Formal credit financing for small scale enterprises in Kenya: a case study of NGOs and small scale women entrepreneurs in the garment manufacturing sector of the textile industry in Nairobi and Nyeri from 1955 to 1996
Wanjiru, Macharia Lilian
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The small-scale enterprises contribution to the growth of the national economy continues to assume increasing importance especially in job-creation and mobilisation of savings. The sector is encumbered by many problems chief among them being financing. Various organisations have stepped in to try and alleviate this problem. It is in this light that this study was carried out to try and throw some light on factors that inhibit credit availability to women in the small-scale enterprises. Specifically, this research sought to analyse how education, marital status family size, income and starting up capital affect credit availability among the small-scale women entrepreneurs on the garment manufacturing industry. The study established that education, income and family size are positively related to credit availability. Marital status was found to negatively affect credit availability though the relationship is very small. It also had a bearing on the likelihood of the entrepreneur to use credit. Start-up capital had a small but positive effect on credit availability. Other findings include the fact that most irregular cash flows coupled with lack of awareness of existing credit schemes were major inhibitors of credit availability to the entrepreneurs. Other factors cited though in relatively few cases include high interest rates, high minimum deposit requirements and lengthy loan procedures. In the light of the research findings, it was suggested that the entrepreneurs be given business counseling and training where they are found to lack sufficient skills e.g. to cope with sales fluctuations and other business problems. The business counseling and training could be offered as part of the pre-loan education programmes or separately at a small fee. It was also suggested that the micro-financing institutions intensify their publicity campaign to increase the awareness of their programmes and their benefits to the entrepreneurs, especially to the newcomers in the small scale enterprises sector.