Islamic Banking and Growth of Women Owned Small-Scale Enterprises in Garissa County, Kenya

Abstract

The growth of women owned small-scale enterprises contributes to the economic development of Garissa County and by extension the entire economy at large. However, this growth could be compromised and lead to erratic growth due to harsh economic conditions such as stiff competition from established enterprises, tax policies and technological challenges. Hence, in view of this background, the study seeks to determine the effect of Islamic banking on growth of women owned small scale enterprises, to contribute more to the development of their country. The specific objectives were to establish the effect of Islamic banking networking, training, access to Islamic finance and Islamic bank’s business support on the growth of women owned enterprises in Garissa County, Kenya. This study was anchored on the micro credit theory, network theory, entrepreneurship theory and resource based theory. Descriptive research design was adopted for the study. The target population was 281 women owned small scale enterprises who own small businesses in Garissa County who had received Islamic financial services from Islamic banks. The scope of the study was 2016 – 2020. This study used stratified sampling to select 74 women owned small scale enterprises. Questionnaire was utilized for data collection. Questionnaires were self-administered where drop and pick later method was applied. Analysis of data was through both descriptive statistics and multiple regression analysis. Descriptive statistics constituted mean scores, percentages, frequency distributions and standard deviations. Inferential statistics entailed determining the strength and relationship of the study variables. The study findings were presented using tables, diagrams and graphs. The study observed ethical standard of informed consent, confidentiality and anonymity. The findings indicated that banking networking β1=0.568, p˂0.05, Training β2=0.091, p˂0.05, Islamic banking products β3=0.661, p˂0.05 and Islamic banking business support β4=0.336, p˂0.05 were statistically significant and they affected growth of SMEs owned by women in Garissa. From the model summary, it showed that Islamic banking accounted for 66.2% variation in growth. The study therefore recommends that Islamic banks should offer more non-borrowing services like cash management, payroll management, payments, collections, and trade finance solutions to support SMEs. They should also make sure that there are monitoring services by attaching a team leader from the institution to the SMEs for close monitoring.