Business incubation practices adopted by the youth enterprise development fund and the financial performance of Youth-owned Enterprises in Kenya

Abstract

n Kenya, Youth-Owned Enterprises (YOEs) create employment for youths and contributes to poverty reduction. Despite this, more than a third of start-up YOEs often fails before the third year of operation, resulting far-reaching consequences at all levels. Youth Enterprise Development Fund (the Fund) adopted a number of incubatory practices to increase YOEs’ longevity and financial performance. Even though a number of studies have evaluated the survival and financial performance of YOEs, none has been done in Kenya. The study anchored on the pragmatism school of thought, the cross-sectional design and mixed methods approach. Primary data were sourced in mid-2019, from 176 start-up YOEs financed by the Fund; and Officers of the Fund, among others. Key findingsshow that all the business incubation practices adopted by the Fund positively and significantly correlated with YOEs’ financial performance; with the correlation being strongest for entrepreneurship training (50.7%), followed by partnership linkages (42.0%), market access (40.7%), and infrastructure support (23.1%). Besides, all the incubation practices caused positive and significant effects on YOEs’ financial performance; while the regression model accounted for 44.1% of improvement in YOEs’ financial performance. The study concludes that business incubation practices adopted by the Fund significantly improved YOEs’ financial performance. This implies that: the Fund plays a crucial role in enterprise development; the incubation practices adopted by the Fund are insufficient; and that the Fund’s potential in enterprise development is yet to be exhausted. Efforts to strengthen the Fund should revamp the business incubation program with more strategies, among other measures.