Determinants of Acquisition of Financial Services by Micro and Small Enterprises in Langata Sub-County of Nairobi County, Kenya
Loading...
Date
2015
Authors
Ndede, Fredrick W. S.
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Globally Micro and Small Enterprises have been acknowledged as agents of economic development. They have been cited as being the seedbed to the medium and large enterprises. MSEs have been known for their crucial role in creation of employment, income generation and supplementing the provision for goods and services by large enterprises as well as eradication of poverty. The contribution of MSEs in the creation of wealth and support to the development and growth of medium and large scale enterprises has been enormous. In recognition of their contribution to development, several governmental and non-governmental agencies have been set up to support their activities. The failures of MSEs to recognize the important role played by external sources of finance usually pose a serious challenge to their functions. Since MSEs regularly suffer serious financial constraints, they are yet to realize their full potential as agents of economic growth. In Kenya for example, the failure rate of MSEs is still as high as 65 percent. The general objective of this study was to investigate the determinants of acquisition of financial services by MSEs in Langata Sub County of Nairobi County in Kenya. The specific objectives of the were to determine the relationship between legal and regulatory framework, level of education and entrepreneurial training, demographic factors as well as economic factors and acquisition of financial services by MSEs in Langata Sub County. The study design was descriptive with a target population consisting of 2,098 micro and small enterprises. A sample size of 250 businesses was determined through stratified random sampling technique by sector. Primary data on the selected businesses were collected using semi-structured questionnaires. The response rate was 231 firms representing 92.4 percent. Data was analysed using frequency distribution, chi-square tests, correlation analysis and multinomial regression analysis. The study found that there was a negative but significant relationship between legal and regulatory framework, level of education and entrepreneurial training and acquisition of financial services by MSEs. Demographic factors also had a negative but significant relationship with acquisition of financial services by MSEs in Langata. For practice the study recommended that: firstly, accessibility to financial services can be enhanced by financial intermediaries and the government by working on a framework that relaxes the complexities in loans acquisitions. Secondly the government should enhance entrepreneurship financial training, including cascading it through formal education system and thirdly, financial services providers should develop financial products that are inclusive enough to carter for the different demographic groups.
Description
Department of Accounting and Finance, 162p. 2015