Factors that Influence the Growth of Micro and Small Enterprises in Nairobi Central Business District

Abstract

The study was an attempt to investigate the factors that influence the success of micro and smal1 enterprises in Kenya. The objectives of the study were to determine the characteristics of entrepreneurs and firms which contribute to the growth of micro and small enterprises in Kenya, assess how social networks and value chains affect the growth of micro and small enterprises in Kenya, and establish the role played by inter firm co-operation and government policies such as taxation and infrastructure development on the growth the success of MSEs in Kenya. The study methodology was descriptive survey; the location of the study was the Nairobi Business District with the target population being micro and small enterprises. Using a multi-stage stratified random sampling a sample size of 97 MSE enterprises which is 10 percent of the approximately 970 MSE enterprises in Nairobi, Central Business District was arrived at. The researcher used a questionnaire as the main data collection instrument. Descriptive statistics was used to analyze data with the assistance of the SPSS software. The expected output was in the form of tables of frequencies and percentages and statistical charts such as pie charts and bar graphs. The study findings indicate that the locals are of the opinion that although the government and agencies including the local authority had done a lot in the area of provision of business friendly environment there was still a high number of discrepancies which led to many enterprises to operate informally. The size of capital and the type of business may contribute to the growth of small and micro enterprises. It was also revealed that access to finance and the type of capital influence MSE's growth in the town. The connectivity of the business and the chain that it has influences its growth. Social network is important in business and from the study, information is important to business in overcoming contract enforcement and overcoming transaction costs. Family and friends network help in business. The contextual factors influencing the MSEs are like good infrastructure in the region and the government support in things such as licenses for business. The researcher recommends the establishment of an effective process to ensure issues like company registration and a well-entrenched VAT system are institutionalized to assist existing and upcoming MSE operate optimally. The government can follow this lead and continue improving and expanding the available infrastructure so as to fully support most small scale enterprises. The study indicated that access to loans by small and medium size enterprises was still very limited as such it is upon the government and its agencies to fine-tune working modalities that will ensure that even MSEs have adequate access to credit instruments just like their bigger counterparts.