Financial Services Access and Growth of Small and Medium Enterprises in Mombasa City, Kenya
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Date
2023-06
Authors
Haron, Cheror Cheruiyot
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Small scale and medium businesses contribute immensely towards the GDP of any nation. They account for large percentage of the jobs in many countries. The attainment of Kenyan vision 2030 which is a blue print for achievement of industrialized nation, is slowly being achieved thanks to SMEs. However, these group of businesses have been facing stagnation on their revenues and size. Many of them had their diversification ambitions crushed and high mortality rate within three years of inception. Those that falls out of going concern category liquidate their assets without starting a new venture. This trend too affected Mombasa City with high number of SMEs collapse in financial year 2018/2019.The study sought to find out if a change in financial services access brings out a shift in growth of SMEs in Mombasa city. It analyzed specific objectives as; lending services, digital banking, bancassurance services, business training and financial saving on how they relate with the growth of SMEs. The findings from this study are of importance to both county and national governments in policy formulation, with a view to boosting SMEs growth. Furthermore, financial institutions being the primary source of the financial services, can obtain benchmarking concepts to improve their relationship with SMEs for mutual benefit. The study adopted a descriptive study with the researcher attempting to study the subjects in their natural settings. Primary data was obtained from a sample of 345 enterprises extracted from a population of 34,501 licensed SMEs in the financial year 2020/2021,in Mombasa City. This was through random sampling, as only those who had been in existence from the financial year 2016/2017 were sampled, putting the period scope of the research at five years. The researcher used both open and closed ended questionnaires. These questionnaires were dropped at SMEs premises and others sent through their official email address. There were 211 questionnaires answered and revered back representing 61.1% response rate. The coefficients of four variables were positive as per the regression analysis. However financial saving had a negative coefficient that was not statistically significant (β=0.17, p=0.334). This implies that financial saving relates negatively with the growth of SMEs in Mombasa City. The R Square adjusted of the study was 0.536.This implies that all the dependent variables can explain 53.6% of the total change in the growth of SMEs in Mombasa City when all factors are kept constant. The study recommends financial institutions to facilitate good working relationship between their credit departments with SMEs. This will boost uptake of credit services for realization of growth among SMEs Insurance institutions to coordinate their partnership with banks to be able to accelerate uptake of bancassurance services. Governments to establish incentives on ICT firms that innovate products targeting financial services access and SMEs operations integrations. Furthermore, the county governments should fund trainings conducted by financial institutions to encourage them conduct frequent seminars and workshops with SMEs owners and managers. This will boost their knowledge base that will ultimately assist them in running their businesses efficiently and effectively.
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfilment of the Requirement for Award of Degree of Master in Business Administration (Finance) of Kenyatta University
Keywords
Financial services, Growth of small and medium enterprises, Mombasa city, Kenya