Credit, Entrepreneurship Training and Performance of Micro and Small Enterprises in Nakuru County, Kenya
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Date
2020
Authors
Mwangi, Rahab Wanjiru
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Micro and Small enterprises are widely recognised for their role in industrialization and
economic growth across the globe. In Kenya, the government has initiated a number of
strategies aimed at promoting small-scale enterprises notably the Uwezo and Women
Enterprise Fund. Despite many initiatives by the government and other organisations,
research has revealed that 60 percent of small enterprises fail within three years of being in
operation, their ability to survive the market conditions being very low. Research has also
shown that a large number of small enterprises experience growth challenges and
limitations with a majority closing down. MSEs face numerous challenges, notably, limited
access to credit, lack of entrepreneurship skills, low uptake of new technologies, and gender
of the entrepreneur, among others. This study was carried out in Nakuru County to
determine the effect of credit accessibility and entrepreneurial training on the performance
of MSEs. The objectives of the study were to determine the effect of credit availability on
the performance of Micro and small enterprises, and secondly, to examine the effect of
entrepreneurship training on the performance of micro and small enterprises in Nakuru
County. This research used a non-experimental research design. The empirical model was
based on Cobb-Douglas equation to estimate the relationship between credit,
entrepreneurship training and output as factors of production. A linearized logarithmic
regression model was applied to determine the effect of each of the two variables on MSEs’
performance. A sample of 248 MSEs from a target population of 118,200 in Nakuru
County was selected and a self-administered questionnaire administered to the
entrepreneurs. Reliability of the questionnaire was determined using Cronbach alpha and
found to be 0.72. Collected data was analysed using STATA data analysis programme and
diagnostic tests carried out to test for Multi-collinearity and Normality. Some moderator
variables such as age, gender, level of education and number of years of operation were
analysed and descriptive statistics used to illustrate their individual effect on the
performance of the enterprise. Data analysis results showed that both access to credit and
entrepreneurship training have a positive significant effect on the performance of MSEs in
Nakuru County. Therefore, the government and other stakeholders should aim at availing
both affordable and accessible credit, as well as entrepreneurship training targeted at small
and micro entrepreneurs. The Central bank, in collaboration with commercial banks,
should loosen their borrowing terms by lowering their collateral requirements and interest
rates on loans to micro and small enterprises. The mobile banking industry should be
regulated to cap the interest rates levied on loans and also to increase the amount that can
be loaned out. The government should further initiate training programs geared towards
imparting entrepreneurship skills on the MSE population.
Description
A Research Project submitted to the Department of Economic Theory, in the School
of Economics in partial fulfilment of the requirements for the award of the degree of
Master of Economics (Policy and Management) of Kenyatta University.
Keywords
Credit, Entrepreneurship Training, Micro and Small Enterprises, Nakuru County, Kenya