Microfinance Practices and Growth of Small Enterprises in Busia County, Kenya
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Date
2024-11
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Publisher
Kenyatta University
Abstract
Small businesses have remained to be crucial to Kenya's economy. Promotion is an effective and dynamic method in Kenya for accomplishing national objectives like job creation, sustainable industry-wide development, and poverty reduction. All of them create the foundation for a domestic production system and national manufacturing base, both of which are essential to the government's goal of achieving industrialization. However, majority of the enterprises experience problems in firm growth. The main objective of this study was to establish the effect of microfinance practices on the firm growth of small enterprises in Busia County, Kenya. The specific objectives were: to examine the effect of management reorganization, investment, financial restructuring, and asset reduction on firm growth of small enterprises. Traditional capital structure theory, trade-off theory, and agency-cost theory served as the foundation for this study. Both descriptive and explanatory research designs were used. The target population was 220 employees of registered small businesses in Busia County. A census of every departmental employee was done due to the small number of employees. Data was collected using a structured questionnaire. The questionnaire was tested for validity and reliability. Content validity was ensured through expert review. Reliability of the questionnaire was checked using Cronbach alpha coefficients. Results indicated that all variables had Cronbach Coefficients above 0.7, thus the questionnaire was reliable. Descriptive and inferential statistics was used to analyse data. Descriptive statistics included mean and standard deviations. Inferential statistics included regression analysis. The findings showed that management reorganization, investment, financial restructuring, and asset reduction had a positive and significant effect on firm growth of small enterprises. The study concluded that management reorganization, investment, financial restructuring, and asset reduction contribute significantly to positive firm growth of small enterprises. The study recommended that small business owners implement mergers and acquisitions restructuring to improve management effectiveness and reduce operating costs, which will ultimately promote firm growth of small enterprises. Because investment choices have an impact on growth, the study advises small business owners to regularly assess their tactics. Further, small enterprises owners should modernize assets to enhance internal operation efficiency hence growth. However, small enterprises owners should not concentrate on disposal of assets since it plays no role on firm growth. The current study is beneficial to several groups including the government, non-governmental organizations, small enterprises’ owners, general public and other scholars.
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfillment of the Requirements for the Award of Degree of Masters of Business Administration (Entrepreneurship Option) of Kenyatta University, November, 2024
Supervisor:
1.Kipkorir Sitienei