Improving Supply Chain Efficiency Through Electronic Payments: The Case of Micro-Entrepreneurs in Kenya and Tanzania

Abstract

Research suggests that one possible key to development may be the growth of micro-entrepreneurial firms. The current work suggests that improving supply chain efficiency may help these very small enterprises grow. Specifically, it examines the role played by the use of mobile payments to facilitate transactions with suppliers. The study contrasts Kenya, which has widespread adoption of mobile payments by both consumers and small business, with neighboring Tanzania, where adoption, although substantial, has occurred at a much slower rate and achieved far less penetration. Findings support the idea that positive business outcomes such as increased income and increased hiring are related to mobile payment usage.

Keywords:

• Africa
• Kenya
• micro-entrepreneurs
• mobile payments
• M-PESA
• supply chain efficiency
• Tanzania

ACKNOWLEDGMENTS

The authors are very appreciative of the considerable assistance received from Tonny Omwansa, Sarah Atambo, and Samuel Bonnke from the University of Nairobi; and from Lufumbi Mwaipopo, Neema Mollel, Charles Chiluba, and Tumaini Mtei from the University of Dar es Salaam Business School.