The Effect of Microfinance Services on Financial Performance of Small Medium and Enterprises in Narok County
Abstract
The main purpose of the study sought to investigate the effect of microfinance services
on financial performances of SMEs in Narok County. The study was guided by specific
objectives as follows: to determine the significance of microfinance services on
promoting SMEs growth; to find out the contribution of microfinance services on
facilitating SMEs access credit; to analyse the effect of lending rates of microfinance
institutions on financial performance of SMEs and to determine the effect of small
frequent deposits to microfinance institutions on financial performances of SMEs in
Narok county. The study adopted a descriptive research design.
The study target population was 93 selected enterprises. Structured questionnaires were
used for data collection. The completed questionnaires were reviewed and edited for
accuracy, consistency and completeness. The responses were then coded and entries
made into Statistical Package for Social Science (SPSS version 20). The data was
analysed using descriptive statistics, such as mean scores, percentages and standard
deviations. Regression and correlation analysis was applied to show the relationship
between variables.
The study findings established that the existence of MFIS services has contributed to the
development of SMES; the provision of credit has increasingly been regarded as an
important tool for raising the incomes of youths, mainly by mobilizing resources to more
productive uses; making credit more accessible, the rates for borrowing and the lending
rates have been lowered at fair rates for easy access and availability to credit hence the
financial performance of the SMEs is increased and the promotion of SMEs and,
especially, of those in the informal sector is viewed as a viable approach to sustainable
development because it suits the resources in Narok County.
The study recommended that basic business skill training should accompany the
provision of micro loans to improve the knowledge of the poor to use these funds in
growth of their enterprises; MFIs should addresses capital investment decisions, general
business management and risk management in Narok County; policies should be placed
to regulate the growth of SMEs in the region and provide support for the starting
entrepreneur; MFIs should develop practical strategies and approaches in implementing
and supporting the bold ambition of reducing poverty in Narok County; microfinance
services in its entirety should report effect on savings, income and investments alongside
non-financial study specifically investigating these aspects and MFIs should also consider
the performance of the business before allocating money to the business owners.
Citation
Master Of Business Administration , University Of Nairobi, 2014Publisher
University of Nairobi