1.1 BACKGROUND TO THE STUDY
There have been a consistent agreement
in the body of extant literatures (Daasi, 2012; Nelson & nelson,
2010; Gboski, Joshua & Stephen, 2007) that small and medium scale
enterprises have the tendency to improve the economy of any nation
through job creation and increased flow of finance to the economy calls
for policy formulation and implementation that will enhance its growth
and performance. However, the recent introduction of cashless policy by
the central bank of Nigeria (CBN) has relegated SMEs to a
characterization of what is described as the declining glory of the
sector. This is evident in SMEs performance, growth and operation,
especially in rural areas.
The situation is more disturbing when
compared with what other sectors (with lesser economic implication) of
the economy has been able to achieve. Studies have also described the
situation by showing a high correlation between access to finance and
operations, performance and growth of SMEs. Hence, if the goals of SMEs
which is widely acclaimed by researchers (Daasi, 2012; Nelson &
nelson, 2010) as a boast to the economy will be achieved, then the
development and enhancement of the performance, operations and growth of
SMEs should be vigorously pursued.
The growth of SMEs in Nigeria is a
product of availability of finances and effective utilization of
mechanism which enhances their performance, operation and growth in
terms of execution of transaction. Thus, inability to accomplish the
foregoing could hinder the growth of SMEs especially with the recent
introduction of cashless policy which calls for internet and online
banking, the use of Automated Transfer Machine (ATMs), etc., makes the
situation even more disturbing for SMEs especially those operating in
the rural areas due to the proximity, lack of awareness and knowledge,
access to Information and Communication Technology (ICT) (Ebepanipre
& Oyuoyo, 2013; James, 2012; Olajide, 2012).
The description of SMEs as a business
that utilize average trading capital and the largest number of
participant operating as the lowest strata of the economy, could make
the introduction of the cashless policy not only a plaque to the
operators, but also a burden to the economy.
With the advent of Information
Technology and the internet, the monetary system is taking a new swing
into using electronic money as a legal tender for exchange. Several
literatures have pointed out the emergence of a cashless economy where
the present legal tender (which is paper money and coins) is replaced
with electronic money. This initiative has become a global trend.
Bonugli (2006) noted that bank notes and coins are gradually phasing out
as mode of payment for transactions as more systems present themselves
to be viable and better alternatives across the world.
Nigeria is not left out of this trend as
the cashless policy is the latest innovation of the Central Bank of
Nigeria, among its numerous efforts to reform the Nigerian financial
system. There was the recapitalization agenda, then the redenomination
of the Naira, the non-interest (Islamic) banking and most recently the
cashless economy. While some of these policies made sense to the
citizens, others were treated with discord. Though as always with any
change attempt, resistance is inevitable. Amidst the skepticism of
Nigerians, the recapitalization agenda which kicked off in 2005 has been
successful. The redenomination of the Naira and the Islamic banking
were flogged with critics. For instance, the redenomination of the Naira
was judged to be counter-productive while the initiators of the
non-interest banking concept are accused of masking under some hidden
agenda (Akhalumeh and Ohiokha, 2012). The cashless policy has not
escaped such critics, hence the need to address the concerns of the
citizenry if the policy must survive. The anticipated benefits of the
adoption of the cashless economy have been greatly stressed but people
have not been convinced that the policy is for the good of all
especially the SMEs which contributes majorly to the economy.
1.2 STATEMENT OF THE PROBLEM
The problem of this study therefore, is
to investigate if the introduction of cashless policy has any impact on
Small and medium business in Nigeria with focus on Edo State.
Specifically, emphasis will be placed on: determining the
characteristics of small and medium businesses in the study area;
identifying the challenges that have hindered the adoption of cashless
policy by small and medium businesses in the study area; investigating
if cashless policy has in any way enhanced the growth of small and
medium scale businesses in the study area; examining the impact of
cashless policy on the performance of small and medium scale businesses
in the study area and finally, make evidence based recommendations on
how the adoption of cashless policy could be enhanced in other to
reposition small and medium scale businesses to boost the economy of
1.3 OBJECTIVES OF THE STUDY
The following are the objectives of this study:
- To examine the effect of cashless policy on Small and medium businesses in Edo State.
- To determine the characteristics of small and medium businesses in Edo State.
- To analyze the challenges that have hindered the adoption of cashless policy by small and medium businesses in Edo State.
1.4 RESEARCH QUESTIONS
- What are the effect of cashless policy on Small and medium businesses in Edo State?
- What are the characteristics of small and medium businesses in Edo State?
- What are the challenges that have hindered the adoption of cashless policy by small and medium businesses in Edo State?
HO: There is no significant relationship between cashless policy and economic development of SMEs in Edo State
HA: There is significant relationship between cashless policy and economic development of SMEs in Edo State
1.6 SIGNIFICANCE OF THE STUDY
The following are the significance of this study:
- The result from this study will educate the managers of small and
medium business and the general public on the effect of cashless policy
on SMEs recommending coping strategies to ensure profitability with the
use of the modern technology.
- This research will be a contribution to the body of literature in
the area of the effect of personality trait on student’s academic
performance, thereby constituting the empirical literature for future
research in the subject area
1.7 SCOPE/LIMITATIONS OF THE STUDY
This study is limited to SMEs in Edo
State. It will also cover the relationship between cashless policy and
economic development of SMEs in Edo State.
LIMITATION OF STUDY
Insufficient fund tends to impede the efficiency of the researcher in
sourcing for the relevant materials, literature or information and in
the process of data collection (internet, questionnaire and interview).
Time constraint- The
researcher will simultaneously engage in this study with other academic
work. This consequently will cut down on the time devoted for the
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institutions and rural enterprises in Ogoni land of Rivers state.
Unpublished seminar paper, Department of Economics, University of Uyo,
Uyo – Nigeria, 2012.
E.E. Nelson, and I.E. Nelson,
Microcredit programmes and poverty alleviation in rural Nigeria: A case
of Akwa Ibom State, International Journal of Economic Development
Research and Investment, 1(2&3 ), 2010, 168-180.
A. Gboski, A. Joshua, and T. A. Stephen,
The Role of “Susu” A Traditional Informal Banking System in the
Development of Micro and Small Scale Enterprises (MSEs) in Ghana,
International Business & Economic Research Journal, 6(14), 2007
G.M. Ebipanipre, and K.O. Uyouyo, An
empirical analysis of the benefits of cashless economy on Nigeria’s
economic development, Research journal of finance and accounting, 4(17),
A. O. James, The Acceptance of E-banking by Customers in Nigeria, World Review of Business Research, 2(2), 2012, 6-8.
Akhalume P.B., and Ohiokha F. (2012),
“Nigeria’s Cashless Economy: The imperatives”. International Journal of
Management & Business studies. 2(2):31-37
Bonugli Paul (2006), The Cashless
society: Increased Usage of Card-Based Payment Systems”, Electronics and
Computer Science, University of South Ampton.