Effects of External Financing on the Performance of Agribusiness Small and Medium-sized Enterprises in Trans-Nzoia County

Abstract

Adequate finances keep businesses afloat hence ensuring that they remain in operation for long. Crucial as they may, funding is never adequate to support the various activities and investments of a business. As a result of the dire financial risks facing enterprises, most of them struggle to take off while others go bust within the first few years of their conception. The study was to evaluate the effects of external financing on performance of SME agribusinesses in Trans-Nzoia County, Kenya. Design that is descriptive was employed in this research. The population that was of interest to the study was all the 15 agribusiness SMEs in Trans-Nzoia County as at September 2021. Quantitative data that is secondary was used. These were acquired by extraction technique from reports of finance for 15 firms chosen as they were disclosed by the firms. The data collected covered five years; from 1st January 2016 to 31st December 2020. The results portrayed that the performance of Agribusiness SMEs in Trans-Nzoia County depends on the short term debt to equity, long term debt to equity, Firm age and Firm Size. The outcome wound up that firm revenues are not significantly influenced by external financing for agribusiness firms operating in Trans-Nzoia County. Counsel was given that conducive enterprise landscape, positive investment programs and investor-beneficial environment is a precondition for enhanced performance of enterprises. Hence, the government should always endeavor to offer a favorable enterprise environment to boost performance of firms.