Effect Of Services Offered By Microfinance Institutions On Performance Of Micro And Small Enterprisesin Kariobangi Light Industry In Nairobi, Kenya

Abstract

Micro and Small Enterprises (MSEs) are of great importance because of their role in the economic growth and poverty reduction in many countries. However, many studies carried out on these enterprises reveal that they are faced with a number of challenges including access to finance despite the numerous financial institutions available. This study assessed the effect of services offered by Microfinance Institutions (MFIs) on the performance of MSEs in Kariobangi Light Industry Nairobi, Kenya. This study was conducted in Kariobangi Light Industries, in Nairobi County and targeted operators of MSEs. The specific objectives of this study were; to establish the effect of MFIs’ saving services on the performance of MSEs in Kariobangi Light Industry, to establish the effect of MFIs’ loan services on the performance of MSEs in Kariobangi Light Industry and to investigate the effect of MFIs’ training services on the performance of MSEs in Kariobangi Light Industry. These objectives sought to answer the following questions: what is the effect of MFIs’ saving services on the performance of MSEs in Kariobangi Light Industry?What is the effect of MFIs’ loan services on the performance of MSEs in Kariobangi Light Industry? and, what is the effect of MFIs’ training services on the performance of MSEs in Kariobangi Light Industry?The study adopted descriptive research design targeting a complete census of 210 MSEs. Primary data was collected using structure questionnaires while secondary data was collected from relevant literature. The study used self- administered questionnaires to collect primary data from the respondents. Data collected was analyzed both descriptively and statistically. Quantitative data was analyzed using descriptive statistics such as frequencies, modes, means and standard deviations. Likert type data was analyzed using mode as the focal point of discussion. A Cross-tabulation of variables was generated to determine the relationship between the study variables. Linear regression and Chi-Square test was conducted to determine the effects of MFI on the performance of MSEs in the study area. Analysed data from a response rate of 86% was presented in tables and charts to represent quantitative findings. Interpretation of data and inferences were made to describe the research findings. The study findings revealed MFI saving and loan services have positively influenced the performance of MSEs in Kariobangi Light Industries but the training services have not contributed positively. The study recommends there is need for MFIs and MSEs stakeholders to come up with measures of addressing the poor performing training component of MFIsservices in Kenya.