Effect Of Microfinance Services On Growth Of Micro And Small Business Enterprises In The Textile Industry In Nairobi, Kenya

Abstract

In the Kenya Textile industry, past statistics shows that most of the micro and small business enterprises do not survive third year of their incubation period since three out of five micro-enterprises fail within the first few months of operation (Ogindo, 2009).Access to microfinance services such as credit, training, micro insurance and mobile banking services should enable the micro and small business enterprises to achieve increased growth but this is hardly the case among many micro and small business enterprises in Kenya textile industry. The study main objective was to investigate the effects of microfinance services on growth of micro and small business enterprises in the textile industry in Kenya. A case study of Nairobi Kenya. The study specifically aimed to determine the effect of access to credit on growth of micro and small business enterprises in the textile industry in Kenya; establish the effect of training on growth of micro and small business enterprises in the textile industry in Kenya and to assess the effect of micro-insurance on growth of micro and small business enterprises in the textile industry in Kenya. The study adopted a descriptive research design and the target population will be a total of 1220 micro and small business enterprises in Nairobi. The study will apply a stratified random sampling technique to select 122 owners of micro and small business enterprises as the study respondents. Questionnaires were used as the main data collection instruments and a pilot study will be conducted to pretest questionnaires for validity and reliability. Descriptive statistics and multiple regression analysis were used to analyze the gathered data and the results were presented on Tables, figures and graphs. The study findings indicated that access to credit; training and microinsurance are the key major microfinance services that affect the growth of growth of micro and small business enterprises in the textile industry in Kenya. The study drew conclusions that access to credit; training and micro-insurance and the major microfinance services that affects the growth of micro and small business enterprises in the textile industry in Kenya. The study also concluded that training with a coefficient of 0.560 is the major microfinance service that affects the growth of micro and small business enterprises in the textile industry in Kenya. This is then followed by micro insurance with a coefficient of 0.440 and then lastly access to credit with a coefficient of 0.086.The study recommended that as measure to improve access to credit by micro and small business enterprises. Microfinance institutions in should design effective and affordable credit services by reducing high interest rates fee and offering favorable credit payment terms and credit payment period. Microfinance institutions should also avoid insisting on high values collateral from the owners of micro and small business enterprises and provide different credit options depending with the nature of business.The management of microfinance institutions should offer the owners and operators of micro and small enterprises with alternative training methods by engaging them in business seminars, workshops, and encouraging them to access training institutions hence making them to get an opportunity to learn on how to implement various business growth and development strategies. Micro finance institutions should guide the owners and operators of micro and small business enterprises on how to conduct on the job training and technical training institutions should design up to date vocational training programs depending with the skills needs of individual owners and operators of micro and small enterprises in textile industry in Kenya.