Factors influencing financial sustainability of enterprises funded under the youth enterprise development fund program in Mombasa county
This research project dealt with factors influencing financial sustainability of youth enterprises funded under the Youth Enterprise development fund in Mombasa County. A report from the Ministry of Youth Affairs revealed that repayment rates of beneficiary enterprises from the Coast province were very low. Of concern was the fact that 3 out of the 4 constituencies of Mombasa County were in the bottom half of the province and 2 were in the last 50 in national rankings in terms of debt recovery. The purpose of this study was to examine the factors that influenced the ability of these enterprises that receive funding from the YEDF to meet the financial obligations of their operations and service their loans as and when required. Literature surveyed revealed four prominent factors in relation to financial sustainability, namely; leadership profile, financial planning, financial and administration procedures, and internal methods of financing. The researcher dwelt on these factors in carrying out the study. The study was conducted through a descriptive survey. Random sampling and purposive selection was used to pick the groups sampled and 5 YEDF officers as key informants. Data was collected using questionnaires and interviews. Questionnaires were analyzed and presented using tables and in form of percentages, means and standard deviation. Findings from the interviews were analyzed for content and presented in narrative form according to the thematic areas in relation to the variables. The study revealed that most enterprise groups consisted of male members with a majority having attained high school education. The leaders and members in most groups had no prior experience in business. Though most groups appreciated the importance of financial plans, few businesses had documented their plans and were therefore likely to change them frequently. Additionally most groups appreciated the importance of having administration and financial procedures and controls and checked their records on a weekly or monthly basis. However the study also revealed that most groups only drew up an income and expenditure account and few drew up balance sheets and cash flow statements implying a lack of knowledge or understanding in key financial concepts. The study showed that personal contribution from group members was the most popular form of internal financing. However it was noted that savings from income of the group scored lowly, implying that in most cases reinvestment into the business was not a priority for the group members and this could greatly affect the financial operations of the business. The null hypotheses were accepted for the hypotheses tests conducted on the variables under study implying that further research is needed to identify other factors that influence financial sustainability of these enterprises. It was therefore the recommendation of the researcher that the groups be given more training to enable them understand key financial concepts and strengthening monitoring and evaluation of these groups by the YEDF officers. The researcher has also suggested that a similar study could be carried out in other counties as well as studies on other factors that could affect the financial sustainability of these groups.