Micro-Credit Access and Growth of Youth Owned Micro and Small Retail Enterprises in Tharaka Constituency, Kenya
Abstract
All over the world, lack of access to credit and its effect on growth is a crucial problem facing MSRE's. In Kenya, various studies have been conducted to show that access to finance has influenced youth-owned MSEs and SMEs' growth. In Tharaka Constituency, MSREs growth is fluctuating with many businesses collapsing within the first three months of operations with available information from youth office in the Sub County showing the collapse of business and failure to grow concerning profitability, stock levels, and levels of workers. The study's main objective was to assess the effect of micro-credit access on the youth-owned Micro and Small retail enterprises growth in Tharaka Constituency, Kenya. The specific objectives were to examine the impact of the availability of information on finance, determine the effect of interest rates and evaluate the impact of entrepreneurial education on the perfomance of youth-owned micro and small retail businesses in Tharaka Constituency. The research applied four theories to support the objectives which include, resource-based theory to support the dependent variable on growth, the perking order theory to support the effect of interest rates, signaling theory to support the availability of financial information, and decision usefulness theory to support the effect of entrepreneurial education on the growth of MSREs. A population of 240 young entrepreneurs yielded a sample size of 150 respondents and was used for this study. Data was collected through questionnaires.The research instruments' validity was done using piloting, while the research's reliability was done using Cronbach alpha. This study used purposive sampling in selecting enterprises from wards. Results show that most of the respondents did not keep proper financial records despite acknowledging their significance in accessing loans. A majority did not access loans, and most of them reported that interest rates were unfavorable. A limited proportion attended any entrepreneurial training. The analysis found a negative association between interest rates and the growth of MSRE's. The findings, however, found a strong positive correlation between the availability of financial info and the growth of MSREs. There was also a strong positive correlation between entrepreneurship education and the growth of MSREs. Lastly, there was a significant positive relationship between information availability and growth of MSREs, as shown by coefficient. The study recommends sharing entrepreneurship information, training of entrepreneurs, and revised interest rates to promote the performance of MSREs. This study recommends that the governments (county and national government) must design programs that will educate youths on requirements for accessing loans, sources of finance and the importance of preparation of financial statements to allow them access credit to grow their businesses. Trainings and workshops should be aimed to achieve financial literacy since a majority of young entrepreneurs were found to be literate. Banks should take upon themselves to conduct visits to small businesses, sensitizing them to secure loans and market products available to young entrepreneurs.
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