Mobile Money Services and Entrepreneurial

Development In Rural Communities

A Report of Preliminary

Findings Karatu Kiemo and Barbara Leseni, University of

Nairobi Kenya

This study was set against clear indications of expansion of mobile money services (MMS) to rural people who have been traditionally excluded from baking services.

A key assumption was that exposure to banking services inculcate among users positive attitude and behaviors of personal finance management e.g., budgeting, saving, investment and entrepreneurship.

Background

The study hypothesized that MMS use might influence personal finance management and entrepreneurship.

The study was guided by the theory of planned behavior (Ajzen, 1991), which holds that intention is the most important predictor of behavior.

Applied to entrepreneurship, the theory has led to the development of:

1. entrepreneurial intention model (EIM) (Ajzen, 2002) and;

2. entrepreneurial intention questionnaire (EIQ), which has been validated in several studies (Linan and Chen, 2006).

Ajzen’s model of planned behavior

Personal attitude was measured by 5 items: 1. Being a businessperson implies more

advantages than disadvantages to me2. A career as businessperson is attractive for

me3. If i had the resources, i would like to start a

business4. Being a businessperson would entail great

satisfaction for me5. Among other options, i would rather be a

businessperson

Components of EIM: Personal Attitude

Subjective norm was measured by six items: 1. To what extent would your spouse approve/disapprove

of your decision to start a business?2. To what extent would your children approve/disapprove

of your decision to start a business?3. To what extent would your siblings approve/disapprove

of your decision to start a business?4. To what extent would your parents approve/disapprove

of your decision to start a business?5. To what extent would your close friends

approve/disapprove of your decision to start a business?6. To what extent would your workmates

approve/disapprove of your decision to start a business?

Component of EIM: Subjective Norm

Perceived Behavioral control was measured by 6 items:

1. To start a business and keep it running would be easy for me

2. I am prepared to start a viable business 3. I can control the creation process of a new business 4. I know the necessary practical details to start a

business 5. I know how to develop a business entrepreneurial

project6. If I tried to start a business, I would have a high

probability of succeeding

Component of EIM: Perceived behavioral Control

Entrepreneurial intention was measured by 6 items:

1. I am ready to do anything to be a businessperson2. My professional goal is to become a

businessperson3. I will make every effort to start and run my own

business4. I am determined to create a business in the future5. I have very seriously thought of starting a

business6. I have the firm intention to start a business some

day

Component of EIM: Entrepreneurial Intention

Personal finance management was measured by questions on whether one does budgetary planning and whether formally.

It was also measured by 6 Likert-type scale of 6 positively and negatively worded items:

1. I seriously think about my life in retirement;2. I save money to help me in retirement;3. I have made investments to help me in retirement;4. I seriously think of who will inherit my assets when I

die;5. It is impossible to think about my own death;6. I have no assets to be inherited by anyone.

Measuring Personal finance Management

The study adopted two designs - A cross section survey and a comparison of agricultural and pastoralist modes of livelihoods.

Participants were selected randomly through a two-stage sampling design

The sample included 174 participants – 51.7% (90) from agricultural zone and 48.3% (84) from pastoralist zone.

Method

Owners 83.9%Status of ownership of mobile phone or SIM card

Non-owners 16.1%

Users of borrowed Phone/SIM Card

17.2 %

Owners and borrowers

3.4 (6)*

Non-owners and non-borrowers

2.3 (4)*

Table 1: Sample description

Status of usage of Mobile Money Services

Users 69.0%

Non-users 31.0%Users on borrowed phones or SIM cards

6.9 % (12)

Non-users and non-borrowers

20.7%

Current users 96.0%M-pesa 100% (others,

0.8%)

Each of the 174 respondents had their values of responses (1 = SD; 2 = D; 3 = A; 4 = SA summed for individual components and the composite variable.

Subjective norm was excluded in this computation due to presence of “not applicable” response category.

The scores were treated as interval type of measurement and compared using Analysis of Variance test (SPSS Version 16)

Substantive Data Analysis

Hypothesis 1: There is a relationship between MMS use and entrepreneurial intention

There was no significant difference between MMS users and non-users in relation to the composite entrepreneurial intention variable (F = 1.913).

Substantive/Tentative Results

Disaggregating for the constituent variables, significant difference was found in entrepreneurial intention (F = 6.254, p< 0.05) but not in personal attitude and behavioral control.

In respect to significant finding (above) MMS users had higher entrepreneurial intention than non-users as was hypothesized (Table 1).

strongly agree

agree disagree strongly disagree

Users 75.0% 17.6% 2.4% 5.0%

Non-Users

50.0% 38.9% 4.0% 7.1%

Table 3: Levels of agreement on entrepreneurial intention among MMS users and non-users

MMS use was also measured by length of use disaggregating for under 1 year, 1 -3 years and above 3 years.

The results showed no difference in the composite variable (F=0.421) and particular components.

Hypothesis 2: There is a relationship between MMS use and personal finance management.

This was strongly confirmed (F=21.991, p< 0.001) with MMS users having the higher level of positive attitude on PFM than non-users.

strongly agree

agree disagree strongly disagree

Users 21.3% 30.5% 36.2% 12.0%

Non-Users

6.9% 25.5% 37.5% 30.1%

Table 4: Levels of agreement on personal finance management among MMS users and non-users

The mode of livelihood had no significant influence (F= 2. 279, p = .1).

Hypothesis 3: The mode of livelihood mediates between MMS use and entrepreneurial such that those from agricultural area are more likely to have higher entrepreneurial intention.

There results showed no relationship (F = 1.833 for MMS use and 0.0 for mode of livelihood) for the composite variable.

Influence of mode of livelihood

But with regard to the entrepreneurial intention component the difference between users and non-users “disappeared” (F = 3.306, p = 0.071).

But the difference between mode of livelihood was significant (F= 12.990, p< 0.0001).

strongly agree

agree disagreestrongly disagree

Agriculturalist 90.8% 2.9% 6.3%

Pastoralist

52.4% 38.6% 5.9% 3.1%

Table 5: Levels of agreement on entrepreneurial intention among users by mode of livelihood

MMS users in the agricultural had the higher entrepreneurial intention.

The two variables, however, could explain only 10% of the variation (Eta = 0.104).

Pastoral Agricultural

The use of MMS has influenced how one manages finances

94.0% 94.2%

Ways MMS use has changed finance management

Cost-reduction 83.3% 61.2%

Saving 37.5% 67.2%

Security 6.2% 4.5%

Pastoral Agricultural

Whether one owns a bank account

39.0% 46.1%

Ways of saving for non-bank owners

MMS 7.8% 42.3%

Live assets 49.0% 7.7%

Depositing with a shopkeeper

3.9% 1.9%

Wallet/handbag/house

7.8% 0.0%

Chama/group 2.0% 9.6%

Doesn’t save 2.0% 15.4%

Others (unspecified) 23.5% 23.1%

Pastoral Agricultural

Whether one budgets

95.2% 82.3%

Whether one develops a written budget

28.6% 25.4%

Supposing you had a need and asked a friend to lend you 10,000/= to return in 3 months which he does but you manage your need with half the amount, what would you do with the rest?

Test question

Pastoral Agricultural

MMS users

Non-MMS users

Invest in an income generating activity

76.8% 84.7% 81.6% 79.2%

Return it 17.1% 1.2% 9.6% 7.5%Meet everyday needs

2.4% 8.2% 7.9% 0.0%

Enjoyment 2.4% 0.0% 0.0% 3.8%

PASTORAL AGRICULTURAL

MMS users Non-users MMS users Non-users

Invest in an income generating activity

73.5% 81.8% 87.7% 75.0%

Return it 22.4% 9.1% 0.0% 5.0%

Meet everyday needs

4.1% 0.0% 10.8% 0.0%

Enjoyment 0.0% 0.0% 0.0% 10.0%

The preliminary analysis showed no influence of MMS use on entrepreneurial intention as a composite variable.

However, MMS was found to have significant influence on the component of entrepreneurial intention.

Conclusion

The study also found that MMS use have positive influence on personal finance management.

These results are good news for policy since they imply accelerating MMS use might indeed increase rural people’s entrepreneurial attitude and behavior.

An important finding from the study was the low perceived behavioral control (Data not shown).

This may mean people have the wish to become entrepreneurs but they are limited by know how.

The policy implication is the need for entrepreneurial training that would make people have the courage to venture in entrepreneurial activities.

The End