Mobile Phones and Employment Among Informal Micro and Small Enterprises in Nairobi

Abstract

Lack of employment has pushed many people into self employment in the informal sector in Nairobi and Kenya at large. Micro and small enterprises (MSEs) are recognized by the government for their contribution to the GDP. Information and communication technologies (ICTs) are assisting the operators of MSEs in this sector to become more entrepreneurial. The ICT that is widely used in the sector is the mobile phone. Mobile phone usage has had a great impact on employment in the informal sector; however documentation of this influence is rare. The role of ICTs in the creation of jobs in the informal sector remains largely unexplored. This study analyzed the extent of mobile possession, and the impact of mobile phone usage on employment among MSEs in the informal sector in Nairobi. The hypothesis that was tested and strongly rejected was that, mobile phone usage has no effect on employment among MSEs within the informal sector. Data for the study was collected from the 8 divisions of Nairobi Province. A regression model was used in analyzing these data. The main findings of the study are as follows: a) the sector is dominated by literate people, the majority of whom were male operators; b) many of the operators had mobile phones, and they used them for business transactions; c) mobile phone possession and usage of the phone for business transactions increases employment in the informal sector. It was recommended that policies that encourage mobile phone innovations be developed so as to increase the number of employees in the sector. Literacy classes on mobile phone applications should be conducted so as to enlighten MSE operators in the informal sector on job opportunities.