Microfinance Interventions and Growth of Small-Scale Enterprises in Kiambu County, Kenya
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Date
2025-10
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Publisher
Kenyatta University
Abstract
This study sought to evaluate the influence of microfinance interventions on the expansion of small and medium-sized enterprises (SMEs) within Kiambu County, Kenya. The specific objective of the study were; to determine the effect of financing intervention on growth of small and medium enterprises in Kiambu county Kenya, to determine the effects of financial literacy education on growth of small and medium enterprises in Kiambu county Kenya, to evaluate the effect of managerial capacity building on growth of small and medium enterprises in Kiambu county and to assess the effect of market networking on growth of small and medium enterprises in Kiambu county Kenya. The research concentrated on four primary support mechanisms provided by microfinance institutions to SMEs: financial accessibility, enhancement of financial management capabilities, instruction in business administration, and connections to potential clientele. The study was anchored in the Pecking Order Theory, Network Theory, and Evolutionary Theory. A stratified random sampling approach was employed to select 398 SMEs, and data collection followed a descriptive research design. Participants included either proprietors or organizational managers. Quantitative data were analyzed through both descriptive and inferential statistical techniques, with regression analysis executed using SPSS software. Validity tests and diagnostic procedures, including normality, heteroscedasticity, and multicollinearity, were undertaken to guarantee the accuracy and reliability of the findings. The study was conducted while adhering to ethical principles and ensuring the confidentiality of the data. The results showed that financial initiatives contributed to increases in SME growth (p <0.05). Financial literacy positively influenced SME growth at a 95% confidence level (p < 0.05). The results showed that managerial capacity building had a positive influence on SME growth (p < 0.05). Engaging in market networking significantly contributed to the growth of SMEs (p = 0.027). The study concluded that microfinance institutions provide comprehensive support, expand outreach initiatives, improve networking opportunities, leverage technology, and work together with public and development partners to boost SME growth. The study therefore recommended that government officials and policymakers should collaborate with Microfinance institutions to design flexible loan products that suit the operational realities of the small businesses while minimizing the risk of default. It is also recommended that Microfinance institutions should strengthen their financial literacy programs while incorporating digital forms of education to equip small business owners with skills on how to manage loans and other investments effectively, and that the training should be practical and need-based, delivered in formats that accommodate varying literacy levels in both urban and rural establishments.
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfillment of the Requirements for the Award of Degree in Master of Business Adminstration (Finance Option) of Kenyatta University. October, 2025
Supervisor
Job Omagwa