Report: Construction sector leads in mobile money use
Real Estate
By
Graham Kajilwa
| Nov 14, 2024
Adoption of mobile money is highest in the construction industry, according to a new report that shows the low level of digitisation among informal sector businesses.
Research by the Kenya Institute for Public Policy Research and Analysis(Kippra) found that mobile money use in construction stands at 66.7 per cent, the highest across the six industries analysed in the informal sector.
These are agriculture, manufacturing, wholesale and retail, accommodation, transport and construction.
Mobile money was one of the tools the Kenya Economic Report 2024 used to analyse the level of digital penetration in informal sector businesses. Others are having an active website, using mobile for business, and official use of computers.
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While the construction industry leads in the use of mobile money, it lags in the use of active websites.
Official use of computers in the construction industry stands at 8.3 per cent, while mobile for business is at 77.8 per cent, the highest among the analysed informal sector industries.
The report does not explain why mobile money is highly preferred in construction. However, the sector is capital-intensive and largely cash-based due to the constant purchase of materials and paying workers their daily wages, which may explain why the use of mobile money is preferred.
Utilisation of mobile money platforms, the report explains, occurs when it is used to make digital transactions, payments and management of the business finances.
The report notes that digital technologies play a significant role in increasing productivity in the informal sector.
It notes that the diffusion of technologies is embraced differently in the informal sector, which is influenced by factors such as essential infrastructure, including electricity, internet, and fibre connectivity.
Others are communication channels used to share information about digitalisation and social systems that the firms find themselves in.
It adds that the informal sector’s level of digitisation is still low, and some of the establishments use digital tools such as computers and mobile for money and online platforms, including mobile money, computers, websites and business phones.
“Although the level of penetration of digital technologies is low, some sectors are already utilising technology to increase productivity. The use of mobile money was high in the construction sector at 66.7 per cent and lowest in agriculture at 32.8 per cent,” the report says.
It adds: “The use of mobile phones for business was high in construction at 77.8 per cent and agriculture at 36.6 per cent.”
Mobile phones for business refers to when the devices are used as a marketing medium, which is applicable to make sales, advertise or provide customer service.
Official use of computers was highest in accommodation at 11.7 per cent, while active website ownership was highest in accommodation at 3.6 per cent and lowest in the transportation sector at 2.0 per cent.
“Most informal sector enterprises and operators such as second-hand clothes dealers, hawkers, dressmakers, housekeepers, security, and carpenters use simple technologies and are yet to fully embrace digitalisation except for the use of mobile phones,” the report says.
Access to computer-based technologies where construction has the second highest score of 8.3 per cent remains low, which is attributed to the low level of digital skills among the informal sectors.
Technology use in the construction industry, the report notes, is through platforms such as the Ajira Digital Programme, where skilled workers are registered.
“One such application is Fundis (construction workers), which is a mobile application platform that enables businesses and homes to find and hire professionals for maintenance, repairs, large projects, and other construction services,” says the Kippra report.
The report adds that once those talented and have certifications in their fields are registered, they undergo theoretical, practical, and soft skills assessments before onboarding.
“This initiative has helped transform the sector by eliminating high risks of poor quality and projects left incomplete,” the report says.
Other onboarded professions in the platform include plumbing, masonry, carpentry, glasswork, welding, painting, tiling and electricians.
“The platform has already onboarded 300 fundis from 11 areas (Nakuru, Mombasa, Coastal regions, Machakos, Eldoret, Nyeri, Nairobi, and environs) and 83 fundis have earned digitised wages,” the report says.
Other professionals such as second-hand clothes dealers, dressmakers, and housekeepers advertise their products and services through online platforms such as Facebook, Instagram, and TikTok.
“That is why it is essential to ensure such businesses are connected to affordable infrastructure such as electricity and the internet,” the report adds.
According to the report, not seeing the need to adopt technology, the inapplicability and costs are the three main reasons why businesses in the informal sector do not adopt technology at 43.1, 34.5 and 14.3 per cent respectively.
Kippra says the high cost of digital tools such as basic phones and mobile data plans are often out of their reach, which limits the informal economy workforce’s ability to adopt new technology.
“Therefore, the informal sector workers end up sticking to manual processes instead of incorporating technology into their operations,” says Kippra.