Effects of Rural Electrification on the Growth of Small and Medium Enterprises-a Case of Nakuru Town (2003-2021)

Abstract

Lack of reliable electricity or reliable supply of power can be an impediment to sustainable economic growth and development of any country. The general objective of the study was to establish the effects of rural electrification on growth of SMEs in Nakuru Town. In specific terms, the focus of the inquiry was on power interruptions, accessibility to rural electrification as well as cost of rural electrification. The theory of constraint was embraced. Descriptive cross-sectional survey was adopted targeting 1000 small and medium enterprises located within Nakuru Town out of which 285 were selected through stratified random sampling. Primary data was collected through questionnaire that was administered to respondents from, the small and medium enterprises and the interview guide were used to interview key informants from Kenya Power and Lighting Company. The questionnaire was pilot tested prior to actual data gathering so as to determine validity and reliability. The analysis of the data was done through Statistical Package for Social Sciences version 24 using frequencies and regression analysis and presented through tables. Content analysis was used to process qualitative information. The findings were that 57.7% variation in the growth of small and medium enterprises in Nakuru is explained by variation in rural electrification. The study further noted that while power interruptions (β= -0.490, p<0.05) and cost of rural electricity (β= -.128, p<0.05) had negative but significant effect on growth of small and medium enterprises in Nakuru, accessibility to rural electrification (β=0.137, p<0.05) had positive and significant effect. The study concluded that rural electrification is a significant predictor of the growth of small and medium enterprises in Nakuru. The study recommends that the Kenya Power and Lightning Company officers in Nakuru County should monitor the frequent power interruptions in the region and establish the root causes so that appropriate response measures are undertaken to mitigate this challenge. The regional managers of Kenya Power and Lightning Company in Nakuru branch should ensure there are adequate technicians who can easily be accessed and deployed in case there are power related issues. The government of Kenya should implement the directive of subsidizing the cost of electricity and ensure the same has been fully implemented.