An Analysis of Management Constrains Affecting Performance OfMicro and Small Enterprises SMEs in Kenya
Micro and Small Enterprises (MSE's) playa very critical role in the growth and development of the Kenyan economy. The sector has increasingly assumed importance especially in the areas of job creation, ready availability of commodities, utilization of idle savings, and poverty reduction and eradication among others. However the sector has been faced with many constraints such as poor management practices, insecurity, lack of access to credit, bad marketing practices, competition, technological changes and globalization, among others. King (2002) states that there are a good number of surveys of MSE 's in Kenya which have been concerned with identifying what might be called 'obstacles to growth' illustrating factors such as security, working capital, access to credit, business training and higher technical skills. The purpose of the study was to explore management constraints faced by the MSE sector in Kenya and analyze how constraints relating to management functions of Planning, Organizing, Staffing, Directing and Controlling impact on the performance of MES's in Kenya. Stratified and Simple Random sampling techniques were used to select 75 Cyber Cafes from the study population of 574 businesses within the Nairobi's Central Business District. Structured questionnaires were used as instruments of data collection and were administered to managers/owners of the businesses. Data was analyzed and conclusions drawn. Based on the results of the study, appropriate recommendations are made to put a case for adoption of sound management practices in MSE's to enhance their performance. The study findings revealed that majority of the MSE's do practice, to a large extent, these management functions of Planning, Organizing, Staffing, Directing and Controlling, in their daily operations. However, most managers of the enterprises lack managerial skills and experience needed to run the enterprises efficiently. Majority of them were found to be very young and lack the necessary experience. The turnover rate of managers was also found to be quite high resulting in lack of continuity in the management of the enterprises. In terms of performance of the businesses, it wasfound that majority of the businesses were at the lower end of micro enterprises in terms of number of employees, daily revenues, assets, profits and competitiveness. Most of the enterprises, in their own assessment, indicated that the businesses were performing only fairly but it was not clear which indicators they used to gauge business performance. It appears therefore that lack of managerial skills and inexperience was responsible for their inability to assess business performance accurately.