o '-JVV \ EFFECTS OF TRAINING ON WOMEN-RUN MICRO AND SMALL K'JTERPRISES [N J(AWANGW ARE DIVISION, NAIROBI COUNTY SOPHIA A RESEARCH PROJECT SUBMITTED TO THE SCHOOL OF HUMANITIES & SOCIAL SCIENCES IN PARTIAL FULFILMENT OF REQUIREMENT FOR AWARD OF DEGREE OF MASTERS OF ARTS IN GENDER & DEVELOPMENT STUDIES OF KENYATTA UNIVERSITY. MAY 2013 Njoki, Sophia Effects of training on women-run micro and 11111111111111111111111111111111111111111111111111111111111111111 2013/432302 DECLARATION This research project is my original work and has not been presented for a degree in any other university. Date .. ht.).,J :-!.!"f. ~ .. 1.?::::)3 Sophia Njoki This research projectbeen submitted for examination with our approval as university supervisors. Signature .~...::J Prof. Catherine Ndungo Date .. !t:(..k.I.~.~3... SigUatJJ.r~ . Dr. Grace Wamue - Ngare DEDICATION This research project is dedicated to my late father Michael Njenga who worked tirelessly to educate but never lived to see me climb the educational ladder. ACKNOWLEDGEMENTS I would like to thank the Almighty God for bringing me this far. I am sincerely grateful to a number of people who offered me invaluable support without which this project could not have been produced. Specifically, I wish to thank my supervisors Dr. Grace Wamae - Ngare and Prof. Catherine Ndungo for their tireless efforts in supervision and technical support from the inception of this work. In special way, I wish to register my appreciation to my mother, Virginia Njenga and the entire Njenga's family for their prayers and moral support during the entire period. Special mention to my nephew Michael Medad who deserves gratitude for typing the work dutifully. I am also thankful to Elizabeth my friend who kept on encouraging me to go on. Indeed am grateful to you all. I wish you all Gods blessings. Above all to God be the glory and honour. TABLE OI~'CONTENTS Content Page Title Page . DECLARATION . DEDICATION . ACKNOWLEDGEMENTS . TABLE OF CONTENTS i Table , vi LIST OF FIGURES vii ABSTRACT viii ABBREVIATIONS AND ACRONYMS ix OPERATIONAL DEFINITION OF TERMS x CHAPTER ONE 1 INTRODUCTION 1 1.1 Background to the Study 1 1.2 Statement of the Problem 4 1.3 Research Questions 5 1.4 Objectives of the Study 5 1.5 Research Premises ,. 6 1.6 Significance of the Study 6 1.7 Scope and Limitations of the Study 7 CHAPTER TWO 8 LITERATURE REVIEW AND THEORE,TICAL FRAMEWORK 8 2.1 Introduction 8 2.2 Nature of Training Offered to Women running MSEs 8 2.2.1 Financial Management Skills 12 2.2.4 Resilience in Doing Business 15 2.2.5 Market Information 16 2.3 Effects of Training Women who Run MSEs 17 2.4 Gender related Challenges that Hamper Women-run MSEs 22 2.5 Theoretical Framework 32 CHAPTER THREE 36 RESEARCH METHODOLOGY 36 3.1 Introduction 36 3.1 Location of the Study 36· 3.2 Study Design 37 .3.3 Target Population 38 3.4 Sample and sampling 38 3.5 Research Instruments 39 3.5.1 Questionnaire for Woman Running MSEs 39 3.5.1 Interview Guide for MFI Trainers 40 3.5.1 Instrument Reliability 40 3.5.2 Instrument Validity 41 11 3.6 Data Collection Procedure 41 3.8 Data Analysis and Presentation 42 3.9 Ethical Considerations 42 CHAPTER FOUR 44 DATA ANALYSIS AND INTERPRETATION 44 4.1 Introduction 44 4.2 Instrument Return Rate 44 4.3 Respondents' Demographic Information 45 4.3.1 Age of Respondents 45 4.3.2 Education of Respondents 46 4.3.3 Respondents' Marital Status 47 4.3.4 Number of Children/Dependants 48 4.3.5 Types of Businesses 50 4.3.6 Persons Managing Businesses Sl 4.3.7 Length of Experience in Running Businesses 53 4.3.8 Reasons for Starting Businesses 54 4.4 Nature of Training offered to Women Running MSEs 55 4.4.1 Areas of Training and Quality 55 4.4.2 The Duration of Training 57 4.4.3 Reasons for Participating in Training ., 58 4.5 The Effect of Entrepreneurship Training on Women-run MSEs 59 4.5.1 Acquired skills that trained women have applied in Business 60 III 4.5.2 Impact of Training on Businesses 61 4.5.3 Areas of Improvement in Businesses 62 4.5.4 Rating of the Effectiveness of Training 64 4.6 Gender-Related Challenges 66 4.6.2 Challenges faced by Women Entrepreneurs .,. 66 4.6.3 Whether Challenges are Gender-based 69 4.6.4 Factors Contributing to Gender-based Challenges 70 4.6.6 Gender-based Challenges facing Women Entrepreneurs 72 CHAPTER FIVE 75 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 75 5.1 Introduction 75 5.2 Summary of the Findings 75 5.3 Conclusion 76 5.4 Recommendations of the Study 00 ••••••••••• 77 5.5 Suggestion for Further Research 79 REFERENCES , 80 APPF~NDICES 87 APPENDIX I 87 WORK PLAN AND TIME SCHEDULE 87 APPENDIX II _ 88 BUDGET PLAN 88 APPENDIX III 89 IV QUESTIONNAIRE 89 APPENDIX IV 95 INTERVIEW GUIDE FOR MFIS MANAGERS 95 APPENDIX V 96 SUCCESS STORIES OF RESPONDENT 96 v Table Table Page Table 3.1: Population Under study: Consistent Women who Received Credit and Training Between 2004-2010 38 Table 3.2: Summary of the Sample Size 39 Table 4.1: Age of Respondents 45 Table 4.2: Reasons for Starting Businesses 54 Table 4.3: Reasons for Participating in Training 56 Table 4.4: Women's Levels of Knowledge on Areas of Training 58 Table 4.5: Reasons for Participating in Training 59§. Table 4.6: Areas ofImprovement in Businesses 63 Table 4.7: Challenges faced by Women Entrepreneurs 67 Table 4.8: Reasons which Women face these Challenges 73 VI LIST OF FIGURES Figure Page Figure 1.1: Conceptual Framework 34 Figure 3.1: Map of Kawangware Division 37 Figure 4.1: Highest Education Level 46 Figure 4.2: Marital Status 47 Figure 4.3: Number of Children/Dependants 49 Figure 4.4: Types of Businesses 50 Figure 4.5: Persons Managing Businesses 52 Figure 4.6: Length of Time Respondents have Run Current Businesses 53 Figure 4.7: Impact of Training on Businesses 61 Figure 4.8: Rating of the Effectiveness of Training 64 Figure 4.9: Whether Challenges are Gender-based 70 Figure 4.10: Sources of Gender-based Challenges 71 Vll ABSTRACT The study examined effects of training on women-run micro and small enterprises in Kawangware Division, Nairobi County. The study was guided by Bishop (1994) theory of training through empowerment based on the human capital theory the study objectives included establishing the nature of training offered to women who runs MSEs, the effects of training on women-run MSEs, gender related challenges that hamper the growth of women-run MSEs, and responsive strategies for training of women. The study adopted a descriptive survey design and targeted four women groups trained by four MFIs that operate in the area. The study used questionnaires and in-depth interview schedules as data collection instruments. The data was classified into different categories through coding and tabulation where descriptive statistics such as frequency distribution tables and percentages were used to present quantitative data. The qualitative data was presented thematically. As a result of training women-run businesses had become more profitable, had increased sales, became easier to manage and had more customers. In regard to gender-related challenges facing women-owned MSEs, the results revealed that most women entrepreneurs lack business management skills, capital as a result of gender roles. The study recommended that married women should be given support by their spouses in respect of finances, motivational encouragement, advice and actual involvement in the running of business. Access to credit by women entrepreneurs at the level of micro and small-scale enterprises, should be facilitated through innovative programs and financing arrangements that go beyond the conventional approaches; which require collateral and capital among other conditional ties. A major goal should be to promote the social and economic empowerment of women, as they constitute a vulnerable social category that is critical in sustainable development endeavours. Given that the study was confined to women running MSEs in Kawangware Division in Nairobi County, it is recommended similar studies be replicated targeting men and the youth entrepreneurs, to assess ways in which training influence their MSEs. VUJ A MAP CCN GOK GOMED ILO K-REP MFI MSE NGO PSF SSA SWOT UNESCO UNIDO USAID ABBREVIATIONS AND ACRONYMS Accelerated micro-enterprise advancement project City Council.of Nairobi Government of Kenya Growth Oriented Micro-enterprise development programme International Labour Organization Kenya Rural Enterprise Program Micro Finance Institution Micro and Small Enterprises Non-governmental organization Private sector federation Social Security Administration Strengths Weaknesses Opportunities and Threats United Nations Educational Scientific Cultural Organization United Nation Industry Development Organization United States Agency for International Development IX OPERATIONAL DEFINITION OF TER1WS Micro and Small Enterprises: Those businesses engaged 111 income generating activities and whose total employment is 20 people or less. Micro Finance Institutions: Financial institutions dedicated to assisting small enterprises, the poor, and households who have no access to the more institutionalized financial system, in mobilizing savings, and obtaining access to financial services. Performance: Growth in terms of sales, profit and increase in number of employees. Women-run: Business done by women x CHAPTER ONE INTRODUCTION 1.1 Background to the Study Many countries have increasingly recognized that advancing the socio-economic status of women is no longer a debatable issue but a subject that must continuously be pursued. Fostering women's entrepreneurship development is crucial for the achievement of broader development objectives, including poverty reduction and economic development (Gakure, 2003). This is in accordance to the Beijing Declaration and Platform for Action (BPFA, 1995) which asserts that countries are expected to facilitate women's equal access to resources. Despite the intervention of Micro Finance Institutions (MFls) providing finances to women, past statistics indicate that three out of five businesses fail within the first few months of operation (Brush et al, 2006). There are gender related issues that affect the success of women's businesses. Most women multi-task production and reproduction, have limited resources, are often illiterate and least involved in decision making. These challenges limit their knowledge on business processes and operations (Amyx, 2005). As such they fail to take full advantage of available opportunities. Thus result either in busines stagnation, desert loan, drop out or become delinquent. Therefore, Micro and Small Enterprises (MSEs) are unlikely to grow significantly without inputs tl at can address these constraints. Bardasi (2007) asserts that all women loan borrowers must be trained on business operations. 1 There is an ever present need for training women who run MSEs so that new and contemporary techniques may be applied as opposed to the old methods. There appears to be a consensus that training is crucial in the development of MSEs especially those run by women (Oketch, 2003). According to Boettkee (2004), improved and sustainable global economy development is much dependent on strong entrepreneurship training. Further, it is a crucial strategy as it makes people to be job creators other than seekers. While training provides opportunities for business planning; business management encourages imagination, creativity and risk taking in business. Business training for women run-MSEs has been undertaken in many regions in the world. In the United States, the National Foundation for Women Business Owners found out that women who owned MSEs with the strongest commitment to training were significantly more likely to report positive revenue and productivity compared to other firms. It showed that there is a relationship between the degree of business training and the bottom-line performance of a firm which is expressed in terms of survival and also reflected in higher profits or sales (UNESCO, 2003). In Bangladesh, interested business women were provided with three to seven days of initial training. They were given access to credit, of which one-quarter received skills while the remainder served as a control group. After training, it was reported that there was higher client satisfaction and lower rates of delinquency (Brana, 2008). In most African countries, both the Government and the private sector are 2 engaged in various efforts to empower women to grow their enterprises. Gozi and Klock (2003) report on African women entrepreneurs in Ethiopia, Zambia and Tanzania found that the vast majority of women-owned enterprises start very small and rarely grow beyond five workers, if they grow at all. However a study by ILO (2008), on women entrepreneurs in Zambia found out that the growth of women entrepreneurs had thrived due to involvement of training and capacity building. Half of the entrepreneurs had received credit only while the other half had access to several services, including skills management training and marketing support. The study found that those who received both types of services achieved better business results which allowed them to graduate to subsequent loans which had longer maturities. In Botswana, a review of 22 village banking institutions found that all three of those institutions that integrated finance and training perform.ed better than those who received credit alone in terms of management of business. Those who did not train reported a failure in business (Zororo, 2011). The Government of Kenya recognizes that women, who constitute over 50.3 % of the population, are a pillar in the development of the country and that investing in them is critical (GOK, 2008). A study carried out in Kenya that sought to determine if there is a relationship between business performance and level of training showed that 49.5 per cent of those who had received training in their areas of business reported higher profitability (GOK, 2008). 3 A study on women-run MSEs in Kilifi and Murang'a districts in Kenya, which focussed on a project run by an NGO in collaboration with UNIDO, revealed that a total of 170 women had been integrated into the project and the feedback received from participants indicated that there was a buy in (UNIDO, 2003). It also showed that women's interest in business had increased in the course of training and that awareness was raised of the essential role of personal initiatives and self-confidence to succeed in business (Gakure, 2003). 1.2 Statement of the Problem Despite the intervention of MFls by providing finances to women in business, statistics indicate that 3 out of 5 businesses fail within the first few months of operation. This is to a large extent, attributed to lack of entrepreneurial skills and information on business processes and operations (Brush, 2006). Consequently, these women-run businesses face stagnation, and default loans from MFls. Not only does business training promotes success, it also enables one to acquire skills in financial and personnel management, strategic planning, and marketing helps one to identify and exploit business opportunities. It is for these reasons that MFIs developed training programs that assist business women in their course. Kawangware Division is one of the areas where women owned MSEs lack growth despite the fact that they have had access to financial services. The MFls have indeed integrated finance and training which nevertheless does not enhance output. 4 The current study sought to establish the effectiveness of the training programs in women-run MSEs. 1.3 Research Questions The study was guided by the following research questions: 1. What is the nature of training offered to women who run MSEs in Kawangware Division? 2. What are the effects of training on MSEs run by women III Kawangware Division? 3. What gender related challenges hamper the growth of women run MSEs III Kawangware Division? 4. In what ways can entrepreneurship training for women be enhanced III Kawangware Division? 1.4 Objectives of the Study The study was based on the following objectives: i. To determine the nature of training offered to women run MSEs in Kawangware Division. ii. To assess the effects of entrepreneurship training on MSEs run by women in Kawangware Division. iii. To. establish gender related challenges that hamper the growth of women-run MSEs in Kawangware Division. 5 iv. To suggest gender responsive strategies towards enhancing entrepreneurship training for women. 1.5 Research Premises 1. There are gender related challenges that hamper the growth of women run MSEs. 2. That MFls in 3. There are effects accrued to training 1.6 Significance of the Study For a long time access to loans was one of the major problems facing small scale enterprises in Kenya. MFls have made it easy for MSEs to access loan by providing its members with financial and social intermediation services to help improve their businesses. MFls are vital for start-ups growing firms and women entrepreneurs, especially in developing countries (Karnani, 2007). However it was disquieting to note that a high number of women after receiving loans were not clear as to what type of business they would engage in. This had detrimental effects such as investing in businesses that collapsed after start up. The findings of this study may be used to explain how training as an intervention can be used to address the major constrains that hamper women MSEs. Women entrepreneurs may also benefit from the information that emanated from this . study in that it gave invaluable insight into the roJe of MFIs intervention on the 6 growth of their micro and small enterprises. MFls may also benefit from the findings of this study in that it gave valuable insight into the effects of their interventions on training of women-run micro and small enterprises. This may contribute substantially to informed decision-making in the formulation of sound policies that will lead to the promotion of women owned enterprises in the community. 1.7 Scope and Limitations of the Study The study was conducted in Kawangware Division in Nairobi County. The study period was limited to women nm-MSEs that have been in operation from 2004 to 20 lOa period when most of MFls operating in the study area introduced a policy of financing and training. The study also targeted trainers from the four MFls namely: Kenya Women Finance Trust (KWFT) , Kenya Rural, Enterprise Programme (K- REP), Equity Bank and Kadet. Further, by the very nature of MSEs, lack of record keeping was a limitation to this study since the operations of the business might not be truly reflected without records. This is because most entrepreneurs and especially in small and micro enterprises are known to be poor record keepers. The study also relied on estimations and responses from women to represent the operations of MSEs. 7 CHAPTER TWO LITERATURE REVIEW AND THEORETICAL FRAMEWORK 2.1 Introduction This chapter reviews thematically, literature related to the impact of training intervention on the growth of women run MSEs. The chapter is organized in three sections, the first section reviews literature on the Nature of training offered to women running MSEs. The second section explores literature on the effects of training women who run MSEs, while the third section studies gender related Challenges that Hamper Women-run MSEs. Theoretical and conceptual frameworks are also discussed. 2.2 Nature of Training Offered to Women running MSEs Training has been considered as the building blocks of entrepreneurial support to improve the professional competency of potential entrepreneurs. Karlan & Valdivia (2006) notes that training is a process planned to make people more effective in carrying out aspects of their work. They argue that training women entrepreneurs is the systematic modification way of doing things through learning, which occurs as a result of education and instructions development. There is a clarion call from women business owners for more formal training and education in business management marketing, financing, personnel management and technology (Stevenson .L A. (2005). Women entrepreneurs unanimously indicate their desire for the opportunity to learn about effective business. For example, nine out of ten women entrepreneurs 8 interviewed in Korea felt they needed education in business management issues, as did a majority of women business owners in Mexico and the Philippines, (Nieman, 2001). Quite often, the formal and informal networks that are available for men business owners are closed to women (Paula, 2000). A business can only be successful if the people who make it up are properly directed and are committed to make an effort on its behalf Therefore an entrepreneur must have leadership, motivation, delegation and communication skills. The study sought to establish whether these skills would help women run their businesses effectively. Shane (2003) asserts that planning skills improves business operations thus making an entrepreneur to see how his business satisfies the customers' needs, why his customers find his product attractive than those of his competitors. This Study sought to identify whether the research findings would be the same for women entrepreneurs who have received planning skills. In Kenya one of the areas that MFIs train on is the actual line of business. Majority of rural women start business without any idea of what they want to do. In most cases they go for similar business as of their friends without considering possibilities of success (Kapila, 2006). Training on the line of business helps the entrepreneur identify what is best and what is profitable. It helps them to do a SWOT analysis on the various types of business. This aims at helping them invest in the right business opportunities. This study aimed to establish if the research findings would be similar to that of rural area. 9 According to Nieman, (2001) for an enterprise to be successful it has to address ways of identifying or recognizing and generating a viable market opportunity. To gather resources in the face of risk, to pursue the opportunity and create an operating business organization of implementing the opportunity motivated business idea. Business location has impacts on the market potential and growth opportunities of new firms. Geographical proximity to either critical buyers or suppliers produces a form of enhanced environmental scanning that enables small business to more easily identify and exploit growth opportunities in the market (Longenecker, Petty, Moore, & Palich (2006). The entrepreneurs can be helped to prospect for their new markets through events such as seminars, and workshops which improve MSE access to information and markets. This study sought to assess if training has empowered women on the importance of market opportunities and location of their business. According to Brana (2008), entrepreneurs with business and skill training background are well placed in terms of being innovative and can market their products in very unique and competitive ways. It also helps to acquire skills that are necessary to set up and run a business enterprise. This is because it ensures skill development of individuals, builds the community network, and leads to regional economic growth as well as providing valuable employees. This study employed a descriptive approach to find out if the research findings will be the same. Advisory services and networking are necessary to entrepreneurs; they lead to increased business knowledge, lower business attrition, better business practices and 10 improvements in several household and member outcomes. Networking is key to both new and established MSEs.and can positively impact on their performance and access to finance. A study by World Bank (2005) found that the formation of networks helps entrepreneurs to tap resources in external environment successfully. Shane (2003) agreed that networking can be used to reduce information asymmetry in creditor positively influences the firm's access to external financing. Networks play an important role in spreading knowledge about a firm's existence and its practices. Networks also help a firm learn appropriate behaviour and therefore obtain needed support from key stakeholders and the general public. This suggests that networking can positively impact on the growth of MSEs. The current study aimed to establish how advisory services and networking influence women-run MSEs in Kawangware. Literature also explicated that limited education, skills and business experience are obstacles for women's performance (Stack, 2002) and across Rwanda, women entrepreneurs have indicated the need for management and technical skills plus better access to training facilities (Cutura 2008; Tzemach 2006; Hamilton 2000). According to PSF (2009: 34), the majority of women business owners are drawn from secondary education and there is an urgent need for 'basic skill-based training'. Nevertheless, what exactly are these 'basic skills'? Throughout the interviews, respondents came up with examples of knowledge and skills gaps, which has led to a diverse range of education needs of which 'financial management skills'; 'business 11 management skills'; 'business innovation knowledge'; 'resilience in doing business'; and 'market information' were mentioned most. 2.2.1 Financial Management Skills According to Tzemach, (2006) twenty out of thirty women in Rwanda mentioned 'financial management skills') consisting of creating financial statements, keeping books of accounts and organising daily administration, as their main education need. These skills were often labelled as 'hard', 'confusing' and 'boring', inclining it is not the type of business activity women prefer doing. Women generally identified financials as an important aspect of doing business, which might be why they are afraid to make mistakes and therefore indicate a need for education on the subject. In its most basic form, knowledge about financial management relates to simple bookkeeping skills needed in order to clarify income and expenditure as well as profit. Justin & Carlos (2003: 18) explains that "women don't know what comes in and goes out", which is when "they start losing money, sometimes even without knowing it." Respondents recognise this from their own experience, and tell me that women "don't always realise that expenses they make are related to their business", which results in "losing money without realising it." More advanced financial management skills relate to preparing financial statements for accounting purposes, budgeting and estimating investment possibilities. For most women in the lower and middle social segment, these types of financial management skills are not relevant due to the small 12 nature of their company. Nevertheless, some of the respondents in the higher social segment are growing fast and are considering or already acting internationally, whereby advanced financial management skills were identified as relevant education needs (PSF, 2009). The second education need, mentioned by seventeen women entrepreneurs, is 'business management skills'. This is a general term describing how to runday-to- day operations in a business, such as sales, stocks, customer care and employee management, without losing sight on the bigger picture of managing the enterprise (Tzemach, 2006). Tzemach, (2006), explained how she needs knowledge on how to actually run the daily operations of the business, how to deal with employees, how to deal with the customers, how to plan the process and how to keep track of finances. She is a recent start-up belonging to the grassroots segment of women and admits that almost every day things happen that make her doubt about what she is doing. In addition, women identified knowledge about general business management skills as very essential. According to Karlan (2006: 24), a fast-growing entrepreneur with ambitious future plans and belonging to the middle segment of women, explains that "as the owner you need to know about all the operations otherwise you won't learn from experiences and you don't know where things go wrong if they go wrong." The higher segment of women entrepreneurs, owning relatively large companies and dealing with multiple suppliers and buyers, have linked business management skills 13 to time management and business planning and processes, indicating that they also relate to the need of improving the efficiency and effectiveness of doing business. In a study by PSF (2009), twelve respondents, mainly young entrepreneurs from the middle segment, identified a need for 'business innovation knowledge'. Business innovation incorporates elaborating on your business idea and showing innovative behaviour as an entrepreneur whereby your business is filling a gap in the. market and does not copy existing enterprises. According to PSF (2009), most women business ventures are clustered in the commerce and services sector. Consequently, they advise women business owners to diversify and enter into other business sectors. Several respondents agree, and believe "focus should be on the business idea - some women think their idea will work, but once they put it on paper the reality looks different." Related to being innovative and having a good business idea, PSF (2009) identifies the importance of having the right mind-set as an entrepreneur. According to one of the respondents, she often hears from women "that what they need is money, and then the rest will follow - but if you don't have a good idea and [right] mind-set it will not bring you anywhere." PSF (2009: 36) agrees this is important, and recognises that she herself might lack "some kind of innovative mind", though she does not know whether this aspect can be easily taught. This information reflects that learning to be innovative in business might not be as easy as improving, other skills such as bookkeeping which is a 'hard' skill to master and therefore more objective. Women who have followed entrepreneurship 14 education indicated the need for business innovation more frequently, indicating it might currently be lacking in programmes. This specific education need can be linked to the theoretical discussion of whether entrepreneurship can at all be taught, which is something not everyone agrees on. As reflected in literature by Lazear (2004), many entrepreneurship skills can be obtained through education. 2.2.4 Resilience in Doing Business 'Resilience in doing business' relates to learning about the downsides of doing business, getting prepared for hard times and receiving information on how to deal with challenges. From her own experiences and those of other women entrepreneurs, Olomi, (2009) explained that "some people don't realise it is quite a tough process which does not always payoff right away", though a good preparation before starting a business should help avoid obstacles that may discourage women from continuing with their businesses. Olomi, (2009) agrees and explains that "it is important that we know that being self-employed is not easy, that it will take time to be successful and that drawbacks will happen, which should not change our drive. It should simply be a state of mind." In the current Rwandan environment the government is strongly encouraging entrepreneurship amongst its citizens where entrepreneurs seen as the backbone of development processes. It is therefore necessary that business owners are stable and have growth perspectives that limit failures as a result of losing money and time, learning about resilience in doing business seems to be an important educational need for self-employed women (Olomi, 2009). 15 2.2.5 Market Information Marketinformation relates to receiving information about competitors, customers, training opportunities, financing possibilities, support services and challenges in the market (Nelson and Duffy, 2010): In addition, market information signifies industry specific rules and regulations, such as health and hygiene standards, but also export regulations for certain product groups. Nelson and Duffy (2010) further explains that due to a lack of information about the markets, products and services are not. up to quality standards and that women simply don't have the information and knowledge about it. Furthermore, market information takes into account context specific rules on taxation, registration and formalisation issues. According to PSF (2009), only 13 per cent of women business owners are aware of the taxation system in the country. Olomi (2009) says that it is important for women business owners to keep good records because if they cannot show a clear overview, the government automatically deducts tax. However, if women would keep good records the tax percentage would be much lower, so "they are losing money simply because they don't have the knowledge and training on how to do proper book-keeping" (Nelson and Duffy (2010». In this regard, information on taxation also seems to coincide with resilience in doing business, as this might cause problems along the way if business owners are not fully informed beforehand. 16 2.3 Effects of Training Women who Run MSEs According to Rogerson (2001: 131),support for business development services in Sub-Saharan Africa has not been good because many training programmes have had a limited impact. Nonetheless, since the new millennium a policy turnaround has been taking place with a renewed interest in the supply and recognition of the importance of business service provisions for MSE development (Jeans 1998). Overall, the need for a more 'balanced' approach towards the support for MSEs began to emerge (Dawson 1997) and several researchers started arguing that business development services "have key roles to play in stimulating innovation and promoting self-sustaining growth" (Dawson & Jeans 1997: 8). Additionally, the critical importance of appropriate education, systems to promote entrepreneurship and to prepare school leavers for self-employment has been stressed in several African studies, for instance McGrath & King (1995) and by Langowitz, & Minniti (2007). More recently, Naude (2010) also illustrated the importance of entrepreneurial ability as a function of both culture and education in a particular country, as well as of economic development policies of governments. As a practice, entrepreneurship education appears to include many dimensions and possible capabilities. Naude (2008) explains how knowledge shared by existing successful entrepreneurs might be valuable to starting entrepreneurs and that successful entrepreneurship requires obtaining broad, practical skills. Lazear (2004) agrees and encourages multiple or balanced skills instead of specialisation. Education programmes should therefore include skill-building courses such as 17 networking, negotiation, leadership, management capabilities, product development and creative thinking (Dana and Wright 2004; Kuratko 2005; Naude 2007). Hitt et al. (2001), finally explain that insights into entrepreneurial strategies are essential in deciding on the direction and future of one's enterprise. In addition, Tikly and Barret (2009: 8) have identified general core capabilities that a quality education would seek to facilitate in a SSA context. They include autonomy, knowledge, social relations, respect and recognition, aspiration and voice. Nevertheless, an individual's capability set will differ depending on forms of disadvantage such as rurality, disability, ethnicity, gender and relations of power and inequality (Tikly and Barret 2009: 8). UNIDO (2003), in its program rural and women entrepreneurship development program in Central America set to start a promotion of women participation in the productive sector. They targeted women with low levels of training and education and those who were alone as the head of families and needed to organize themselves for productive gains to increase their income. It sought to find effective ways through the establishment and networking of business support programs to bring women and young entrepreneurs into the mainstream of entrepreneurial ventures and private sector development. The program strengthened their institutional capacities of counterpart agencies and their local collaborating agencies through training, developing and adapting methodologies and technical advice to address the demand for managerial and technical services required by women entrepreneurs. As a result, there was tremendous improvement in MSEs (UNIDO, 2003). 18 Oketch (1993) notes that enterprise-based training have many advantages over preparation either schools or in vocational training institutes. However, the element of theory that learners acquire in the training institutions is a further vital ingredient in small development. He holds that training in technical and vocational skill alone is insufficient. It must ;be combined with basic business, marketing and entrepreneurial skills. When the UNDP - fundedJua Kali project in Kenya, it offered short training programmes to owner-managers in the textile industry, it was found that they lacked management skills. It therefore started offering training in business management, accounts and book-keeping and taught them how to prepare good business plans. Here too, the effect of the informal training has not been measured. The study sought investigate what ought to be done to close the gap USAID (2004-2008), carried out a participatory research study on the India Growth- Oriented Microenterprise Development Program (GaMED) and its impact in India and observed that the enterprise development project was a 4-year, $ 6.3 million program funded under the Accelerated Microenterprise Advancement project (AMAP) , it was an innovative program that developed sustainable and scalable approaches to job creation in agriculture by fostering the growth of micro and small enterprises (MSEs). It pioneered the Village Extension Agent Model to expand the availability private agricultural extension services at reduced cost while providing employable skills to local women. Eighteen under-employed farm women from within a vegetable production cluster were recruited, trained in the rudiments of .crop, soil, water and pest management then stationed in their home village. The 19 village agents, who spoke the local dialect and were acquainted with the village farmers, were trained to provide solutions to less complex farming problems and could call on professional agents whose work they supplemented. GOMED demonstrated commercially viable solutions to MSE growth constraints through development of these models, inspiring other industry participants to adopt them. This bond well for the sustainability and scalability of GOMED efforts, which benefit MSEs and the industries involved through enhanced competitiveness and greater growth opportunities in India (USAID, 2004-2008). It has however not been investigated how such an intervention may have impacted on women entrepreneurs in an urban setting in Kenya. ILO (2008) carried out a desk review on a project run by UNIDO in Rwanda. The programme dubbed Rural and Women Entrepreneurship Development programme was being run in other countries but the review focused on Rwanda. It was established that the project targeted women who were already engaged in some form of processing activities such as dairy, fruit and vegetable products. Trainers were selected from the group of specialists working in the business. Bank officers and field extension officers were invited to run a series of mock consultation sessions with the women to discuss their business plans. By getting to know each other and sharing their business experiences and problems in ethnically mixed groups, women became aware of their need to be trained. 20 As a result of this programme, Some 40 women entrepreneurs were trained in dairy products and fruit and vegetable processing in Byumba and Kigali Rural Prefectures. Ten of them obtained credit from .local development banks for expanding their business and two of them successfully marketed their products into the urban market in Kigali; Trained women entrepreneurs started playing the role of a local adviser to fellow entrepreneurs at their own settings-s-a network was thus established among women entrepreneurs to share information, resources and equipment to produce food products; Some 26 trainers were trained in the organization of skill training for women entrepreneurs and 23 of them went through refresher training courses. More than half of them now belong to local NGOs and institutions. This resulted m tremendous growth in the MSE industry in the area of study (ILO, 2008). However, ILO observed that due to time constraints and bureaucratic procedures of accessing these organizations, the research team was not able to acquire adequate data on their activities. Thus, the research team recommended that further research be carried out to establish their effect on MSEs growth in Kenya. As a result, this study therefore sought to carry out the same focusing on Kawangware, Kenya. The studies conducted by Kale (1990); Kirve and Kanitkar (1993), revealed that training approach is an important element in helping women in non-traditional high skill, male dominated activities and also to build confidence among women to meet the specific needs. Intensified effort has to be undertaken to assess the social attitude, mentality, needs and abilities of the women and to impart training. Flexible 21 training programmes and interest-based skill training can push the women towards entrepreneurial activities. Training to .develop good managerial skills is useful and essential to women (Padmavati, 2002 and Sathyasundaram, 2004). Training and education in financial management skills could enable women to acquire the necessary skills, to save and develop the confidence to explore viable business ideas and market opportunities for their products or services. This is particularly true at the moment due to the growth of e-business and telecommuting. It is now possible for women to do commercially viable work from home. Some skills in elementary accounting like financial recording and reporting are needed. The larger and more elaborate the enterprise or project, the more the financial skills needed (Otuya, 2003). The most important conceptual point to make in financial training is that every transaction represents two elements: one party gives an amount of money, and another party receives that amount of money. That duality IS represented in the principle of double entry accounting, (Justin and Carlos 2003). 2.4 Gender related Challenges that Hamper Women-run MSEs The experiences the women entrepreneurs have in running their businesses include such problems as lack of enough capital, difficulties in transportation and marketing, the perishability of some commodities and competing demands related to household chores and difficulties in licensing procedures. Finding staff with the right skills, willing to work for a small firm can be a problem, as is ensuring they have the time to update their skills and keep up with developments in the field (Kamani, 2007) 22 The greatest barrier facing women entrepreneurs in Kenya is access to finance. This is an issue because of requirements of collateral. In Kenya, only 1% of women own property and that makes it very difficult for women to provide collateral for banks (Kinyanjui, 2006). Most women who venture into businesses in the rural areas and need financing lack the needed collateral because to enable them secure bank loans. Responsibility of entrepreneurs for dependants has limited opportunities to make savings or undertake business expansion and diversification (Athanne, 2011). The financial aspects of setting up a business are without doubt the biggest obstacles to women (Zororo 2011, Brush 1992). Women entrepreneurs often lack information about how to get a loan, lack the necessary collateral to obtain one and lor face discriminatory laws or practices related to finance and credit (Commonwealth Secretariat, 2002). Finding the finance to get a new business going, or to grow an existing one is a difficult challenge. According to Kinyanjui (2006) women entrepreneurs have financial social demands that compete with business capital, leading to a diversion of capital away from business needs. Kinyanjui (2006) adds that some entrepreneurs felt that it was difficult to obtain loans as they had to show credit records and they did not fully understand the requirements getting and paying loans. Loans from Kenyan micro finance institutions tend to be limited in amount, have no grace period, are short term in design and carry very high interest rates. Consequently, most women entrepreneurs are likely to have multiple short-term loans to cater for both businesses and social needs. Studies have shown that loans to MSE entrepreneurs only satisfy a 23 fraction of their financial needs (Women Entrepreneurs in Kenya, 2008). Formal financial support is seen to be too expensive for many women entrepreneurs and hence they treat this as a last resort (Stevenson L. A. 2005). According to Olomi, (2001) women engage in activities with low entry thresholds and low financial risk. In Tanzania, for example, the highest concentration of women-owned businesses is in wholesale and retail trade, hotel and restaurants and services because of low barriers of entry. The choice of the sector is accounted for by a combination of resource constraints, environmental uncertainty and specific female aversion to risk-taking. Women owned MSEs are known for their low start up and small working capital. A large number of women start the small scale enterprises with personal savings or traditional collective savings. This can be attributed to the fact that most women do not own assets hence can't access loans. It can also be attributed to the fact women spend money upon consultation with significant males in their lives (UNIDO, 2003). This study therefore sought to establish the effect of gender challenges that women face in financing their businesses. Another challenge that women entrepreneurs in Kenya face is discrimination. Even when women entrepreneurs do approach banks for financing, they tend to face discrimination. Women report that bank officials tend to ignore them in meetings and prefer speaking to their husbands or male business partners. The fact that banks engage in gender bias, prevents the women from approaching them. Some women 24 get so discouraged that they do not bother to seek bank financing and turn to informal savings groups instead. Gray (1996) adds that the women's major problem during the start-up is the credit discrimination. For quite a while a woman was not allowed to open a bank account or own land without her husband's or father cosignatory. Although inheritance laws were revised with the succession Act of 1981, women have rarely inherited land and other property in their own right. This means that they lack title deeds which are still the most commonly used form of security for borrowing money. Women own only 1 percent of Kenya's land while 5 to 6 percent is held under joint names usually with husband (World Bank Report, 2001). Women in the rural areas, gender stereotyped perception of self, lack of confidence and assertiveness appear to be major barriers. Being risk averse is a big hindrance. The status of women in a patriarchal social structure makes women dependent on males in their lives -husbands or fathers and family resistance is a major disincentive to business start-up. Other close male family members often make decisions for women hence going against the independent spirit of entrepreneurship. In addition, women are usually less educated than men, making them less well equipped to manage a business (Commonwealth Secretariat, 2002). Ngauand Keino (2006) assert that women suffer due to the socialization and lack of collateral for business. They differ with their husbands or other family members over key business decisions. Men are perceived as the key decision makers in a family 25 and a woman is not often expected to make a decision on her own. This slows their businesses because they have to consult a male figure such as husband, brothers or fathers. The training of women on decision making will improve their performance and help them to undertake task that are necessary for their venture. The study investigated the influence of this disadvantage that women face in the running of the MSEs. The foregoing scholars agree that socio-cultural setup affects the development of women run MSEs. If training is done it will help the women to overcome gender related challenges thus be able to succeed in their entrepreneur ventures. This study sought to affirm these assertions. The city council management has proved to be a very big challenge to women entrepreneurs in Kenya. The licenses are numerous and expensive. Being a woman seems to exaggerate that fact since most women are harassed by the city council officials when they come to inspect the business premises. Moreover, women are less likely to meet and negotiate bribes with the predominantly male council officials. Business licensing is.an issue for many women entrepreneurs who perceive the process as lengthy and complex (Athanne, 2011). Bindra (2006) adds that many Kenyan MSEs are covered by some formal registration, the cost of such registration is nominal but entrepreneurs find the procedures to be followed and information about offices to be visited for requisite forms and registration to be confusing. There is no "one-stop shop" which inform an aspiring entrepreneur what is required of him or her in terms of regulations to be followed for licensing. 26 One other challenge is the responsibility of providing for the extended family and relatives. Most micro-enterprise fmancial resources are not usually isolated from personal finances and hence these family obligations are met from resources earned in the business. Their demands tend to drain the savings and income made by the business, since such finances would otherwise have been used in the enterprise for expansion and growth. Though some of them do assist in providing services in the enterprise (or in the family), the financial obligations in supporting them usually exceeds the services they provide. Ahmad et a1 (2011) adds that women are overloaded with business and family responsibilities and may not have the time to join these beneficial associations and this automatically limits the women entrepreneurs' wings of exploration. Commonwealth Secretariat (2002) adds that when business training is available, women may not be able to take advantage of it because it is held at a time when they are looking after their family. Comparative studies show that women start business at an older age than men, when they have had the family and children (Zororo 2011, Green and Cohen 1995), this becomes a great challenge. The rural women appear not to be driven by profits but rather, by the need to provide for their families. They see enterprises as a means of setting them free from 'begging' money from their spouses for the basic necessities of their families - food, clothing and health. What they earn is totally spent for the benefit of the entire family. Another key motivating force for women to become business owners has been identified as interest in helping others. Generally women entrepreneurs in small scale business receive 27 substantial family support at start-up and in the course of running their business. Such support is however, based mainly on social rather than economic consideration. A study carried out by IFAD (2006) on developing micro and small enterprises in the rural poor in Africa found out that family and community responsibilities take a lot of women's time that could be applied on improving their income generating efforts. Most of them in their 30's or 40's are married, and have children. It is thus difficult for women to expertly run business, due to dual responsibilities of growing a business and raising a family. This study probed the challenges women face in relation to family responsibilities and the running of MSEs. Women's responsibilities for child care limit their mobility and oblige them to generate income in less conducive environment for business. Mavoux (2006) cites women's responsibilities for children as reason for women's low participation in skills training and literacy programs. Training on literacy is crucial for building business management skills of female entrepreneurs. Consequently, time spent 011 family duties leave women with less time to run their business, take advantage of training opportunities, or network. Training on management offered to women helps them manage their multiple burdens thus achieve in businesses. According to Kathuri (1993), the pressure for women to start business activities to meet basic needs or supplement income was a prominent motive especially following the economic crises of the 1970s and early 1980s and the subsequent structural adjustment programmes. These programmes led to erosion of purchasing 28 power of salaried workers and limited job openings. The impact has been felt most by women, who have a greater burden of enabling the family to cope. Olomi and Sievers (2007) noted that in some cases, women have become the main breadwinners. Another explanation for the increased prominence of this motive is that the number of single mothers has been increasing, and many of these do not have any means of earning their livelihood other than self-employment. Women have reported that they get respected and trusted by husbands and others because they are self employed. Some women have noted that when they are generating income from business activity their husbands cannot harass them, because they can take care of the family without the husbands financial support (Mavoux, 2006). Access to justice is essential for ensuring, smooth business operations, and it spans issues such as enforcing contracts and employment disputes. Yet women entrepreneurs in Kenya have difficulties when accessing justice. Using the formal courts in Kenya can be costly, complex and time consuming for entrepreneurs. For women who are burdened with multiple responsibilities in the household and at work andwho do not have the know-how to navigate government processes, dealing with the complicated and often corrupt bureaucracy is another challenge, (Athanne, 2011). Commonwealth secretariat (2002) records that women often have few or no contacts in the bureaucracy, and there may be a bias against women's businesses. Women have little representation on policy -making bodies, partly because they tend not to belong to or reach leadership positions in mainstream business organizations. 29 Lower education .levels puts women entrepreneurs in Kenya at a disadvantage compared to men. While gender gap in primary education in Kenya has decreased ill recent years, the gap remains high at secondary and tertiary education levels. Lower education does not emphasize entrepreneurship skills. It decreases the chances that women will have the knowledge needed to excel in business, and thereby contribute .to the country's overall economic growth. III education, preference is given to boys, thus the educational level of .most women entrepreneurs is very low, creating a barrier to them in accessing training and other business development services, (Women entrepreneurs in Kenya, 2008), In addition, women are usually less educated than men, making them less wen equipped to manage a business (Commonwealth secretariat, 2002). Namusonge (2006) noted that entrepreneurial education and training play a key role in stimulating entrepreneurship and self- employment Despite the presence of Business Development services in Kenya not many women entrepreneurs use it because of cost, access) necessity, or availability (Steven et al, 2005), According Bowen and Mureithi (2009) 'on average, women entrepreneurs are less educated than their male counterparts and •.are twice as likely as men to be illiterate. Historically, the patriarchal systems have discriminated against the girl child from access and control of resources. Traditional. societal perceptions view girl-child education as a loss. The girl child has been thus disadvantaged compared to the boy child. This make most women to operate in an informal way that denies them access to markets as well as critical services which in turn confine them to a vicious cycle 30 .ofIowproductivity, income and access to resources. Ongori, & Migiro (2011) cite that women's high illiteracy rate also limits the types of vocational and skills training they can beoffered .. Lack of adequate skills has been cited as constraints faced by female entrepreneurs. This pattern helps explain why most female businesses are typically; smaller in employment and sales compared to their male counterparts ..When women are equipped with adequate skill through training it helps : them succeed in their businesses.r This-study sought to examine if women will achieve better result in their businesses if-trained. A study by Richardson, Howarth and Finnegan (2004) on women entrepreneurs in \ Africa reveals that many women entrepreneurs in Africa feel they lack abilities, skills and expertise in certain business matters. Many of the issues mentioned appear to relate to women's relative lack of exposure to the world of business. In addition to this lack of exposure, women's business networks are poorly developed as social assets. This in turn impacts negatively on a range of factors that adversely affect the women entrepreneurs at all levels. It is grounded in women's gendered experiences of education: and work and, due to the demands of their reproductive and household roles, their lack of key dedicatedi'time" to be able to explore and nurture their own resources..Theiraccess to the essential abilities, skills and experiences for business is' .also adversely.affectedby various constraints on their mobility, often due to their dual' (household) and triple {community) roles and responsibilities. In a more general way, society's views 'are largely negative about women entrepreneurs who associate and network with others inbusiness (Mayaux, 20(6). 31 Managing employees is another challenge that women entrepreneurs in Kenya face. Finding and retaininggoodemployees is essential for the sue-cess of a business, but can be difficult for women entrepreneurs in Kenya. Since women owned businesses tend to be smaller, they are often less likely to provide job security and retain good talent. Some women find that they are not taken seriously by their employees; especially in non-traditional sectors, and have to make a special effort to win their respect (Athanne, 2011).. According to Jaiyeba (2010) whilst micro-enterprises are very often the source of innovation, they are also especially vulnerable to competition from counterparts who introduce new products or services, or improve their production processes, women often lack the resources to respond rapidly. Competition (markets) and information related factors, are said to be major challenges. Competition is seen in fOTIn of the size of market share in the rural setting. Most of these markets are not expanding and new competitors such as mini-supermarkets with wide varieties of products for those' who were engaged in selling household products are emerging. To this could be caused bylackofmarketing skills (Jaiyeba, 2010), 2.5 Theoretical Framework This study was guided by Bishop, (1994) theory of training through empowerment based on the human capital theory. The focus of the theory is on access to and investment in education where the choice of training is made relative to the expected benefits spread over a lifetime, and costs of training. If groups of individuals were to 32 ·be prevented from accessing training due to costs and or any other militating factor; then they are denied the benefits that accrue from training. Furthermore, investment in training contributes to human capital accumulation, which is essential for development (Henry, 2000). Concepts related to role of training on empowerment have further been explored by Booth (2004) who emphasizes private and social returns to training in trying to justify household and public choice to create more opportunities of access to training. In the context of this study, training women should be given priority as the benefits. will be both to the individual as well as her society. This study views entrepreneurship training for women running MSEs from three connected perspectives. The first assumption is that there exists private demand for training by women who would like to be empowered. To acquire this training, individual women have to have the initiative or belong to a group of women who may be given that training as a tool to empower them. The second assumption is that the government and the stakeholders have an obligation to provide training to disadvantaged members of the society so as to improve their standards of living and help them acquire life skills. Lastly, the student has to overcome all inhibiting factors and attend secondary education. In this context therefore, the study views MSEs training as a core component to improving the living standards of women by equipping them with skills to assist them eke out a living. 33 As such, the human capital theory informs' this study on the basis of the- two perspective with the ultimate aim of investigating the effects of MSEs training intervention on the growth of women run Micro and Small Enterprises in Kenya and specifically in Kawangware Division. Input (Independent Variables) Mitigating factors Output (Dependent Variables) { [ -~-;n-a~-~ic-ne~--:- -~~:ij~~S~i~-l --:-'ra-a:2-~:~-!~J' r l !~~~:~~~~l LManagement Planning strategies Innovation II I~ ~ ~~ I { Gender-related challenges facingwomen running MSEs Preparation Expanded 1:-- Ilmproved I Imoroved Finance of good market - qualityof Management business share products plans. and services --- ----- --_.- __________J Source: Researcher (2013). Figure 1.1: Conceptual Framework The conceptual framework provides an illustration of ways In which entrepreneurship training for women running MSEs influences their businesses. It provides areas in which women receive training and these are finance management, business planning, marketing strategies and production innovation. Mastery of these areas of training is expected to lead to improved management of finances, preparation of good business plans, expanded market share and quality of products 34 and services. However a number of gender-related challenges stand in the way of women in achieving this.rThe conceptual framework is in line with Bishop (1994) theory of training through empowerment based on human capital theory as it provide justification for investment in training programmes for women entrepreneurs as it goes a long way to improve skills to !Un their business. 35 CHAPTER THREE RESEARCH l\lETHOnO:LOGY 3.1 Introduction. This chapter focuses on the methodology that was used in the study. It describes the location of the study.vresearch design; target population; sampling techniques, instruments of data-collection; validity and reliability of the instruments; data collection procedures and data analysis. The chapter concludes with ethical issues. 3.1 Location of the Study The study was conducted in Kawangware Division, Nairobi County. This is one of the divisions of Dagoretti District within Nairobi County. It is situated 10 km West of Nairobi's city centre and covers an area of 38.7 km2 (See Figure 2). It has a population of 800,000 (2009 Census). Kawangware constitutes seven villages namely: Sokoni, Coast, Muslim, Kiamboni, Kabiro, Congo and Kanunganga which are estimated to host about half a million people (CCN, 2(07). Kawangware Division was selected for the study because most of the women are self-employed in small-scale income generating activities, or engage in casual labour due to limited access to education and finances. The MFls in the area have integrated finance and training to women-run MFIs for better MSE'S practice thus, making this site suitable for study. 36 •••••• '.' w •••••• - ~..::.-:.:.::..:.:. < ,,- ,~ -. ,- '.~ " - .- '-1~ '\ ) Kaba Gucaria Women Group ..l - '- ••••. /' S -Jcseeh III \ .>Ca holi Chllroet.· • /' ..•....- -r- /' --- ../ Mwethegie women Group """ /I\./" 4~ ~-~- * *'i~ '>i?i. \ El'E1, El * __",,".~'. " '- l':l .•...Vin<::emia ~. Pra.,.er ouseLAI, / . <, El-/'" * ....<, f Emmt!Jnuel..•••Na.nJ..~ Sap i$t Church ."'..~ q.