Effect of credit available to Micro and Small enterprises on business performance. The case of Kitale town
This research study examined the effect of credit available to MSEs from diverse sources on their business performance in Kitale town. The MSEs contribution to the growth of the national economy continue to assume increasing significance especially in job creation and mobilization of savings for poverty alleviation . These enterprises are created to fulfill the primary needs of man and are formed under conditions of risk and considerable uncertainty .This sector is encumbered by many problems chief among them being financing. A number of organizations have stepped in to finance their operations and solve this problem and promote their business performance. Its in light of this that this study was carried out with the objective of conducting a study to determine the effect of credit available to MSEs on business performance in Kitale town. More specifically this research sought to establish the effect of credit on improvement of profits, savings, kinds of assets acquired, market share served, stock levels held in the business, number of employees added in business. It also sought to establish the personal characteristics of entrepreneurs those of MSEs that influence their business performance. From relevant and current literature reviews conducted by the researcher, the independent variable considered in this study was the provision of credit while the dependent variable was performance. The intervening variables considered included the characteristics of entrepreneurs like the business management skills, technical training, gender and expenditure of credit and the characteristics of the MSEs like amount of credit given .cost of credit, type of business conducted, size of business and expenses of operating the business. The measures of performance considered included profits realized, employment provided, amount of savings, assets acquired, market share and stock levels held due to access to credit. This study was set to fill the gap that had been left by past studies and economic surveys which have over emphasized on availing of credit to MSEs as the solution of their problems, other studies had recommended a replica of their research to be conducted elsewhere. This study was important because the findings will provoke interest and encourage various stake holders to provide an enabling environment for the growth of the sector. Primary data collection utilized interview and questionnaire to capture required data from respondents while secondary data was collected from relevant literature's to capture the intended information .The questionnaires were open- ended . The target population was a researchers prepared list of 465 MSEs who have been receiving credit from diverse sources and have kept records for their business performances .Cluster sampling was used to get the population of study from 4 ( four) different markets, but because the number was fairy latge 30% of the MSEs from each market was used in the study giving a total of 140 MSEs to be used in the study ,then random sampling by use of random number tables was used. After conducting data collection, the researcher received 120 complete responses showing a response rate of 86% which was adequate number. This was a descriptive research project which used the statistical package for social sciences (SPSS) as a tool to analyze descriptive statistics. A database was created and data entered in a way that allowed computation of basic characteristics such as tabulations to show frequencies and percentages of responses to questions. The results of descriptive statistics was presented by use of tables and pie charts. The researcher calls for a repeat of the research study in the same area with the objective of establishing factors hindering most of the MSEs who receive credit but don't keep records of their performances.