Mobile Money and SME Growth: A Zambian Perspective

Purpose : An in-depth analysis of how mobile money services influence the growth and development of Small and Medium-sized Enterprises (SMEs) in Zambia. This research explores the expanding realm of mobile money in Zambia, a region experiencing swift technological uptake alongside the growing small and medium-sized enterprise (SME) industry. Methodology : Using a blend of qualitative and quantitative research methods, data was gathered from 150 SMEs across various industries in Lusaka. The study examines key factors such as transactional efficiency, access to financial services, cost reduction, and enhanced financial management facilitated by mobile money platforms. It also explores the challenges faced by SMEs in adopting these digital financial tools. Findings : The findings reveal a significant correlation between the use of mobile money services and SME growth, characterized by increased operational efficiency, broader market access, and improved financial management. Unique contributor to theory, policy and practice: This study not only underscores the important role of mobile money in transforming the economic structure for SMEs in Zambia but also provides valuable insights for policymakers and financial service providers aiming to boost the SME sector through technological innovation. The research contributes to the growing body of knowledge on digital finance and its impact on emerging economies, highlighting the unique dynamics and opportunities within the Zambian context.


INTRODUCTION
In Zambia, Small and Medium-sized Enterprises (SMEs) form the cornerstone of the national economy.They play an important role in driving economic growth, generating employment, and contributing substantially to the Gross Domestic Product (GDP) (Nichter & Goldmark, 2009).SMEs in Zambia span a diverse range of sectors, including agriculture, manufacturing, retail, and services, embodying the entrepreneurial spirit and innovation that characterizes the Zambian business structure.
Despite their critical role, SMEs in Zambia face numerous challenges, particularly in terms of financial accessibility and management.Traditional banking systems, with their stringent requirements and limited reach, often fail to cater adequately to the needs of these smaller enterprises.This is especially true in rural and underserved urban areas, where access to physical banking facilities is scarce.Consequently, many SMEs struggle with basic financial operations such as transaction handling, payroll management, and accessing credit facilities, which hampers their growth and sustainability.
The advent of mobile money services has heralded a new era of financial inclusion and accessibility for Zambian SMEs (ZICTA, 2015).These services leverage the widespread use of mobile phones to offer an array of financial services that were previously unreachable for many small business owners.Through mobile money platforms, SMEs can now engage in a variety of financial transactions, including sending and receiving payments, paying bills, and managing cash flow more efficiently.The simplicity and convenience of these services have enabled even the most remote businesses to participate in the formal financial economy (Aron, 2018).
Moreover, mobile money services in Zambia have been instrumental in bridging the gap between the unbanked or underbanked segments of the population and the formal financial sector.They provide a secure and reliable medium for financial transactions, which is crucial in a landscape where financial security remains a significant concern.These services have also opened up new opportunities for SMEs, such as easier access to microloans and insurance products, which were previously hard to obtain.Furthermore, the integration of mobile money services into the SME sector has sparked a wave of digital transformation, encouraging even traditional businesses to adopt more modern and efficient ways of operating.This shift not only enhances operational efficiency but also positions Zambian SMEs for greater competitiveness in a rapidly globalizing world.
In essence, the proliferation of mobile money services in Zambia stands as a testament to technological advancement's role in empowering SMEs, fostering economic development, and driving national progress.

Statement of the Problem
While mobile money services have demonstrated potential benefits in various sectors globally, their specific impact on the growth, operational efficiency, and overall development of Small and Medium-sized Enterprises (SMEs) in Zambia remains underexplored.This lack of comprehensive research constitutes a significant problem for several reasons.
Firstly, without a deep understanding of how mobile money services influence SME growth, policymakers may be unable to craft targeted strategies that effectively leverage these digital platforms for economic development.The potential of mobile money services to catalyze SME growth, enhance financial inclusion, and stimulate broader economic progress in Zambia might not be fully realized without empirical evidence guiding policy decisions.
Secondly, for SMEs themselves, the absence of detailed insights into the benefits and challenges of mobile money services impedes their ability to make strategic business decisions.
SMEs are often resource-constrained and require clear data to allocate their limited resources effectively.A better understanding of the role of mobile money in facilitating business operations, reducing transaction costs, and improving access to credit can empower these enterprises to optimize their use of this technology.
Additionally, financial institutions and mobile money service providers lack a nuanced understanding of the specific needs and preferences of SMEs in Zambia.This knowledge gap hinders the development of tailored financial products and services that meet the unique requirements of this critical economic sector.As a result, opportunities for innovation in financial services that could benefit SMEs remain untapped.
Furthermore, the broader impact of mobile money services on Zambia's economic landscape, particularly concerning financial inclusion, digital literacy, and the digital economy, has not been sufficiently quantified.This research gap makes it challenging to assess the full potential of mobile money as a tool for economic transformation and social development.
In summary, the limited research on the impact of mobile money services on SMEs in Zambia presents a critical barrier to effective decision-making for policymakers, business owners, financial institutions, and other stakeholders.Addressing this gap is essential for harnessing the full potential of digital financial services in supporting the growth and sustainability of the SME sector in Zambia, which is crucial for the country's overall economic prosperity.

Objectives of the Study
The primary objective of this study is to conduct a comprehensive analysis of the role and impact of mobile money services on Small and Medium-sized Enterprises (SMEs) in Zambia.The specific objectives are outlined as follows: (1).Analysis of mobile money utilization among SME (2).Examining the impact on operational efficiency and growth (3).Identifying challenges in mobile money adoption (4).Proposing strategic recommendations By achieving these objectives, the study intends to provide a comprehensive understanding of the dynamics between mobile money services and SME growth in Zambia, offering valuable insights for various stakeholders including business owners, financial service providers, and policymakers.
The ultimate aim is to contribute to the formulation of strategies and policies that support the sustainable growth and development of SMEs through effective utilization of mobile money services.

Theoretical Frameworks
Several theoretical frameworks are relevant to this study.The Technology Acceptance Model (TAM) provides insight into how and why SMEs adopt mobile money services, focusing on perceived ease of use and perceived usefulness.The Theory of Reasoned Action (TRA) offers a perspective on how SMEs' attitudes towards mobile money influence their decision to use these services.Additionally, Rogers' Diffusion of Innovations Theory helps to understand the factors that facilitate or impede the adoption of mobile money services among SMEs.

Technology acceptance model (TAM)
The TAM, conceived by Fred Davis in 1989, is anchored in the TRA and stands as one of the most pivotal models addressing individual acceptance of information systems (Lee et al., 2003).Its framework encompasses variables like perceived usefulness, perceived ease of use, attitude toward using, and actual system use.Later iterations included external variables and behavioural intention, emphasizing how external factors could affect perceived usefulness and ease of use (Alharbi & Drew, 2014).In the domain of mobile money services, the TAM suggests that user attitude, shaped by the perceived usefulness and ease of use, directs their behavioural intention, which, in turn, dictates actual usage.(1) Perceived Usefulness (PU): Recognized as the extent to which an individual believes a system can augment their performance (Erasmus et al., 2015).For SMEs, benefits include improved efficiency, better relationships with business partners, enhanced competitiveness, and quality information (Al Nahian Riyadh et al., 2009).
(2) Perceived Ease of Use (PEU): Defined by the degree of effort an individual believes is required to use a system (Erasmus et al., 2015).PEU influences both perceived usefulness and attitudes towards system use.
(3) Attitude Toward Using: It represents an individual's disposition towards the target behaviour (Fathema et al., 2015).TAM posits that perceived usefulness and ease of use shape user attitudes, influencing their behaviour.
(4) External Variable: Later adaptations of the TAM introduced external variables, accounting for factors that might influence system beliefs, like user training and participation in design (Cluttur, 2009).At its core, TAM underscores two pivotal constructs: perceived usefulness and perceived ease of use.For SMEs, this translates to a straightforward calculus.If a technology, such as mobile money, is deemed beneficial for investment and business growth and is simultaneously easy to integrate and use, the likelihood of its adoption surges.It is a balance of utility and usability.A technology that's perceived as beneficial but convoluted may face resistance, and conversely, a simple-to-use technology with limited perceived advantages might also see sluggish uptake.

Perceived usefulness
Perceived ease of use

Attitude towards using
Behavioural intentions to use Actual use

Theory of reasoned action (TRA)
Developed in 1975 by Ajzen and Fishbein, the TRA seeks to elucidate the intricate relationship between attitudes and human behaviours.Central to this theory are attitudes and subjective norms, both of which shape an individual's intention to partake in a specific behaviour.Attitude here is understood as an individual's positive or negative disposition towards performing a target behaviour, and it influences behaviour by moulding intentions (Mtebe, 2014).Sheppard et al., (1988) found that the model exhibited exceptional predictive accuracy in scenarios involving both voluntary and mandatory use, challenging assertions made by Fishbein and Ajzen (1977).However, the model faced criticism for its exclusive focus on individual-level behaviour, neglecting environmental and social factors that could potentially impact such behaviour.As a result, subsequent researchers have revisited and expanded upon the initial model to address these limitations.
Figure 2.2 The theory of reasoned action (Fishbein and Ajzen, 1975).
This theory posits that an individual's intention to perform a specific behaviour is influenced by attitudes towards that behaviour and perceived societal expectations (subjective norms).In the SME context, this means that an entrepreneur's decision to adopt mobile money services, or any technological tool for that matter, isn't solely dictated by their personal belief.Instead, it is also shaped by the prevalent norms and attitudes within their industry or business community.If the collective sentiment veers towards the efficacy of a technology, an SME might be more predisposed to embrace it.

Diffusion of innovation theory (DoI)
Belief and Evaluation

Attitude towards behaviour
Normative belief and motivation to comply Subjective norm

Behaviour intention Actual behaviour
Rogers' (1995) DoI theory defines innovation diffusion as the process through which new technologies spread across a social fabric.This theory categorizes innovation characteristics into five segments: relative advantage, compatibility, complexity, trialability, and observability.DoI emphasizes the positive influence of relative advantage on behavioural intention, and some researchers regard TAM as a subset of the DoI due to overlapping constructs (Tobbin, 2010).DoI offers a panoramic view of how innovations spread within a community or society.In the realm of SMEs, this theory can elucidate why certain technologies gain rapid traction while others languish.Factors like relative advantage, compatibility with existing systems, trialability, and the visibility of benefits play a pivotal role.An SME will be more inclined to adopt a technology if it observes peer businesses reaping tangible benefits from it or if the technology aligns seamlessly with existing practices.
While existing literature provides valuable insights into the role of mobile money services in SME growth, there are still gaps, particularly in the context of Zambia.Many studies focus on individual usage of mobile money, with less emphasis on how these services impact SMEs' operational and financial performance.Furthermore, there is a need for more comprehensive research on the challenges SMEs face in adopting these services and how these challenges can be addressed to maximize their benefits.This literature review sets the stage for this study by highlighting the importance of mobile money services for SMEs, particularly in the Zambian context, and by identifying areas where further research is needed.

Overview of Mobile Money Services Globally and Within Africa
Mobile money, an innovative technology-based service, has garnered significant attention not only in Africa but worldwide.This digital payment system enables users to conduct financial transactions via mobile phones or related devices.While its definition varies depending on the business context, at its core, mobile money is a medium to transfer funds between accounts using mobile phones (Kombo & Tromp, 2006).It facilitates sending and receiving monetary value, offering users the flexibility and convenience to transact at anytime from anywhere (Chauhan, 2015).Additionally, mobile money transfer, sometimes known as mobile payment or mobile wallet, intersects the realms of banking and telecommunications (WorldBank, 2012).It brings together stakeholders from both mobile phone service providers and financial institutions.The concept of utilizing mobile phones for financial engagements was pioneered in 1999 in Japan with NTT DoCoMo's I-Mode mobile internet service, allowing online purchases via mobiles.Some studies posit the genesis of mobile finance can be traced back to prepaid mobile services targeting those desiring anonymity and affordability (Sibwela, 2017).The shift towards a cashless transaction environment, driven by benefits like fraud reduction, decreased criminal activities, minimized cash handling costs, and less dependency on physical cash, emphasized the importance of such services.
However, Africa revolutionized this domain in the early 2000s, capitalizing on the scarcity of traditional banking services.In Kenya, 2007 marked the launch of M-Pesa by Safaricom (Helix, 2018).This service, granting users the facility to transact money, settle bills, and buy goods/services using mobile phones, gained rapid popularity.By 2010, M-Pesa had over 14 million users in Kenya (Simiyu & Oloko, 2015).Today, M-Pesa stands as the most prominent mobile financial service in the developing world, boasting a clientele of approximately 83% of Kenya's adult populace, which translates to over 19.5 million individuals (Dorata, 2013).Following M-Pesa's inauguration in Kenya in 2007, several renowned mobile money platforms such as MTN, Airtel, Vodacom, G-CASH in the Philippines, and more emerged (UNCDF, 2014) (Julian et al., 2017).This success spurred similar ventures globally.

The Emergence and Growth of Mobile Money Services in Zambia
In Zambia, the journey into Digital Financial Services (DFS) commenced in 2002 with the introduction of Celpay (Zambia, 2018), which primarily catered to corporate clients for bill payments.Gradually, various mobile banking services and third-party providers such as ZOONA, Airtel, and MTN began to offer both bill payment and person-to-person transfer services (Chiti, 2018).At present, numerous commercial banks and their agent platforms like Zanaco express, First National Bank Zambia (FNB) E-wallet, Airtel money, MTN mobile money, and Zamtel money have joined the mobile banking brigade in Zambia (ZICTA, 2015) and has revolutionized the banking experience, ensuring it is both accessible and cost-effective .
The proliferation of mobile phones across Africa, especially among low-income demographics, has made it feasible for mobile money services to utilize existing mobile infrastructure and distribution networks.These networks, initially set up for airtime distribution, now cater to the unbanked population, offering them accessible, convenient, and affordable financial amenities (Subia & Martinez, 2014).
Mobile money has democratized financial access, especially for those who previously found traditional banking prohibitive due to minimum balance requirements and other constraints.This innovation has ushered in a secure, cost-effective means of transaction for the less privileged, leveraging existing mobile infrastructure and distribution channels (UNCDF, 2014).As a result, financial inclusion has surged, fostering economic growth as the previously marginalized segments of society embark on entrepreneurial ventures (Yousif et al., 2013).
The intensifying competition between banks and mobile operators in Zambia arises from a significant segment of the population being financially marginalized due to the prohibitive costs and geographical challenges associated with traditional banking.Current data from the Zambian Central Bank reveals a marked increase in mobile money accounts, indicating the growing influence of this platform among the unbanked, especially in rural areas (Zambia, 2018).

Mobile Money and SME Growth
Yu (CS, 2012) employed the Unified Theory of Acceptance and Use of Technology (UTAUT) to delve into the determinants driving individuals to adopt mobile money banking services.This insightful study shed light on the nuanced factors steering mobile banking uptake.With a sample size of 441 respondents, it was empirically established that adoption intent was predominantly influenced by social factors, perceived financial implications, performance expectancy, and perceived credibility.Notably, individual intentions and facilitating conditions played a critical role in shaping adoption behaviours.The study also illuminated the nuanced role of demographics, pinpointing that gender significantly influenced performance expectancy and financial considerations, while age moderated the influence of facilitating conditions and perceived selfefficacy on adoption.Maradung (2013) embarked on a study to discern the factors steering the uptake of mobile money services within Botswana's financial sphere.Leveraging the Technology Acceptance Model (TAM) coupled with demographic considerations, the research incorporated a diverse cohort of 190 respondents spanning users and non-users from four districts in Gaborone, Botswana.The findings painted an intriguing picture.Income levels and bank account ownership seemed inconsequential in shaping mobile money adoption.Age emerged as a defining factor, with the younger demographic showing a predilection for mobile banking.Educational attainment did not sway mobile money uptake.Gender dynamics revealed a tilt towards male users, and the employed demographic exhibited a stronger preference for mobile banking.The overarching conclusion was that mobile banking is gradually gaining traction in Botswana, especially among younger, employed males.This trend signals a promising trajectory for banking accessibility in Botswana.
Yankee Group Research (2002) highlighted the nascent challenges m-commerce faced, particularly in the U.S. landscape.Survey insights revealed that U.S. consumers grappled with cost, speed, and perceived complexities of mobile services.The Asian and European markets, on the other hand, saw mobile phones as primary online gateways, bypassing traditional PCs.A prominent challenge for mobile money's ascendancy, especially in regions like Finland, was the need for multistakeholder alignment.Service providers had the dual challenge of courting vendors to create the requisite infrastructure and convincing consumers of the system's utility.
In summary of these studies, it is evident that mobile money adoption is shaped by a blend of technological, sociocultural, and economic factors, with regional variations adding further layers of complexity.

Research Design
The research adopted a mixed-methods approach, combining quantitative and qualitative strategies to explore the impact of mobile money services on SME growth in Zambia.This design facilitates a comprehensive understanding by quantifying data trends and exploring deeper insights through qualitative narratives (Girden & Kabacoff, 2010).

Data Collection Methods
Primary data was collected using structured surveys and semi-structured interviews.The survey instrument comprised closed-ended questions to gather quantitative data on the usage of mobile money among SMEs.Interviews, conducted with select SME owners and managers, provided qualitative insights into their experiences and perceptions of mobile money services.

Sampling Techniques and Justification
A purposive sampling technique was employed to select SMEs that actively use mobile money services.This method ensured that the sample was representative of the study's target population -SMEs in Zambia engaged with mobile money.The sample size of 150 SMEs was determined based on feasibility and the potential to yield statistically significant results.

Data Analysis Procedures
Quantitative data from surveys were analyzed using descriptive statistics to identify trends and patterns.Statistical Package for the Social Sciences (SPSS) software facilitated this analysis.
Qualitative data from interviews were transcribed and thematically analyzed to extract common themes and insights relevant to the research objectives.

Mobile Money Adoption Among SMEs
The findings indicated a high rate of mobile money adoption among SMEs in Zambia.Data showed that 85% of surveyed SMEs actively use mobile money services for various business transactions.The primary reasons for adoption included ease of access to financial services (72%), faster transactions (65%), and lower transaction costs (55%).

Reason for Adoption
Percent Ease of access to financial services Faster transactions Lower transaction cost 72% 65% 55%

Impact on Operational Efficiencies
Survey responses and interview data revealed that mobile money significantly enhanced operational efficiencies within SMEs.About 60% of the SMEs reported a reduction in time spent on financial transactions, and 50% noticed a decrease in operational costs related to financial management.

Access to Finance and Investment Activities
The adoption of mobile money services improved SMEs' access to finance.Approximately 40% of SMEs reported easier access to credit and financial services.Moreover, 35% of respondents noted an increase in their investment activities, such as purchasing new equipment or expanding

Correlation between Mobile Money Usage and Business Growth
Statistical analysis indicated a positive correlation between the intensity of mobile money usage and business growth indicators such as revenue increase and customer base expansion.This trend suggests that more engaged use of mobile money services could potentially contribute to SME growth.
To correlation equation used in a hypothetical table (Table 2) assessing the relationship between mobile money usage and business growth, we used Pearson's correlation coefficient.The Pearson correlation coefficient (r) measures the strength and direction of the linear relationship between two variables.Therefore, the formula for Pearson's correlation coefficient: Where: n the number of observations (data pairs).
 xy is the sum of the products of paired scores.
 x is the sum of the x scores. y is the sum of the y scores.
 x 2 the sum of the squared x scores.
 y 2 is the sum of the squared y scores.
In this case; x would represent the data for Mobile Money Usage.
y would represent the data for Business Growth.The result of this equation, r, ranges from -1 to +1.An r value close to +1 indicates a strong positive correlation, meaning as mobile money usage increases, business growth also increases.An p value close to -1 indicates a strong negative correlation, where increased mobile money usage correlates with a decrease in business growth.An r value around 0 suggests no correlation.
It's important to note that correlation does not imply causation.These results collectively highlight the important role of mobile money in enhancing the operational efficiency, financial accessibility, and investment capability of SMEs in Zambia, suggesting a positive impact on overall business growth.

Interpretation of Results
The results of the study underscore the significant role of mobile money services in shaping of SME operations in Zambia.The high adoption rate and the positive impact on operational efficiencies and financial accessibility reflect the dynamic nature of the Zambian economy.In an environment where traditional banking services are either limited or inaccessible to many, mobile money services have emerged as a catalyst for SME growth, enabling easier access to financial resources and streamlining business operations.

Comparative Analysis with Other Regions
Comparing the Zambian with other regions, especially in sub-Saharan Africa, a similar trend emerges where mobile money services have significantly contributed to SME growth.This can be seen from the study by (Simiyu & Oloko, 2015) who conducted a study in Kisumu city of Kenya .However, the degree of impact varies, with some countries exhibiting higher rates of adoption and impact due to differing regulatory environments and levels of technological penetration.In the case of Zambia however, it is particularly noteworthy for its rapid adoption and the substantial positive influence on SMEs, perhaps more pronounced than in more developed economies where traditional banking is more entrenched.

SME Challenges Through Mobile Money
One of the critical challenges faced by SMEs in Zambia is limited access to financial services, which mobile money effectively addresses.This is similar to the findings from (Munongo & Bizah, 2017).By providing an alternative to traditional banking, mobile money services have allowed SMEs to bypass the constraints of financial exclusion.Moreover, the reduction in transaction times and costs through mobile money has facilitated better cash flow management, enabling SMEs to allocate resources more efficiently and make timely investments.

Innovation and Competitiveness
The introduction of mobile money services has not only provided financial solutions but has also spurred innovation within the SME sector.The necessity to adapt to a digital financial system has propelled SMEs towards more innovative business practices, enhancing their competitiveness both locally and in broader markets.This adaptation is seen in the integration of mobile money with other business processes, leading to more streamlined operations and the exploration of new business models that leverage digital financial technologies.
Overall, the study's findings illuminate the transformative impact of mobile money services on SMEs in Zambia, marking a shift towards more efficient, innovative, and competitive business practices.This shift is not just a testament to the adaptability of SMEs but also highlights the potential of digital financial services as a tool for economic development and growth in emerging markets.

Summary of Findings
The study has provided substantial insights into the adoption and impact of mobile money services on the growth of SMEs in Zambia.It was found that mobile money significantly enhances operational efficiency, facilitates better access to finance, and supports investment activities for SMEs.In addition, the analysis revealed that while there is a growing trend in the adoption of mobile money services among Zambian SMEs, challenges such as financial literacy, network reliability, and regulatory frameworks still persist.

Conclusion
The future of mobile money services in Zambia appears promising, with potential for considerable growth.As technology advances and awareness increases, more SMEs are likely to adopt mobile money, further integrating it into their business operations.In addition, the ongoing development of mobile money services, coupled with supportive policies and infrastructure improvements, is expected to drive innovation and competitiveness among Zambian SMEs, contributing to the overall economic growth of the country.
In conclusion, mobile money services have emerged as a transformative force for SMEs in Zambia, offering new opportunities for growth and development.While challenges remain, the potential benefits of these services, especially in enhancing financial inclusion and operational efficiency, are substantial.Continuous research and strategic implementations in this sector will be pivotal in realizing its full potential for SMEs and the wider Zambian economy.

Recommendations for Stakeholders
(1).For SME Owners: Embrace mobile money technology for enhanced operational efficiency.
Invest in training staff on the usage of mobile money platforms and explore innovative business models that leverage these services for growth and expansion.SMEs should integrate mobile money services into their financial management systems for seamless transactions.This includes using mobile money for supplier payments, employee salaries, and customer transactions.Furthermore, leverage mobile money services for sustainable business growth by utilizing the data and insights gained from transactions for strategic planning and market analysis.
(2) For Mobile Money Service Providers: Develop user-friendly platforms tailored to SME needs, ensuring reliability and security.Engage in partnerships with SMEs for customized financial products and provide educational resources to enhance financial literacy.Encourage the use of mobile money for internal accounting practices, helping SMEs maintain more accurate financial records and enabling better financial planning and decision-making (3) For Policymakers: Create a supportive regulatory framework that encourages the growth of mobile money services while safeguarding users' interests.Implement policies that incentivize SMEs to adopt digital financial services and provide infrastructural support for widespread mobile network access.Encourage the use of mobile money as a tool for financial inclusion, giving SMEs the capability to participate more fully in the economy and fostering overall economic growth and development By adopting these recommendations, the role of mobile money in SME operations can be effectively enhanced, leading to more significant growth and sustainability in the Zambian business sector.

Suggestions for Future Research
(1).Future research could explore the long-term impact of mobile money services on the sustainability and scalability of SMEs in Zambia.
(2).Comparative studies between regions within Zambia, or between Zambia and other countries, can provide a broader understanding of the effectiveness of mobile money services in different economic contexts.

Figure 1 :
Figure 1: Operational Efficiencies Improvement Graph attributed to the efficiencies and savings gained from mobile money services.Graph 2: SME Investment Activities Post Mobile Money Adoption

Table 2 :
Correlation Between Mobile Money Usage and Business Growth