The response from the registered firms to the questionnaires was higher than that obtained from SMEs without formal registration mostly because of the individuals involved in providing the requested information did not take the questionnaire seriously and some thought of it as a competitor strategy to obtain their business model. The registered firms recorded a positive response of 87.5% of the total questionnaire’s issued while the non-registered firms had a response of 76.7%.
Registered SMEs
The study conducted was empirical in nature and was based on sample data which was obtained by means of a survey instrument distributed from 34 registered SMEs with holding and 46 SMEs with no holding or registered companies in Lusaka from a total of 40 and 60 questionnaires sent to firms respectively.
The categories covered in registered firms were Manufacturing, Trading, Services and Mining. The intention was to understand their application of ICTs in their businesses and the challenges Taghizadeh-Hesary,
2016 they face in enhancing their operations using ICTs. From the information collected, the Services category had the highest percentage with 50%, followed by the Trading category with 26.5%. The rest were the Manufacturing Energy,
2016, with 20.6% and Mining with 2.9%.
From the survey, most of the business owners were male representing 55.9% of the sample population, while the female owners had 2.9%. Firms with both male and females had 41.2% representation. All the SMEs covered in the sample population were all Zambians.
Firms that had implemented the use of ICTs in their operations made the highest representation in the research sample population with 38.2% followed by Web application with represented by 17.6% of the firms, same percentage as Electronic Commerce and together as Online Application accounted for 35.2%. Others were Banking with 14.7% and Mobile Banking with 5.9%. Mobile Application and Security were both represented by 2.9% of the sample population. SMEs embraced the use of ICT more in general operations as computerization and automation of processes showing to be key in the effectiveness and efficiency of conducting business.
Web applications were also vital in SMEs conducting businesses because of the ease of reaching to customers instantly and in an affordable way. Advertisements could be done online at cheaper costs, exchange of information through web portals, Social Media advertisements through ads at convenient prices and online payments among other uses. Using Bank portals enabled SMEs to schedule payments, manage and transfer funds. Mobile applications were popular among SMEs through usage of platforms like Unstructured Supplementary Service Data (USSD) that work with Quick Codes to operate and transact without the use of the Internet.
These were preferred especially in areas that had no Internet connections. Point of Sale (PoS) was another platform on which mobile banking was practiced on as a device with cellular network communicates with the respective banks to transact. The table below shows the usage of ICTs by the SMEs:
From the study, 82.4% of the SMEs agreed to the use of Mobile Money in their business transactions. Easy to access was the major reason why SMEs prefer using Mobile Money with 44.1% of the sample population citing the availability of Mobile Money Booths in diverse locations made it easy to transact. The other reason for using Mobile Money was security with a representation of 17.6% of the sample population as SMEs are guaranteed that their transactions were protected for they regarded the service in high esteem. Other reasons included convenience in using it with small amounts representing 14.7%, accessibility with 11.8% and 8.8% representation each for client preference, core business and swift operation.
Customer retention was one of the core objectives of SMEs when conducting business because it was difficult to expand and explore new markets if a business experiences a high customer churn rate. Customer satisfaction therefore was one of the main reasons that made customers continue trading with SMEs and the use of ICT was engaged to enhance the level of customer satisfaction. The table below shows that over half of the businesses in the study had ICTs impact their business moderately with a representation of 70% and strongly with 6.7%. Slight impact was represented by 10% and those with no impact 6.7%.
ICT Proficiency refers to the ability of individuals in the usage and implementation of ICTs. Most users were found to be average accounting for 70.6% and advanced users had 23.5%. Learners were represented by 5.9% of the sample population. The high rate of average users could be linked to the investment in training done by the firms after the introduction of new ICTs in the business.
From the survey, there were 41.2% of firms that had Revenue less than K200 million and those with K200–250 million representing 32.4%. Firms with higher revenue in the Range K250 million to K400 million represented 20.6% of the sample population. Two of the respondents did not provide their Firm Revenue representing 5.9%.
The reasons for investment in ICTs differed among firms. In this study, increase in Production was found as the major cause in investing in ICTs representing 32.4% of the sample population. Automation of operations such as business functions, financial management, printing and other operational activities was one of the major reasons with a representation of 23.5% same with the request from the Market as clients demand modes of conducting business. Other determinants were pressures to grow businesses and connection services representing 11.8% and 5.9% respectively.
The investment in ICTs could be measured to show how it was impacting on the business comparing with the cost of investment. This is called Cost Benefit Analysis. From the survey, 71% of the sample population did Cost Benefit Analysis to determine whether the investment in ICT repaid the firm or not.
Strategic planning for ICT in businesses is the scheduling of resources and time for the implementation of ICTs in a time frame forthcoming. From the study, it was recorded that 46.7% of the firms had in place strategic measures to implement ICTs in their business with 53.3% having no plans to do so. The major reason that was cited on the lack of planning for ICT was the expense that was associated with the implementation and breaking-even was the ultimate objective for most start-up business.
From the information collected, it was found that businesses that implemented ICTs had a steady increase in productivity with the progression of the years. This was alluded to the fact that costs were reduced in the production of goods and provision of services and firms were able to allocate funds from operational costs and invest in increasing the business productivity. Issues like transport costs were eliminated in cases were movements were required, printing and binding of documents were no longer essential as documents could be sent through emails and stationary use of toners and inks did not form part of the budget. The other major cost reduction factor was the automation of processes in conducting businesses which resulted in efficiency of operations.
Unregistered SMEs
Entrepreneurs that have their business running without formal registration were captured by the study with a total of 60 SMEs without formal registration were contacted and 46 SMEs managed to respond to the requested information providing for 76.6% of the total sample.
The Trading category had the largest representation in the study with 48.9% of the respondents. Services category 40% and the manufacturing with 11.1%. The Services accounted highest among the unregistered SMEs because of the way these businesses were built up without formal registration. Services such as brokering of products, crafts work, small scale farming (Farming,
2018) and catering which do not require businesses to be formally set up constituted the most among these types of SMEs.
The age group of 33–40 years had the most frequency in the study representing 40% of the respondents while the age groups of 26–32 and 48–55 each had 17.8%. Others were 18–25 with 15.6% and 48–55 with 8.9%. Zambians accounted for the whole population sample. It was however noted that due to the nature of their stay in Zambia, foreign nationals conducting businesses avoided answering the questionnaire fearing prosecution and deportation.
Most of the SMEs under study have been operational in the range of 1–3 years representing a major proportion of 41.9% and 32.6% for those that have been operational for 4–6 years. The interpretation of this age distribution was that individuals decided on setting up businesses when they reached their late 20s and early 30s. Others were newly formed under 12 months represented by 14% and 10.9% for those over 6 years in operation.
Almost 90% of the respondents declared that they used mobile money in their operations. This was mainly due to the difficulty in obtained a formal bank account as the documentation required for the businesses would not readily be provided. From the study, 88.6% of the respondents stated that they use mobile money for their transactions with 11.4% not using it. The type of mobile money used was determined by the reliability, accessibility and ease of the platform. In this case, it was discovered that the Airtel platform was the mostly used by the SMEs with a representation of 52.3% of the respondents followed by Zoona with 27.3% and MTN Money MTN,
2018, with 18.2%. Shoprite Money, a service delivered by the chain supermarket store had a representation of 2.3%.
Mobile money transfer was specified as the most widely used to transfer money for businesses among SMEs. This was because of the documentation that bank operations require such as a company name and a Tax Payer Identification Number (T-PIN), which were not required in opening a mobile money account. The cases which they used cheques and bank transfers, individuals used their personal details and not the business name when making payments and exchanging money.
The major barrier in accessing ICTs for businesses was found to be the high cost at which they come with. The equipment cost was singled out as the major cost together with the poor Internet connection which most SMEs faced.