Financial Inclusion and Access to Credit among Women-Owned Small and Medium Enterprises in Nakuru County, Kenya
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Date
2025-12
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Kenyatta University
Abstract
County governments in Kenya are mandated to promote entrepreneurship, strengthen financial systems, and support inclusive economic growth through devolved functions. Central to this mandate is improving access to credit for small and medium enterprises (SMEs), which constitute a backbone of local economies. In Kenya, women-owned SMEs continue to face difficulties in obtaining affordable and sustainable credit, with Nakuru County being no exception. This study examined the effect of financial inclusion on access to credit among women-owned SMEs in Nakuru County, focusing on four key dimensions: availability of financial services, financial literacy, proximity to financial institutions, and digital financial platforms. The study covered the period 2020–2024 and was anchored on the Financial Intermediation Theory, Resource-Based View Theory, Credit Rationing Theory, Technology Acceptance Model, and Pecking Order Theory of Finance. A descriptive research design was adopted, targeting 1,214 registered women-owned SMEs in Nakuru County, from which a sample of 301 firms was selected using simple random sampling. The units of observation were women entrepreneurs actively managing these enterprises. Both primary and secondary data were utilized. Primary data were collected using structured questionnaires, while secondary data were obtained from county government reports, institutional publications, and financial surveys. A pilot study was conducted among 10 SMEs in Nakuru Town to pretest the research instruments. Reliability was assessed through Cronbach’s Alpha Coefficient, while validity was established through content and criterion evaluation. Diagnostic tests including normality, multicollinearity, heteroscedasticity, linearity, and stationarity were carried out to ensure robustness of the regression model. Data were analyzed using SPSS, applying both descriptive statistics (means, standard deviations, and frequencies) and inferential techniques (Pearson’s correlation and multiple regression analysis). The regression analysis revealed that availability of financial services (p < 0.05) and financial literacy (p < 0.05) had statistically significant positive effects on access to credit, showing that reliable and affordable financial services, combined with entrepreneurial knowledge, improve borrowing outcomes. Proximity to financial institutions was negatively related but significant (p < 0.05), indicating that physical distance and high transaction costs constrained women’s ability to secure loans. Digital financial platforms exhibited a positive and significant effect (p < 0.05), demonstrating that mobile banking, digital credit, and online transactions reduced barriers to credit access. The study concludes that while improvements in service availability, financial literacy, and digital adoption enhance women entrepreneurs’ borrowing capacity, challenges related to geographical proximity continue to limit inclusivity. It is recommended that financial institutions and policymakers expand outreach programs, embed literacy training within SME support schemes, leverage digital platforms for inclusive credit scoring, and reduce spatial and cost-related barriers through agency banking and fintech partnerships. The study also calls on county governments, regulators, and development partners to implement gender-responsive financial frameworks tailored to women-owned SMEs. Ethical principles including informed consent, confidentiality, and voluntary participation were fully observed throughout the study.
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfillment of the Requirement for the Award of the Degree of Master of Business Administration (Finance Option) of Kenyatta University, December 2025.
Supervisor/s
1. Dr. Francis Gitagia