An analysis of the factors influencing the growth of Micro and Small enterprises in Kenya: a case of metal, textile and wood work industries in Kariobangi North, Nairobi
Mwangi, Lucy W
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Over the years, the importance of Micro and Small Enterprises (MSEs) as a contributor to economic growth, employment generation and social progress has been increasingly appreciated. It is with this recognition that the Kenya government has since the early 1970s had policies in place to support the viability, expansion and growth of MSEs. Despite these efforts, the sector has experienced numerous challenges which have limited its growth. The purpose of this study was to determine the factors influencing the growth of metal, textile and wood work MSEs in Kariobangi North, Nairobi Kenya. The study had hypothesised that the growth of these enterprises is affected mainly by poor access to credit and markets; inadequate skills and technology, poor infrastructure, and limited access to information. The study also hypothesised that successful MSEs were: licensed, able to access finances, run by entrepreneurs with high levels of education andlor vocational training, kept proper records and engaged in business planning. The study was conducted using a descriptive survey research design. Eighty five entrepreneurs were selected using stratified random sampling and systematic sampling techniques. However, only eighty entrepreneurs responded. Data was collected using questionnaires and key informant interviews. The quantitative data was analysed using Microsoft Excel package while the qualitative data was analysed through content analysis. The study was grounded on Schumpeter's theory of entrepreneurship and Penrose's theory on the growth of the firm elucidating both individual and firm level factors that may affect the growth of an enterprise. The study revealed that although about 64% of the enterprises studied were registered, only 4% of the firms had obtained their start-up capital from formal lending sources. The study also found out that 40% of the respondents had had no training in business skills. With regards to overall MSE growth, about 57 % of the businesses were reported to have stagnated over the past three years while 22% reported that their businesses had declined. The greatest hindrance to business growth among the MSEs was lack of finance as reported by 80% of the respondents, followed by lack of markets, lack of skills and insecurity respectively. Slightly above half (57%) of the respondents cited formalization of a business as a distinct characteristic of the successful MSEs, followed by increased access to financial services, increasing productivity and an extensive social network respectively. The study concluded that MSEs in Kariobangi face numerous challenges that affect their growth, chief among them lack of finance for expansion. The study therefore recommends that in order for MSEs to register positive growth there is a need to: increase access to financial services; address training needs in order to build capacity on management and business development and finally, create an institutional mechanism to support MSEs development.