Assessment of the Relationship Between Biashara Plus Loan of Co-operative Bank of Kenya and Performance of Funded Micro-enterprises

Abstract

This study sought to investigate the relationship of funding activities on MSEs in a bid to determine the relationship of MFIs’ lending to MSEs and entrepreneurs. It entailed finding out whether MSEs on Biashara Plus Loan program actually experience enterprise growth in terms of, among other variables, increase in sales, profits, fixed assets, employment creation and whether their financial requirements surpass those given in the programs and therefore seek finance from formal commercial banks which provide bigger loans than MFIs. Completely randomised design sampling technique was adopted in selecting the sample. Semi structured questionnaires were developed to help in the data capture. Face to face interviews were also conducted to gauge the overall feeling of the entrepreneurs towards Biashara plus loan initiative. Data analysis was done using SPSS (Statistical Programme for Social Scientists) to generate descriptive statistics much needed in the presentation of the results of the study. The study revealed that MSEs on Biashara Plus Loan program actually experience enterprise growth in terms of, among other variables, sales, profits, fixed assets and employment creation. Some MSEs grew to levels where financial requirements surpass those given in the programs and therefore interest for financing from formal commercial banks, which provide bigger loans than MFIs. The study findings support the strategy of promoting micro finance as a way of poverty reduction, job creation and development of diverse sectors. The Government of Kenya and other stakeholders should thus promote micro financing as a form of poverty and unemployment reduction agent by increasing this lending opening to people who cannot access credit from mainstream banks. Further research has been recommended to gauge the relationship of gender and business performance. In the recent past, it has been observed that many women are entering into small business sector. Gender balance has been pronounced in this section of investment and thus necessitates a study to establish whether or not it is true that businesses run by women are more successful than those run by men of late. This will enable women to be advanced more loans by lenders as they are the most disadvantaged in society in terms of investments.