Financial structure and growth of small and micro enterprises in Nairobi
Abstract
Small and Medium Enterprises have been recognized as key in the government
strategy for raising income and employment in Kenya. This is in realization that
the sector contributes about 18%to the Gross Domestic Product and employs
over 5 million people.
The study was carried out using a sample size of 60 SMEs drawn from the Central
Business District of Nairobi. The study aimed at establishing the financial structure
of SMEs in Nairobi, ascertaining their growth and establishing if there is any
relationship between financial structure and growth of firms.
The variables used to determine the growth of SMEs were sales, employees,
assets and size of business in terms of branches.
The study found out that SMEs financed most of their operations using internal
sources of funds and when debt was used it was mainly short term debt.
The study established that there was a relationship between financial structure
and growth of SMEs.There was a high positive correlation between proportion of
capital from MFls and growth of SMES internal sources of initial capital and
growth in terms of sales and employment.
The study established that SMEs have difficulties in accessing external funds and
recommends that the Government sets up a fund where SMEs can access funds
at low interest rates or the governments act-as a guarantor.
Citation
Masters of business administrationSponsorhip
University of NairobiPublisher
school of Business, University of Nairobi