Influence of microfinance services on the growth of small and micro enterprises at Dagoreti corner in Nairobi county, Kenya
The contribution that Small and Micro Enterprises (SME) sector makes to their respective communities and economy at large is now commonly recognized and thus there are high expectations of the SME sector. The purpose of the study was to assess the influence of Microfinance Services on the growth of Small and Microenterprises. To achieve this purpose, the study was guided by four research objectives including: investigating the influence of microfinance services on provision of capital to the SMEs in Kenya; assessing the influence of microfinance services on economic empowerment of the SMEs in Kenya; investigating the influence of microfinance services in promoting entrepreneurship in Kenya; and examine the influence of microfinance services provision on management skills development in the SMEs in Kenya. The study focused on the MFIs and SMEs within Dagoreti Corner area in Nairobi County. Nairobi County is preferable because it’s the capital city and most of the MFIs are within the county. Dagoreti Corner has a lot of SMEs in different industries that ensured the information received was unbiased and logical. Dagoreti corner has a large population of young people who would benefit from MFIs to develop and grow their SMEs. This study used descriptive survey research design. The population of this study comprised of the 197 SMEs within Dagoreti Corner. The study specially sought to interview SME owners as they are the ones involved in decision making on matters concerning rising of capital. This study used stratified random sampling to sample 60 respondents. The study used a questionnaire in order to collect data. The questionnaire had both open and close ended questions. The completed questionnaires were checked for completeness to ensure consistency. The data was then coded to enable the responses to be grouped into various categories. The findings were presented by use of Tables and graphs. From the findings 51% said that MFI has influenced the provision of capital to a great extent. Those who said that MFIs influenced economic empowerment to either a great extent or very great extent were 60%, 56% said that MFIs influence economic empowerment to either a very great extent or great extent and 49% said that MFIs influence management skills development to a very great extent. From the findings the study concluded that MFIs have increased the accessibility of loans due to reduced need for collateral. The study also concluded that there is flexibility of payments due to the reduced and flexible interest rates which enabled entrepreneurs to increase their savings, increased their confidence and financial management. The study made the following recommendations that the entrepreneurs come up with strategies that will highlight those other factors as well as develop measures in which to counteract with them, that MFIs offer training on how the employees can improve the performance of their business through better strategic management skills, that the government develop policies that will ensure training of management skills among all entrepreneurs and that MFIs increase their training frequency and target a larger market so as to improve the performance and promote the growth SMEs which will contribute to the growth of the economy.