The Impact Of Capital Accessibility On The Growth Of Small Scale Enterprises In Migori County

Abstract

Small and medium-scale enterprises (SMEs) play important roles in the process of industrialization and economic growth in both the developing and developed countries. The study aimed to to determine the impact of the capital accessibility on the growth of SME‟s in Migori County. The was guided by trade-off theory, agency theory and capital channel model. The study employed across-sectional survey research design. Survey thus is more appropriate for this study as it enables the collection data from SMEs which was then processed to get information regarding the effect of capital accessibility on the financial performance of SMEs in Migori County. According to Micro and Small Enterprise Authority (MSEA) (2015), there are 378 SMEs in Migori County. The study comprised of 378 SMEs which have been actively conducting business activities within all the sectors of the economy for the years 2011 to 2015 (both inclusive). A stratified random sampling was more appropriate for the study. Later random sampling was carried out to pick the participants. Therefore, the study used a sample of 79 SMEs in Migori County. Semi-structured questionnaires were used to collect data at the premises of the participant SME‟s using an administered questionnaire. The questions are to be divided into sections, typically, and within each section, the opening question were followed by some probing. SMEs owners or managers were called to request an appointment for the data collection. The questionnaires were administered twice to the respondents and data obtained correlated. The data was analysed using descriptive statistics, such as mean scores, percentages and standard deviations to examine the meanings, themes and patterns that are latent in a particular text. Multiple linear regression models using ordinary least square stepwise method was applied to determine the relative effect of capital accessibility on growth of SMEs in Migori County. The research revealed that a unit change in collateral requirements while holding the other factors constant would lead to a decrease in growth of SMEs in Migori County. This shows that increased collateral requirements inhibits growth of SMEs in Migori County. On the nature of business, the study revealed that increased proper management in nature of business while holding the other factors constant would lead to an increase in growth of SMEs in Migori County. The study established that increased level of capital structure while holding the other factors constant would lead to an increase in growth of SMEs in Migori County. The research revealed that increased proper control of assets while holding the other factors constant would lead to an increase in growth of SMEs in Migori County. On the credit information sharing the study established that increased sharing of credit information creates transparency in business leading to an increase in growth of SMEs in Migori County. The study recommends that, in advocating the necessity to train young entrepreneurs in management skills, there are associated benefits of higher management skills in terms of higher productivity and growth of small scale enterprises in Migori County. The study affirms that Income level affects access to credit by small scale enterprises in Migori County who own small scale business enterprises Ministry of Trade should expand financial infrastructure such as credit bureaus and collateral registries that can increase access and reduce the costs of borrowing. The study recommends further research to be carried out on factors influencing the growth of entrepreneurial projects in Kenya