Credit union financial services and growth of teachers’ owned small and medium enterprises in Kakamega County,Kenya
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Date
2018
Authors
Okello, Emmanuel Otieno
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Small and Medium enterprises contribution to the Kenyan economy is widely acknowledged,
they cut across all sectors of the economy and provide many employment opportunities and
generate widespread economic benefits. SMEs face a mixture of success and failure with
past statistics indicating that three out five fail to grow within the first few months of
operation. The growth of teachers’ owned SMEs in Kakamega had been 11.5% for the past five
years. None of the recent academic studies had looked at the effect of Credit Union financial
services offered by IG SACCO Society limited on growth of teachers’ owned SMEs in
Kakamega Central sub-county, Kakamega County. This study sought to establish the effects of
Credit Union financial services on growth of teachers’ owned SMEs in Kakamega Central subcounty,
Kakamega County. The main Sacco in which teachers in Kakamega County belongs to is
IG Sacco Society Limited. Therefore the scope of the research project was limited to IG Sacco
Society limited which most of its’ members are teachers. It is more of teacher-based Sacco since
most of its membership is composed of teachers employed by Teachers Service Commission. IG
Sacco Society Limited provides both BOSA and FOSA activities. The general objective of
research project was to investigate the effect of Credit Union financial services offered by IG
Sacco Society Limited on growth of teachers’ owned SMEs in Kakamega Central sub-county.
The specific objectives were to determine the extent to which savings schemes, business loans,
credit schemes and ATM services offered by IG Sacco Society Limited influences growth of
teachers’ owned SMEs. Conceptual framework was to guide the study by illustrating how the
variables are interrelated. The study was limited to teachers’ owned SMEs in Kakamega Central
sub-county only. The study design was descriptive with a target population consisting of 500
teachers’ owned SMEs. A sample size of 148 SMEs was determined through stratified random
sampling technique by wards representing 29.6% of the target population. The primary
quantitative data on the selected SMEs were collected using semi-structured questionnaires. The
response rate was 110 SMEs representing 74.32%. The source of data included both primary and
secondary sources. Data analysis was done using both descriptive and inferential statistics. Data
was analyzed using frequency distribution, pie-charts and histograms and multiple regression
analysis. Specifically, multiple linear regression analysis was used with the aid of statistical
package for social sciences computer software package (SPSS) version 21.0. The study
concluded from the results of regression analysis that only two predictor variables except
Savings schemes and ATM services (p= 0.071 and p=0.791) respectively produced statistically
significant results i.e. p< 0.05 (Business loans (p= 0.000) and Credit schemes (p= 0.000). All the
predictor variables are also positively related to the growth of teachers owned SMEs. For further
practice, the study recommends the following: firstly, accessibility to credit schemes facilities
can be enhance by SASRA collaborating with SACCOs to come up with friendly policies and
procedures to prevent barriers that inhibit potential owners of SMEs from accessing credit
schemes facilities from SACCOs. Secondly the study also recommends that the government to
collaborate with SACCOs in working out on a policies that relaxes the complexities in
acquisitions of business loans. This will ease the conditionality’s in loans acquisitions by SMEs.
Description
A research project submitted to the school of business in partial fulfillment of the requirement for the award of the degree of master of business administration (finance option) of Kenyatta University. July, 2018