Factors that affect access to credit finance by small scale women entrepreneurs in Gilgil sub county, Nakuru county- Kenya

Abstract

Women owned enterprises are a recent global phenomenon. This is due to the fact that a significant number of enterprises were owned by men. Majority of the women entrepreneurs tend to focus on small scale enterprises. One of the reasons why these enterprises tend not to grow beyond a certain threshold is access to credit finance. The purpose of this study was to investigate factors that affect access to credit finance by small scale women entrepreneurs in Gilgil Sub County, Nakuru County - Kenya. The study was guided by four research objectives which were: To establish the extent to which demand for collateral, interest rate charged, level of literacy and business management skills affect accessibility to credit finance by small scale women entrepreneurs. Descriptive research design was used in this study which mainly relied on primary data. The target population for the study was small scale women entrepreneurs in Gilgil Sub County whose enterprises had been licensed by the County Government of Nakuru. A scientific sample of 49 small scale women entrepreneurs was utilized in the study. A self-administered questionnaire was used to gather data. The quantitative data collected was checked for completeness, coded and entered into the computer via the Statistical Package for Social Scientists (SPPS). The data was analyzed using descriptive statistics, notably frequency distributions which were used to describe the characteristics of the study populations and variations in responses to the questionnaire items. The effect of the independent variables on the access to credit was assessed using the Pearson's Product Moment Correlation. The findings were presented in tables and explanations and discussions provided in narrative prose under each table. The highest percentage of small scale women entrepreneurs (36%) had utilized credit facilities twice, 21.3% once, 18.7% three times and 17.3% more than three times. At least 6.7% had never utilized a credit facility in the period under review. The study established that demand for collateral negatively affects access to credit finance by small scale women entrepreneurs (r = - 186; p=0.002; n=49), and that interest rates charged has a negative effect on access to credit finance by small scale women entrepreneurs (r = -0.295; p = 0.015; n = 49). On the other hand, access to credit finance by small scale women entrepreneurs is positively affected by the level of literacy (r = 0.31; p = 0.001; n = 49) and business management skills (r = 0.39, p = 0.000; n=49). Consequently, the study concluded that the interplay between demand for collateral and access to credit by the small scale women entrepreneurs is manifested in a negative relationship between these two factors, while the high costs of credit as a result of interest rates is prohibitive for the small scale women entrepreneurs. In addition, that study confirmed that level of literacy is a positive factor of accessibility to credit finance by small scale women entrepreneurs while business management skills gained through capacity building opportunities coupled with business management experience positively affect access to credit finance by small scale women entrepreneurs in GilgilSub County. Thus, the study recommends that the requirement for non-collateral or credit worthiness should be applied for small scale women entrepreneurs, the interest charged on credit facilities reviewed downwards capacity building programmes for small scale women entrepreneurs enhanced for those with low education. Future research can test the conceptual framework of this study on an expanded scope and in a different geographical context to validate the findings herein.