THE EFFECT OF ICT SERVICES ON BUSINESS PERFORMANCE IN THE INFORMAL SECTOR IN KENYA. A CASE OF INFORMAL ENTERPRISES IN MLOLONGO TOWN.

Abstract

Kenya’s informal sector plays an important role in the economy through creation of employment opportunities and provision of affordable goods and services. Nevertheless, Kenya’s informal sector operates under difficult circumstances such as lack of enough capital, insufficient preparation, and scanty information for informed decision making, inadequate institutional support and lack of essential infrastructure. It is believed that integrating Information Communication Technology services in business operations may improve productivity. This study sought to assess the effect of ICT usage on the business performance of informal sector enterprises in kenya . The overall objective of this study was to assess the effect of the Mobile phones, the Internet, the Computers and Broadcast Media Technology usage on the business performance of the informal enterprises in Kenya, with a specific focus on those in Mlolongo Township. Exploratory research model and descriptive research design were used in the study. A sample of 100 enterprises was generated using stratified random sampling while the subjects for each stratum were selected using convenience sampling technique. Data was collected using questionnaires and a response rate of 91% was achieved. Data analysis was done using SPSS V20 while the results of the study were presented using tables and charts. The findings showed that ICT usage explained approximately 76.9% of the positive change in business performance. Precisely mobile phone usage was found to explain 93.6%; computer usage 53.4%; internet usage 62.3% while broadcast media explained 85.6% positive change in business growth. The findings also showed that mobile phone was the most preferred ICT tool in the informal sector in Kenya with a diffusion rate of 100%. Broadcast media technology was second with 94.5%, followed by internet at 57.5% and lastly computers with 27.5%. The respondents cited high tariffs, network failure and cyber security as the main challenges experienced across the four ICTs. The study recommends that there is need for the government through the regulator (Communications Authority of Kenya) to come up with policies and regulations that favor the informal sector such as preferential tariffs, development of TV and radio programs that offer education on business management. The study also recommends strict monitoring of the quality of network and services offered by the ICT service providers. To reduce insecurity in the ICT platforms the study recommends that the regulator needs to drive consumer education initiatives both from the ICT operator level and regulator level to create awareness of information security