Microfinance Services and Performance of Women Owned Small Scale Business Enterprises in Nairobi City County, Kenya
Amran, Caroline Ngina
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Small scale and Medium owned Enterprises is an important sub sector for the Kenyan economy like many other developing countries since it employs about 85% of the Kenyan workforce (about 7.5million Kenyans of the current total employment). The current constitutional framework and the new Micro and Small Enterprise Act 2012 provide a new window of opportunity through which the evolution of SMEs can be realized through the devolution framework. However, the impact of devolution on SMEs development depends on the architecture of the regulatory and institutional framework inclined to support SMEs in an economy. Lack of access to credit is a major constraint inhibiting the growth of SMEs sector. The issues and problems limiting SMEs acquisition of financial services include lack of tangible security coupled with inappropriate legal and regulatory framework that does not recognize innovative strategies for lending to SMEs. The study sought to establish the influence of microfinance services on the financial performance of women owned SMEs in Nairobi City County, Kenya. The specific objectives were; to determine the effect of financial accessibility, savings mobilization, financial knowledge and lending rates on performance of SMEs in Nairobi City County. The study was anchored on the following three theories which included women empowerment theory, game theory of microfinance and microfinance theory. Empirical literature reviewed scholarly studies on financial accessibility, savings mobilization, financial knowledge and lending rates and their influence on financial performance of SMEs. The study used a descriptive research design. The population of study was women owned enterprises in the 17 sub-counties in Nairobi City County that were operational. This consisted of 524 respondents who were the proprietors of the enterprises. A sample of 157 respondents was taken which formed 30% of the target population. The primary data was collected by use of self-administered semi-structured questionnaire. Data analysis was done by use of descriptive statistics such as frequencies, percentages, mean scores and standard deviation with the aid of SPSS and presented through tables, charts, graphs, frequencies and percentages. The study established that financial accessibility, savings mobilization and financial knowledge positively and significantly influence the performance of small scale enterprises while lending rates negatively affected their performance. The study further concludes that financial knowledge was offered to a limited extent to the small scale enterprises in Nairobi County with most of them not being aware of the trainings. It was concluded on the other hand that lending rates had in inverse relationship with the performance of the women owned small scale enterprises in Nairobi City. The study recommends that the MFIs in Nairobi City County need to create awareness among the business owners especially the small scale cadre to enable them access the credit facilities. The study recommends that the MFIs need to reduce lending rates and make them affordable and flexible hence making credit friendly and attractive to the enterprises. The study recommends that the small scale enterprises in the area of study need to embrace a diligent savings plan and scheme to enable them improve their creditworthiness and seed capital.