Affirmative action funds and the growth of small and medium enterprises (smes) in Nairobi county

Abstract

Across the globe, small and medium-sized enterprises (SMEs) serve as vital engines for economic advancement and social development, particularly within emerging economies. However, despite their significance, these enterprises often face challenges such as limited access to capital, insufficient managerial capabilities, and restrictive policy environments. This study explores the impact of affirmative action funds on the growth of SMEs in Nairobi County, focusing on the roles of the uwezo fund, youth enterprise development fund, and women enterprise fund. This study was anchored on growth theory and complimented by human capital and social capital theory. This study employed a cross-sectional survey design. Using Yamane’s formula, a sample of 376 SMEs was selected from a population of 6,176. Primary data was conducted through questionnaires. Data was coded and processed using SPSS. Descriptive statistics and inferential methods were adopted to analyze the data. Inferential statistics such as regression and correlation analysis were used to assess the influence of affirmative action funds on the growth of SMEs in Nairobi County. The study established that all three affirmative action funds, Uwezo Fund, Youth Enterprise Development Fund, and Women Enterprise Fund, positively influenced SME growth in Nairobi County. Uwezo Fund enhanced financial discipline and credit access through group lending, while YEDF improved managerial capacity and strategic planning via training and support services. WEF emerged as the most impactful, enabling women-led enterprises to invest in inventory and expand operations through affordable, tailored financing. Based on these findings, the study recommends strengthening fund outreach, simplifying access procedures, and integrating post-financing support such as mentorship and market linkages. Policy reforms should institutionalize these funds within national SME frameworks, promote inter-agency coordination, and embed gender-responsive strategies to ensure inclusive, sustainable enterprise development across Kenya.