Credit, Entrepreneurship Training And Performance Of Micro And Small Enterprises In Nakuru County, Kenya

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.