Factors Influencing the Performance of Youth Owned Small Businesses Initiatives: Case of Mathare Informal Settlement, Nairobi County, Kenya

Abstract

The purpose of this study was to determine the factors influencing performance of youth owned businesses initiatives. More specifically, the study focused on how individual factors and business socio-ecological factors impinge on the performance of youth-owned business enterprises. The unit of study was the youth who own small businesses and reside in the informal settlement of Mathare, Nairobi County, Kenya. This study was guided by three theories: the namely the: social learning theory, Maslow hierarchy of needs and rational choice theory. A descriptive research design was used to draw a sample of 201 from a universe of 409 youth owned small businesses. A mixed method approach was adopted to assemble quantitative and qualitative data. Quantitative data were collected using questionnaires and analyzed using SPSS package. Supplementary qualitative data were obtained from key informants and analyzed thematically. The study found that individual factors that motivating youth into own small businesses include: unemployment, desire for financial independence, achievement and social recognition. Other factors included: a strong family background and networks, business knowledge and experience, gender, higher educational attainment and entrepreneurial skills. Other important business social ecological factors included: positive societal attitudes, strong social networks, a conducive socio-political environment, easy access to markets and credit. Factors such as age, however, did not appear significant in influencing performance of youth owned small business initiatives. The study concluded that youth owned businesses is a positive phenomenon that should be supported as an alternative to formal employment which is increasing becoming scares in Kenya. However, for youth owned businesses to succeed, youth need to be equipped with entrepreneurial skills. Financial institutions should provide youth with credit at low interest rates and be less stringent on collateral as is currently the case. The government should reduce the cost of electricity and also relax the stringent legal requirements that limit business registration. The government should improve the road transport network in the informal settlement to ensure smooth transportation of business products. Finally, there is need for small business owners to be encouraged to adopt use of technology such as the social media in marketing their products.