Factors influencing access to credit by youth entrepreneurs in Sotik sub-county Bomet county, Kenya
Abstract
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ABSTRACT
The youth comprise a significant proportion of the Kenyan population. Due to the prevailing
high rate of unemployment, self employment is one of the avenues through which the youth can
earn a living and contribute towards growth of the economy. One of the ways through which
youth can gainfully employ themselves is through starting and operating their own businesses.
This calls for entrepreneurial skills, availability of market and capital. For the youths to raise
capital either for start up businesses or expansion of existing ones they need reliable sources.
This study was designed to assess the factors influencing access to credit by youth entrepreneurs
in Sotik constituency, Bomet County. The aim of the study was based on four objectives; To
start with, it was to investigate the extent to which the cost of the loans (interest rates and
administrative costs among others) influenced access to loans by youths in Sotik Constituency.
Next, the study was to examine how collateral influenced access to credit by youths in Sotik
Constituency. Then, it also explored the extent to which education and entrepreneurial training
of youths influenced access to loans by them in Sotik Constituency.Further, It was to determine
the level at which application procedures for credit influenced access to loans in Sotik
Constituency. Finally, the researcher examined how access to information influenced access to
loans in Sotik Constituency. This study targeted all the youths aged between 18 and 35 years
operating small businesses in Sotik-Sub County. They are found in small market centers. There
were 120 licenced small scale youths entrepreneurs who are engaged in different kind of
business in Sotik-Sub County. Because of small number of small scale youths entrepreneurs in
Sotik-Sub County, all of them were sampled, census method was used. Data was collected by
use of questionnaires composed of open ended and closed ended questions because it was easy
to administer, cheap and less time consuming. The study used questionnaires to solicit
information in line with objectives of the study. Target population of a survey is the entire set of
units for which the survey data are to be used to make inferences. It defines those units for
which the findings of the survey are meant to generalize. Piloting was done using split half
technique. Opinions of experts, peer review were used to check the validity of the instruments
and reliability. This study used descriptive survey design. Descriptive survey designs are used
when the objectives are systematic or descriptive of facts and characteristics of a given
population or sample of the population or area of interest is factual and accurate. In Sotik-Sub
County, level of education of majority of licenced small scale youths entrepreneurs 48(43.6%) is
primary and below thus literacy level is very low among them and secondary level 39(35.5%),
majority of youths entrepreneurs 96(87.2%) in Sotik-Sub County had not engaged in
training,42(39.1%) of small scale entrepreneurs are in the age bracket of ( 32-35) ,100(90.9%)
did not have any form of collateral required by lending institution for them to access credit.
2(1.8%) borrowed loans very frequently,5(4.6%) do it frequently, 33(30%) borrowed
occasionally and 70(63.6%) rarely borrowed. 60(54.5%) had taken an average of one year of
repayment, more than (90%) who were the majority were of the opinion that application
procedures and repayment rules hinder access to loans by youths. Data was then edited, coded
and analyzed using descriptive statistics. The results were presented using frequency tables and
percentages. - SPSS Version 20. The findings indicated that small scale youth entrepreneurs
face many challenges such as lack of collaterals, high interest rates cumbersome application
procedures and lack of education and entrepreneurial knowledge. Based on the findings,
conclusions, recommendations and recommendations for policy formulation were drawn.
Recommendations for further research were also established so as to fill the gaps that might
have been left out in the research.
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- Faculty of Education (FEd) [5981]
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