owners and managers of SMEs, financial institutions in Cameroon and elsewhere, and also relevant policy makers.