Determinants Of Green Financing Adoption by Small and Medium Sized Enterprises in Manufacturing Sector at Nairobi City County, Kenya

Abstract

The general objective of this study was to determine the factors influencing the uptake of green financing by small and medium-sized enterprises in Nairobi, Kenya. It was guided by the following specific objectives: to assess the effect of organizational characteristics on the uptake of green financing by SMEs in Nairobi; to assess the effect of technology on the uptake of green financing by SMEs in Nairobi; to assess how government support influences the uptake of green financing by SMEs in Nairobi; to assess the effect of access to financing information on the uptake of green financing by SMEs in Nairobi, particularly those in the Manufacturing sector. The theories used in this study were the Resource theory of sustainable finance, System disruption theory of sustainable finance, the Positive signaling theory of sustainable finance, the and Priority theory of sustainable finance. The study utilized descriptive research design and the population was the management of registered small and medium-sized enterprises in Nairobi, Kenya. The target population for the study was the 134 small and medium-sized enterprises in Nairobi, Kenya. Census of all the SMEs was done. Questionnaires included questions on background and constraints to adoption of green financing which were used as the main tool to collect primary data. Data collected was then analyzed using SPSS through inferential statistics i.e., regression analysis, hypothesis testing, and confidence intervals where measurements drawn from the samples were used to make generalizations about the larger population of SMEs. Tables and graphs were used to present data and further interpret the results. The regression analysis showed that organizational characteristics had a positive and insignificant beta coefficient meaning that it does not contribute significantly to uptake of green financing. Further, it was shown technology had a positive and significant beta coefficient meaning that use of better technologies by SMEs could lead to improved uptake of green financing. Similarly, the regression analysis showed that Government support had a positive and significant beta coefficient meaning that increased government support should lead to improved uptake of green financing. Lastly, the regression analysis showed that access to financing information had a positive and significant beta coefficient meaning that increased access to Financing Information could lead to improved uptake of green financing. Based on these findings, this study concludes that organizational characteristics does not contribute significantly to uptake of green financing. Also, on these findings, this study concludes that use of better technologies by SMEs could lead to improved uptake of green financing. Additionally, this study concludes that increased government support could lead to improved uptake of green financing by SMEs. Lastly, this study concludes that increased access to financing information could lead to improved uptake of green financing. Based on these findings, this study recommends that the management of SMEs come up with policy of auditing their financial statement s as to increased their chances of accessing green financing from banks. Lastly, this study recommends that management sponsor most of their employee to attend green financing trainings and seminars so as to create more awareness of the available green financing projects for the SMEs.