Social-economic factors influencing financial performance of businesses supported by micro-finance institutions in Kangundo sub-county Machakos County

Abstract

The SMEs sector has continued to play an important role in Kenyan economy. It is the objective of every entrepreneur to grow their businesses to large extent .To achieve this, most of the entrepreneurs make use of microfinance services. Despite the efforts, many of the businesses are still not able to survive beyond their fifth birthday. It is in this view that the research sought to establish the social economic factors influencing performance of businesses supported by microfinance institutions in Kangundo Sub County. The objectives of the research were; among other things, Influence of demographic factors, technological factors, business characteristics, and effect of human resource on the financial performance of businesses funded by microfinance institutions, this was done on different types of businesses (cyber cafes, green grocers, hardware shops, and general shops). The study was targeting 500 SMEs who were registered business inlets in Kangundo Sub County. The table was used to select 113 respondent from a population of 500 .This sample was taken as a representative population in the sub county. Data was analyzed using descriptive statistics such as percentages, and frequency tables. Using statistical package for social science (SPSS), Data was analyzed based on descriptive statistics and the results was used to establish relationship between independent and dependent variables. Descriptive design was be used to explain business categories. Structured questionnaire and observation were used to collect the data. Ten respondents were used to test the reliability of the research instruments. The response rate was 66% of the selected 113 were able to fill the questionnaire completely and return on time. Data was analyzed from 75 respondents. The findings of the study were that, education and training (3.1188), business characteristics (4.4267) and infrastructure3.4158) as mean had more influence in the financial performance of businesses. The study will be useful to community with the sub-county using it to plan for expansion of businesses in the area.