Effect of Access to Credit on Growth of Small and Micro Enterprises in Kenya: Case of Boutiques in the Nairobi Central Business District

Abstract

The role of the financial sector in promoting economic growth is well acknowledged, dating back to early economists. As much as credit is essential in the growth of enterprises and on overall economies, the lack of access to credit has been widely regarded as a hindrance to such growth. Small and Micro Enterprises (SMEs) in Kenya have been boosted in accessing credit through government schemes as well as Micro Finance Institutions. This study seeks to analyze the effect of access to credit on the growth of SMEs. The researcher expects to investigate and explain the relationship between access to credit and the high entry into SME and specifically the boutique business. The study takes on a descriptive approach with its focus on boutique business in the rapidly growing Nairobi Central Business District. Data collection is undertaken by use of questionnaires administered to a sample consisting of business owners and sales people. Data collected was analyzed through the use of SPSS analytical tool and tables with inferential statistics created to answer the aims and objectives of the study. The findings and conclusions of this study indicated that for businesses to grow there has to be a level of accessed credit as shown by the significant relationship of between access to credit and level of funds and financial management skills hence leading the researcher to conclude that an increase in access to credit leads to growth of SMEs funds and financial management skills while the same relationship exists between access to credit on level of stocks and impact on human resources. The researcher recommends the uptake of credit for small businesses wishing to grow their stocks, level funds and improving their human resource in terms capabilities in terms of numbers, experience and remuneration.