By Ibrahim Kabba Turay
The center for Electoral and Civic Education (CECE) with the African Economic Research Consortium (AERC) and International Development Research Center (IDRC) has on Wednesday,May 3rd, at the Atlantic Lumley Hotel,presented a specialised research paper on financial inclusion with the question ‘Does Mobile Money Adoption and Credit Access Improve Innovation and Performance of Enterprise in Sierra Leone?’.
The research was conducted by three authors including Jacob Novignon of Kwame Nkrumah University of Science and Technology, Kumasi, Dr. James Fomba Sandy of Social Science and Law Department, Njala University of Sierra Leone and Dr. Tom Kimani from AERC Kenya.
While presenting the research paper, the Executive Director for the Center for Electoral and Civic Education, Macksood Gibril Sesay, said the CECE is a local civil society organization set up in 2020 and it stands to promote democracy and good governance.
He said the organization provides expertise and training on civic education, election, political cycle and governance, adding that they also build collaborative relationships with youth groups, women, first-time voters, security sectors, election management bodies, among others.
Director Sesay further states that the AERC study ventures to unravel the impact of mobile money adoption and credit constraints on innovation and performance of micro, small and medium scale businesses in Sierra Leone, adding that the study seeks to investigate the linkages between mobile money use, credit constraints, innovation and performance improved innovation.
He said according to the Ministry of Finance, the financial sector in Sierra Leone is small and underdeveloped, adding that in 2017 the financial sector of Sierra Leone consisted of fourteen (14) commercial banks, seventeen (17) community banks, five (5) microfinance institutions authorized to collect deposit, two (2) mobile operators.
He continues that the World Bank enterprises survey data collected in 2017 for Sierra Leone suggested that 150 firms were surveyed and only forty-eight, which is (38 percent) used mobile money for their transaction and the majority of those firms only used the mobile money services to receive payment from customers.
Director Sesay also said the government should provide a supportive environment for entrepreneurship and innovation to drop access to credit for investment and innovation.
He said credit facilities and bank should provide a variety of services on mobile money options to improve productivity and that there should be a need to harness the benefits of mobile financial services and ensure efforts are gender sensitive.
He further that the AFRC study suggested that there was improvement in the use of mobile financial services in recent years, adding that it is also important to note that the penetration of financial inclusion through digital financial services like mobile money remains low and fraught with operational challenges.
He said recent report by the Bank of Sierra Leone on digital financial services revealed that mobile network operators were only able to activate 12 percent of their registered customer based in 2016 and that figure fell 6 percent in 2017 and increased to 8 percent in 2018.
Director Sesay said in summary of the research, the authors note states that the use of mobile money significantly increased the likelihood of business innovation by 34 percent, but however credit constraints have a significantly negative effect on business innovation, reducing innovation by 32 percent.
Dr. Jacob Novigon in his presentation on the financial inclusion for sustainable innovation performance of enterprises in Sierra Leone, said policies should improve effort to increase mobile money penetration rate in Sierra Leone.
He added that the adoption and use of mobile money also improve firm’s ability to innovate, adding that credit constraint hinders firm ability to innovate and improve performance.
He said the use of mobile money saves time and cost related to financial transaction that requires physical travel, noting that the time and financial cost saved can be invested in developing innovative ides which will improve business operation to increase performance.