Factors Influencing Performance of Micro and Small Enterprises in Kenya a Case of Kiambu County, Kenya

Abstract

Micro and Small Enterprises act as a primary driving force for economic growth in developing countries. Factor influencing the performance of Micro and Small Enterprises in Kenya are essential in improving the uptake of this venture. The study sought to establish factors that influence the performance of MSEs traders in Kiambu County. The objectives of the study was therefore to determine the influence of access to finance on performance, establish the influence of management skills on the performance, determine the influence of access to business information on performance and establish the influence of business regulation on the performance of micro and small enterprises. The study was based on credit rationing theory, resource based firm theory and opportunity based firm theory. The study employed descriptive research design to achieve the objectives. The target population under study was 4897 licensed MSEs in Kiambu County as per the Business Register 2018. Stratified random sampling was applied and Krejcie & Morgan (1997) formula was used to arrive at the sample size of 385 MSEs.The study utilized primary data and the data collection was conducted through self-administered questionnaires. A pilot test was conducted using forty questionnaires to ensure data validity and reliability. The data collected was analyzed using Statistical Package for Social Sciences (SPSS) version 20 software. Normality test was carried out to test for any outlier. The study also carried out Multicolinearity test to test for any correlation between variables. Regression coefficient was used to analyze the relationship between variables. To determine the number of dimensions required to represent set of variables factor analysis was conducted. The results of the study were presented in frequency and percentages. The study finding indicate that access to business information positively and significantly affect the performance of MSEs, Access to finance was found to positively and significantly affect the performance of MSEs, management skills and business regulation didn’t significantly affect the performance of MSEs in Kiambu county. The study recommends that the Government should provide training and seminars to entrepreneurs regarding marketing strategy and how to be innovative and be provided with business information. The study recommends banks to improve on lending terms and condition to enable MSEs access to finance. The government should also ensure that the business regulation is not beyond entrepreneurs' ability as well as offering basic entrepreneur skills which will enable entrepreneurs to be innovative and creative while making investment decision and enhance them to exploit the available business opportunities.