The Contribution Of Agency Banking To The Growth Of Small And Medium Enterprises In Kenya: A Case Study Of Igembe North Sub County - Meru County

Abstract

ABSTRACT With the growth of agency banking as one of the smallest units of financial institutions to disseminate services to the customers, there have been issues as well as challenges associated with their optimisation and effective usage. Therefore, this research purposes to investigate the contribution of agency banking to the growth of small and medium enterprises in Kenya through studying a case of Igembe North Sub County - Meru County. The problem of variation and inadequate services in terms of physical resources, human capital and even latest technologies have contributed to challenges in growth of SMEs, thus this research utilises the following objectives to study this phenomenon; To evaluate the characteristics of SMEs in Igembe North Sub-County; To establish factors that influences the growth and sustainability of SMEs in Igembe North Sub-County; To ascertain the factors that influences the growth and adoption of agency banking within SMEs in Igembe North Sub-County and finally. In the effort to synthesise these aspects amicably, this research utilised Agency theory, Entrepreneurship and Innovation Theory and Diffusion of Innovations Theory to try creating a deeper perspectives of the topical issue and shade light to the antecedents that formed the in-depth understanding. For effective data sourcing, this research utilised a pragmatic approach which necessitated the use of both quantitative and qualitative datasets to increase data accuracy and representability. Case study strategy was used where Igembe Sub County was used and interviews and questionnaires data collection instruments were utilised too. Accordingly, both statistical and content analysis method of data analysis was used to cater for the pragmatic nature of this study. Data findings established that, accessibility to credit is the factor that contributes highly to the growth of the SMEs, secured transactional platform was seen to be the key aspect which has made agency banking to become popular, while lacking adequate features being still the biggest concern and challenge both agents and users of this platform has in regard to agency banking in Igembe North. The following recommendations were proposed; enhancing latest security technologies to combat acts of hacking and increasing effectiveness, embracing adequate training to agents to increase customer relationship and service delivery and lastly liquidity issues must be made part of the minimum threshold requirements.