Leveraging SMEs financial inclusion through agency banking in Zimbabwe

https://doi.org/10.35912/amor.v5i3.1888
Published: Mar 1, 2024

Abstract:

Purpose: The main purpose of this study is to examine the effect of agency banking on the financial inclusion of SMEs, determine factors that influence the adoption of agency banking by SMEs, and establish an agency banking model that can be adopted to improve the financial inclusion of SMEs in Zimbabwe.

Research Methodology: The study uses a mixed-method approach and is explanatory. Questionnaires and informants were used as research instruments, with a random sample of 78 respondents and 10 purposively selected agents. Inferential statistics were used to analyze the data.

Results: The findings shed light on the effects of agency banking on financial inclusion and impediments to financial inclusion, and identify the channels of agency banking being used most frequently. Factors that influenced the adoption of technology were also identified.

Limitations: The study was limited to one population group and one locality, although financial inclusion should ideally include all population groups.

Contribution: This study recommends a unique model that can be used to enhance financial inclusion through agency banking, which has been identified as a pillar of financial inclusion. Therefore, the results are useful to policymakers and future researchers.

Keywords:
1. Leveraging SMEs
2. Financial Inclusion
3. Financial Exclusion
4. Agency Banking
5. Policy Formulation
Authors:
1 . Margaret Mashizha
University of Zimbabwe, Zimbabwe
2 . Lillian Gumbo
Midlands State University, Zimbabwe
3 . Ashley Sabawo
University of Zimbabwe, Zimbabwe
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Mashizha, M., Gumbo, L., & Sabawo, A. (2024). Leveraging SMEs financial inclusion through agency banking in Zimbabwe. Annals of Management and Organization Research, 5(3), 189–203. https://doi.org/10.35912/amor.v5i3.1888
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Issue & Section
Vol. 5 No. 3 (2024): February
Articles
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References

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    Afework, G., (2015). ‘Assessment of adoption of agency banking innovation in Ethiopia: barriers and Drivers’ Addis Ababa University College of Business and Economics

    Agalla, T. O. (2014). The Challenges Facing the Implementation of Agency Banking in Kenya a Case Study of Kcb Limited Mombasa County. Journal of Business and Management (IOSR-JBM) e-ISSN, 76-95

    Agyekum, K. F. (2017). A trajectory of financial inclusion towards economic inclusion: Empirical evidence from LICs-Ghana as a case (Unpublished PhD Thesis

    Allen, F., Demirgüc¸-Kunt, A., Klapper, L. and Peria, M.S.M. (2016). The foundations of financial inclusion: understanding ownership and use of formal accounts. J. Financ. Intermed. (forthcoming).

    Amidži?, G., &Massara, A.A. Mialou (2014). ‘Assessing countries’ financial inclusion standing–A new composite index’. IMF Working Paper

    Aron, J. (2018). Mobile money and the economy: A review of the evidence. The World Bank Research Observer, 33(2), 135–188. https://doi.org/10.1093/wbro/lky001

    Baliamoune-Lutz, M. & Lutz, S., (2017), Financing and performance of female-owned firms in middle Eastern and African economies, Working Paper, InstitutoComplutense de Analisis, Örebro.

    Barugahara, F., (2021). Financial Inclusion in Zimbabwe: Determinants, Challenges, and Opportunities, International Journal of Financial Research Vol. 12, No. 3

    Bucklin, L. P., A Theory of Distribution Channel Structure, Berkeley, CA,IBER Special Publications,1966.

    Chen, Z., and Jin, M. (2017). Financial inclusion in China: Use of Credit. Journal of Family and Economic Issues, 38(4), 528-540

    Chitimira, H. and Torerai, E (2020).The Nexus between Mobile Money Regulation, Innovative Technology and the Promotion of Financial Inclusion in Zimbabwe" PER / PELJ2021(24)-DOI http://dx.doi.org/10.17159/1727-3781/2021/v24i0a10739

    Chitokwindo, S., Mago, S. and Hofisi, C. (2014). Financial inclusion in Zimbabwe: a contextual overview. Mediterranean Journal of Social Sciences, 5(20):.415-423.

    David-West, O., Iheanachor, N., &Umukoro, I. (2019b). Sustainable business models for the creation of mobile financial services in Nigeria. Journal of Innovation & Knowledge, 5(2), 105-116. https://doi.org/10.1016/j.jik.2019.03.001

    Davis, F. D. (1989). Perceived Usefulness, Perceived Ease of Use, and User Acceptance of Information Technology. MIS Quarterly, 13(3), 319–340. https://doi.org/10.2307/249008

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    Finscope. (2015). Highlights from FinScope Consumer Survey Zimbabwe 2014 results

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    Gitonga, M.K., & N. Kiraka R., (2019) The effect of banking services on the business performance of bank agents in Kenya, Cogent Business & Management, 6:1, DOI: 10.1080/23311975.2019.1684420

    Ibor, B.I., Offiong,A.I. and Mendie,E.S., (2017). “Financial inclusion and performance of Micro, Small and Medium Scale Enterprises in Nigeria.” International Journal of Research - Granthaalayah, 5(3), 104-122. https://doi.org/10.5281/zenodo.439557

    Jensen, M.C. and Meckling, W.H. (1976) Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3, 305-360.

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    Makanyeza, C. (2017). Determinants of Consumers’ Intention to Adopt Mobile Banking Services in Zimbabwe. International Journal of Bank Marketing, 35(6), 997-1017.

    Malenya, W. M &Kariuki, P. (2017). Characteristics of Microfinance Banking Services and Financial Inclusion in Kenya. The Strategic Journal of Business & Change Management. ISSN 2312-9492(Online)

    Mavaza,T, Halimani, D., and Dzapasi, F., (2020).Agency Banking Model as a Driver of Financial Inclusion in Zimbabwe. PM World Journal (ISSN: 2330-4480) Vol. IX, Issue

    Mazambani, L., Rushwaya, T. J., & Mutambara, E. (2018). Financial inclusion: Disrupted liquidity and redundancy of mobile money agents in Zimbabwe. Investment Management and Financial Innovations, 15(3), 131–142. https://doi.org/10.21511/imfi.15(3).2018.11

    Migap, J.P., Okwanya, I., Ojeka, G. (2015), Financial inclusion for inclusive growth: The Nigerian perspective. International Journal of Information Technology and Business Management, 37(1), 1-8.

    Mugenda, O.M. and Mugenda, A.G. (2003). Research Methods: Quantitative and Qualitative Research: Nairobi; Acts Press

    Mukhule, J. E. N. (2019). Analysis of factors affecting adoption of agency banking among micro, small and medium sized enterprises in Nairobi County—A case study of Gikomba Market

    Mwangi, M. H. T., &Mwangi, W.M. (2014). Factors influencing the uptake of agency banking services by customers in commercial bank in Kenya: A case of Kenya Commercial Bank, The Strategic Journal of Business Change and Management, Vol 2 (10)

    Nanziri, L. E., (2020). Women, Inclusive Finance and the Quality of Life: Evidence from Zambia. In Women and Sustainable Human Development. Cham: Palgrave Macmillan, pp. 285–303

    Ndungu, C. G., & Wako, G. W., (2015). Customer’s perception of agency banking in Kenya: Case study of Equity Bank Kenya Limited. Global Journal of Commerce and Management Perspective, Vol 4 (2).

    Nesse, P. J., Risnes, O., Hallingby, H. S., Munch-Ellingsen, A., &Canright, G. S. J. (2017, June). Growth of mobile financial services key learnings from literature, industry analysis and cases. In 2017 International Conference on Engineering, Technology and Innovation (ICE/ITMC)

    Nomsa S. M., &Tebogo, I. T. M. (2017). Strategic Planning in Small and Medium Enterprises (SMEs): A Case Study of Botswana SMEs, Journal of Management and Strategy, 8(1): 74-78.

    Offiong, A. & Mendie S. E. (2017). Financial inclusion and performance of micro small and medium scale enterprises.

    Reaves, B., Bowers, J., Scaife, N., Bates, A., Bhartiya, A., Traynor, P., & Butler, K. R. (2017). Mo (bile) money, mo (bile) problems: Analysis of branchless banking applications. ACM Transactions on Privacy and Security(TOPS), 20(3), 1–31. https://doi.org/10.1145/3092368

    Sanford, C. (2013). Do agents improve financial inclusion? Evidence from a national survey in Brazil. Bankable Frontier Associates.

    Sehrawat, M and Giri, A. K. (2016) "The impact of financial development on economic growth: Evidence from SAARC countries", International Journal of Emerging Markets, Vol. 11 Issue: 4, pp.569-583, https://doi.org/10.1108/IJoEM-11-2014-0172

    Sethi, D., and Sethy.S.K., (2019). Financial inclusion matters for economic growth in India: Some evidence from cointegration analysis. International Journal of Social Economics 46

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    Zahan, M. (2017). The economic sustainability of small business: An empirical analysis on the mobile phone banking in Dhaka City. International Journal of Sustainable Strategic Management, 5(3), 231–244. https://doi.org/10.1504/IJSSM.2017.10006654

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  2. Afework, G., (2015). ‘Assessment of adoption of agency banking innovation in Ethiopia: barriers and Drivers’ Addis Ababa University College of Business and Economics
  3. Agalla, T. O. (2014). The Challenges Facing the Implementation of Agency Banking in Kenya a Case Study of Kcb Limited Mombasa County. Journal of Business and Management (IOSR-JBM) e-ISSN, 76-95
  4. Agyekum, K. F. (2017). A trajectory of financial inclusion towards economic inclusion: Empirical evidence from LICs-Ghana as a case (Unpublished PhD Thesis
  5. Allen, F., Demirgüc¸-Kunt, A., Klapper, L. and Peria, M.S.M. (2016). The foundations of financial inclusion: understanding ownership and use of formal accounts. J. Financ. Intermed. (forthcoming).
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  7. Aron, J. (2018). Mobile money and the economy: A review of the evidence. The World Bank Research Observer, 33(2), 135–188. https://doi.org/10.1093/wbro/lky001
  8. Baliamoune-Lutz, M. & Lutz, S., (2017), Financing and performance of female-owned firms in middle Eastern and African economies, Working Paper, InstitutoComplutense de Analisis, Örebro.
  9. Barugahara, F., (2021). Financial Inclusion in Zimbabwe: Determinants, Challenges, and Opportunities, International Journal of Financial Research Vol. 12, No. 3
  10. Bucklin, L. P., A Theory of Distribution Channel Structure, Berkeley, CA,IBER Special Publications,1966.
  11. Chen, Z., and Jin, M. (2017). Financial inclusion in China: Use of Credit. Journal of Family and Economic Issues, 38(4), 528-540
  12. Chitimira, H. and Torerai, E (2020).The Nexus between Mobile Money Regulation, Innovative Technology and the Promotion of Financial Inclusion in Zimbabwe" PER / PELJ2021(24)-DOI http://dx.doi.org/10.17159/1727-3781/2021/v24i0a10739
  13. Chitokwindo, S., Mago, S. and Hofisi, C. (2014). Financial inclusion in Zimbabwe: a contextual overview. Mediterranean Journal of Social Sciences, 5(20):.415-423.
  14. David-West, O., Iheanachor, N., &Umukoro, I. (2019b). Sustainable business models for the creation of mobile financial services in Nigeria. Journal of Innovation & Knowledge, 5(2), 105-116. https://doi.org/10.1016/j.jik.2019.03.001
  15. Davis, F. D. (1989). Perceived Usefulness, Perceived Ease of Use, and User Acceptance of Information Technology. MIS Quarterly, 13(3), 319–340. https://doi.org/10.2307/249008
  16. Ebicherla, S., and Raju, H., (2017). Awareness and Acceptance of Financial Inclusion. SUMEDHA Journal of Management. Vol.6, No.4.76-86.
  17. Esubalew, A. A., and Raghurama. A., (2020). The mediating effect of entrepreneurs’ competency on the relationship between. Bank finance and performance of micro, small, and medium enterprises (MSMEs). European Research on Management and Business Economics 26: 87–95.
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  21. Ibor, B.I., Offiong,A.I. and Mendie,E.S., (2017). “Financial inclusion and performance of Micro, Small and Medium Scale Enterprises in Nigeria.” International Journal of Research - Granthaalayah, 5(3), 104-122. https://doi.org/10.5281/zenodo.439557
  22. Jensen, M.C. and Meckling, W.H. (1976) Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3, 305-360.
  23. Kapoor, A. (2014). Financial inclusion and the future of the Indian economy. Futures, 56, 35-42.
  24. Karedza, G. &Govender, K.K., (2017), ‘Enhancing the export performance of the SMEs in the manufacturing sector in Zimbabwe’, Academy of Marketing Studies Journal 21(2), 1–19.
  25. Love, J.H. & Roper, S., (2015), ‘SME innovation, exporting and growth: A review of existing evidence’, International Small Business Journal 33(1), 28–48. https://doi.org/10.1177/0266242614550190
  26. Makanyeza, C. (2017). Determinants of Consumers’ Intention to Adopt Mobile Banking Services in Zimbabwe. International Journal of Bank Marketing, 35(6), 997-1017.
  27. Malenya, W. M &Kariuki, P. (2017). Characteristics of Microfinance Banking Services and Financial Inclusion in Kenya. The Strategic Journal of Business & Change Management. ISSN 2312-9492(Online)
  28. Mavaza,T, Halimani, D., and Dzapasi, F., (2020).Agency Banking Model as a Driver of Financial Inclusion in Zimbabwe. PM World Journal (ISSN: 2330-4480) Vol. IX, Issue
  29. Mazambani, L., Rushwaya, T. J., & Mutambara, E. (2018). Financial inclusion: Disrupted liquidity and redundancy of mobile money agents in Zimbabwe. Investment Management and Financial Innovations, 15(3), 131–142. https://doi.org/10.21511/imfi.15(3).2018.11
  30. Migap, J.P., Okwanya, I., Ojeka, G. (2015), Financial inclusion for inclusive growth: The Nigerian perspective. International Journal of Information Technology and Business Management, 37(1), 1-8.
  31. Mugenda, O.M. and Mugenda, A.G. (2003). Research Methods: Quantitative and Qualitative Research: Nairobi; Acts Press
  32. Mukhule, J. E. N. (2019). Analysis of factors affecting adoption of agency banking among micro, small and medium sized enterprises in Nairobi County—A case study of Gikomba Market
  33. Mwangi, M. H. T., &Mwangi, W.M. (2014). Factors influencing the uptake of agency banking services by customers in commercial bank in Kenya: A case of Kenya Commercial Bank, The Strategic Journal of Business Change and Management, Vol 2 (10)
  34. Nanziri, L. E., (2020). Women, Inclusive Finance and the Quality of Life: Evidence from Zambia. In Women and Sustainable Human Development. Cham: Palgrave Macmillan, pp. 285–303
  35. Ndungu, C. G., & Wako, G. W., (2015). Customer’s perception of agency banking in Kenya: Case study of Equity Bank Kenya Limited. Global Journal of Commerce and Management Perspective, Vol 4 (2).
  36. Nesse, P. J., Risnes, O., Hallingby, H. S., Munch-Ellingsen, A., &Canright, G. S. J. (2017, June). Growth of mobile financial services key learnings from literature, industry analysis and cases. In 2017 International Conference on Engineering, Technology and Innovation (ICE/ITMC)
  37. Nomsa S. M., &Tebogo, I. T. M. (2017). Strategic Planning in Small and Medium Enterprises (SMEs): A Case Study of Botswana SMEs, Journal of Management and Strategy, 8(1): 74-78.
  38. Offiong, A. & Mendie S. E. (2017). Financial inclusion and performance of micro small and medium scale enterprises.
  39. Reaves, B., Bowers, J., Scaife, N., Bates, A., Bhartiya, A., Traynor, P., & Butler, K. R. (2017). Mo (bile) money, mo (bile) problems: Analysis of branchless banking applications. ACM Transactions on Privacy and Security(TOPS), 20(3), 1–31. https://doi.org/10.1145/3092368
  40. Sanford, C. (2013). Do agents improve financial inclusion? Evidence from a national survey in Brazil. Bankable Frontier Associates.
  41. Sehrawat, M and Giri, A. K. (2016) "The impact of financial development on economic growth: Evidence from SAARC countries", International Journal of Emerging Markets, Vol. 11 Issue: 4, pp.569-583, https://doi.org/10.1108/IJoEM-11-2014-0172
  42. Sethi, D., and Sethy.S.K., (2019). Financial inclusion matters for economic growth in India: Some evidence from cointegration analysis. International Journal of Social Economics 46
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  44. Yangdol, R., and Mandira S., (2019). Demand-side Factors for Financial Inclusion: A Cross-country Empirical Analysis. International Studies 56: 163–85.
  45. Zahan, M. (2017). The economic sustainability of small business: An empirical analysis on the mobile phone banking in Dhaka City. International Journal of Sustainable Strategic Management, 5(3), 231–244. https://doi.org/10.1504/IJSSM.2017.10006654
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