Cashless Society: Challenges and Effects on Small Scale Businesses: A Study of Businesses in Asaba Urban

Cashless Society: Challenges and Effects on Small Scale Businesses: A Study of Businesses in Asaba Urban

ABSTRACT

This study examined the cashless society: challenges and effects on small scale businesses: a study of businesses in Asaba Urban. Three research questions guided the study. A descriptive survey design was adopted for the study. The population of the study comprised of the six hundred (600) small-scale business owners in Asaba, Delta State. The sample of the study was sixty (60) small-scale business owners in Asaba, Delta State drawn through simple random sampling technique to serve as the representative of the entire population. The instrument used for data collection is a structured questionnaire, titled: “cashless society: Challenges and Effects on small scale businesses: A study of Businesses in Asaba Urban.” To ensure the validity of the instrument, copies of the instrument was sent to experts in Business Education and Educational Measurement and Evaluation Departments of Federal College of Education (T) Asaba for face and content validation. The corrections and suggestions made by the experts reflected on the final copies of the instrument. The validated questionnaire was subjected to reliability test. Ten copies of the validated questionnaire were administered on ten (10) Onitsha North Local Government Area of Anambra State using split-half method. Data collected were analyze using Pearson Moment Correlation Coefficient to ascertain the level of correlation which yielded a correlation coefficient of 0.67, indicating that the instrument is reliable. Sixty (60) copies of the validated instrument were administered to the small scale business owners by the researcher with the help of 2 research assistants and 56 were retrieved and analyzed. The method used in analyzing the data collected is mean statistics. The bench mark was fixed at 2.50; therefore, items with mean value of 2.50 and above were considered as agreed while items with mean value less than 2.50 were considered as disagreed. Findings of the study revealed cashless society has negative effect on patronage, the effective management and productivity of small scale businesses in Asaba Urban. It was recommended among others that CBN should embark on intensive awareness campaign and sensitization of the populace including the educated and uneducated, the urban and the rural population, about the newly introduced cashless policy/society so as to enhance the patronage of small scale businesses.    

CHAPTER ONE

INTRODUCTION

Background to the Study

The rate of rapid development at global level has been so dynamic that it touches all aspects of human venture. Policymakers and development practitioners acknowledge the leading role of information and communication technologies (ICTs) for development. Today, the world is becoming a global village, given the growing complexity of business portfolios and expansion of business groups, and the increase in decentralization in response to these changes Over the course of history, different forms of payment systems have been in existence. Initially, trade by barter was common. However, the problems of barter such as the double coincidence of wants necessitated the introduction of various forms of money. Nevertheless, pundits have been predicting the complete demise of study instruments and the emergence of potentially superior substitute for cash or monetary exchanges, that is, “cashless society”.

A cashless society, according to Adewale (2019), simply illustrates a gradual or a radical movement of the entire payment system of an economy from the use of physical cash to a systemic adoption of other non physical cash mode of payments in settlements of all types of transactions, including all commercial, homes, personal, local and international trade both in public and private life within the economy. Cashless society simply implies that all means of payments are carried out without the use of physical cash (Obed, 2022). Payments will range from online transactions, mobile banking, debit and credit cards, cheques, and wire transfer etc. In other words, financial transactions can be carried out anywhere via the internet with the use of computers and mobile devices. It is the latest electronic banking innovation and a revolution changing the lives of millions across the globe. A cashless society is a situation where there is little or very low cash flow in a given society, thus all other purchases and transactions will be made via electronic channels. Akhalume (2022) pointed out that cashless society does not refer to an outright absence of cash transactions in the economic setting but one in which the amount of cash-based transactions are kept to the barest minimum.

Thus, cashless policy services have been gaining ground around the globe. This offers banking industry a new leading edge of opportunities and challenges in the global banking market. Hence, the success of cashless society services depends on the rate at which the new technology is adopted by the small and medium scale businesses. Consequently, the factors that affect the small and medium scale businesses will certainly be of concern to both bankers and policy makers (Shaukat and Zafarullah, 2022). The rapid changes in business operations in contemporary times in the form of technological improvement require banks in Nigeria to serve the small scale businesses. Cashless policy products are increasingly gaining ground as many small and medium scale businesses receive them as panacea to problems of poor service delivery that has been bedevilling many banks for a long time (Dogarawa, 2020).

A small scale enterprise is one that is independently owned and operated, and in which the owner is the sole decision maker and the overall boss (Onuoha, 2018). In general, a small scale enterprise is a business in which its owner influences the entire decision-making process and the business has relatively small market share and low capital requirement for its operation. A small scale enterprise has also been described as a small business in which the manager personally performs all the functions of management. Other authors see small scale enterprise as a manufacturing establishment employing less than ten (10) workers and having capital base not exceeding N2 Million Naira. The American small business Act of 1953 also advanced its own definition. The act defined a small scale enterprise as a business which is independently owned and operated and is not dominant in its field of operation (Nicholas, 2019). Small scale businesses are those businesses in which manufacturing, providing services, productions are done on a small scale or micro scale. Small scale businesses play an important role in social and economic development of Nigeria (Fabayo, 2022). These businesses do a one-time investment in machinery, plants, and businesses which could be on an ownership basis, hire purchase or lease basis. The small business sector is recognized as an integral component of economic development and a crucial element in the effort to lift countries out of poverty.  Small- Scale businesses are driving force for economic growth, job creation, and poverty reduction in developing countries. They have been the means through which accelerated economic growth and rapid industrialization have been achieved. Furthermore, small scale business has been recognized as a feeder service to large- scale businesses.   A small scale business is a business that is not large, in terms of its size, scope of operation, financial involvement and the workforce involved. Most small scale businesses are owned by one entrepreneur. Sometimes a small scale enterprise is said to be a firm that is independently owned and operated and which is not dominant in its field of operation. In general, we should recognize that a small scale business must have few employees, limited capital investment and small scale operation (Nicholas, 2019). As far as the development of the rural and urban areas in Nigeria is concerned, the role of small scale businesses cannot be under-estimated. The present administration realizes the importance of these small scale ventures hence the various policies being put in place to encourage their growth. The small scale businesses have the potentiality to reduce the rate of unemployment in Nigeria and thus to contribute to the Gross Domestic Product (GDP) and economic growth of the nation (Oshagbemi, 2018).

Recently in Nigeria, the Central Bank of Nigeria (CBN) introduced a policy requiring that all cash withdrawals and deposits be set at a daily limit of a maximum of one hundred and fifty thousand naira (N150,000) while pegging that of corporate entities at one million naira (N1,000,000) with penalty fees of one hundred naira (100) per extra one thousand (N1000) and two hundred naira (N200) per one thousand (N1000) on individual and corporate defaulters respectively (Reivent, 2023). This policy could be because of a lot of issues affecting the Nigerian financial system; from trying to check money laundry and illicit activity, inflation, cost of maintaining an economy predominately cash based, or just good old change which is one factor that’s always constant in life. This policy, has led to what is termed “cashless society”.

One of the most important of these services is cashless society (electronic services) which have contributed significantly to reduction in the distance between costumers and the banks (Kannabira & Narayan, 2020). Today’s banking situation demands continuous innovation in order to meet the yearnings and aspirations of the ever-demanding customers. Hence, banks need to roll out new products and services quickly and effectively, using latest cutting-edge technology. Cashless policy enables banks to improve their service delivery, decongest queues in the banking halls, enable customers withdraw cash 24/7, aid international payments and remittances, track personal banking transactions, request for online statements, or even transfer deposits to a third-party account. Those services will undoubtedly impact significantly on the overall performance of small and medium scale businesses. The small scale businesses on the other hand, stand to enjoy the benefit of quick service delivery, reduced frequency of going to banks physically and reduced cash handling, which will give rise to higher volume of turnover (Fagbuyi, 2023). However, these developments in the Nigerian banking industry seem not to have achieved their aims.

However, experts posit that the rate at which Nigerians accept the products is far below expectation. This, according to some research findings, is due to lack of awareness about the products, inadequate legal framework and low technology. Therefore, this study evaluated the examines cashless society: Challenges and Effects on small scale businesses: A study of Businesses in Asaba Urban.

Statement of the Problem

The recent evolution of technology for financial transactions poses interesting questions for policy makers and financial institutions regarding the suitability of current institutional arrangements and availability of instruments to guarantee financial stability, efficiency and effectiveness of monetary policy.

Despite the effort of banks to ensure that customers reap the benefits of e-banking, the bank is met with complaints from customers as regards, online theft and fraud, non-availability of financial services, payment of hidden cost of electronic banking like Short Message Services (SMS), for sending alert, mandatory acquisition of ATM cards, non-acceptability of Nigerian cards for international transaction, malfunctioning Automated Teller Machines (ATMs) and network downtime. Other problems observed that are associated with Nigerian’s cash-based economy, which include: delays in financial transactions which can be caused by queue in the bank or ATM to collect cash, lack of network which affect mobile banking and Web, banking Spread of bacteria through handling physical cash, high rate of crime, terrorism and corruption. Based on the foregoing, the study examines cashless society: Challenges and Effects on small scale businesses: A study of Businesses in Asaba Urban..

Purpose of the Study

The main purpose of this study is to examine cashless society: Challenges and Effects on small scale businesses: A study of Businesses in Asaba Urban. Specifically, the study seeks to ascertain the:

1. The effect of cashless society on patronage of small scale businesses in Asaba Urban.
2. The effect of effective management of small scale businesses in Asaba Urban.
3. The effect of cashless society on productivity of small scale businesses in Oshimili South Local Government Area of Delta State.

Research Questions

The following questions were raised to guide the study:

1. What are the effects of cashless society on patronage of small scale businesses in Asaba Urban?
2. What are the effects of effective management of small scale businesses in Asaba Urban?
3. What are the effects of cashless society on productivity of small scale businesses in Asaba Urban?

Significance of the Study

The study would be beneficial to students, small scale businesses, policy makers, researchers and the field of Business Education.

For Students, such a study can serve as an excellent educational tool, providing students with a real-world case study to understand the practical implications of financial technologies and economic trends on small businesses. It encourages critical thinking and analysis, allowing students to evaluate the advantages and disadvantages of cashless transactions for small businesses. Students studying business and economics can gain insights into emerging trends that may affect their future careers in finance, entrepreneurship, or policy-making.

For Small Scale Businesses, they would gain a better understanding of the challenges and opportunities associated with moving toward a cashless model. This knowledge can help them adapt their operations for increased competitiveness. Through the study, they would learn how to leverage cashless technologies can help small businesses improve operational efficiency, reduce cash handling costs, and streamline financial transactions. The study would reveal insights into customer preferences and spending habits, helping small businesses tailor their services to meet the demands of a cashless society.

For Policy Makers, they would use the findings to make informed decisions about the regulation of digital payment systems and financial inclusion for small businesses. Such research can provide data on the economic impact of a cashless society, influencing decisions regarding infrastructure development, incentives, and support for small businesses. Policymakers can implement consumer protection measures in light of cashless trends, safeguarding consumers and businesses against fraud and financial risks.

For Researchers, the study would expand the body of knowledge in the field of economics, business, and technology by providing data and insights into the impact of digital transformation on small businesses. The study can serve as a foundation for further research and exploration of related topics, leading to a deeper understanding of evolving economic systems. Researchers from various disciplines, including economics, technology, and social sciences, can collaborate on this multidisciplinary topic to gain a holistic understanding of the subject.

For the field of Business Education, the findings from such a study can inform the development of business education curricula, ensuring that students are prepared to face the challenges and opportunities of a cashless society. Real-world case studies derived from the research can be integrated into business courses, making education more relevant and practical. Business education programs can prepare future leaders to navigate the changing financial landscape and provide guidance to businesses on adopting cashless solutions.

Scope of the Study

This study focused on cashless study: Challenges and Effect on small scale businesses: A study of businesses in Asaba Urban). With particular emphasis on patronage, effective management and productivity as variables of interest. The respondents of the Study are small scale business owners in Asaba.

Pages:  57

Category: Project

Format:  Word & PDF               

Chapters: 1-5                                          

Source: Imsuinfo                            

Material contains Table of Content, Abstract and References.