Factors inhibiting growth of micro and small enterprises in Nairobi: A case study of Ziwani jua kali association motor-vehicle sub- sector.

Abstract

The informal sector has been in existence globally for as long can be remembered. However, micro and small enterprises in this sector have experienced numerous problems in Kenya in the last decade. Key to these problems is the inability of these enterprises to grow vertically at the expected rate. Although these problems can be attributed to the economic slump experienced during the period in question, there was a need to establish the causes of these down-turn trend. This research was carried out to establish the causes of this phenomenon. The main objectives of this research were to establish how technological advancement influences growth of micro enterprises. Another objective was to determine how marketing strategies can enhance potentiality of growth of motor-vehicle micro enterprises. Besides these, the study examined the influence of regulatory policies on the functioning and expansion of micro enterprises. Finally, the study determined the role that social organizations (Jua Kali Associations) in enhancing enterprise growth. The research is a case study carried out on a cluster of entrepreneurs in Ziwani who are involved in motor-vehicle enterprises. The research design used is a systematic random sampling. In this design, every Kth respondent was selected after randomly selecting a number between one and four. The Kth number was arrived at by calculating the sampling interval as follows; K =Population size = 795 = 13 Sample size 60 A sampling frame was used in the selection process. After selecting the first respondent randomly, every thirteenth respondent was selected from the population frame of 795 until the required number of 60 respondents was obtained. After a careful analysis of the data collected summary findings were as follows. The level of education acquired by the majority of respondents (43)or72% of them is primary education. This has hampered technological transfer to this sector because they do not possess the capacity to adapt to the latest technology. Other factors were experience in business, income and acquisition of tools and equipment, which were directly related to technological acquisition. With regard to access to markets, 37 respondents who form 62% of those interviewed admitted that they make no effort to advertise their products but just wait for their customers. This has also retarded growth. Considering the legal and regulatory framework, the study established that 53 respondents or 88% did not pay for business licenses. They cited the reason as being the high costs of acquiring licenses from the local authorities. Associations play a pivotal role in enhancing the growth of enterprises. 38 or 63% of those interviewed agreed that they actively participated in association matters. This participation directly influenced development of their enterprises. The study recommends that entrepreneurs in the motor-vehicle industry especially at Ziwani should improve their mode of practice if they are to grow at all. They must get further training in skill enhancement so that they can be able to adapt the latest technology which will enable them to advance. The government should also create a favorable environment that will enable micro and small enterprises to develop. This can be done by formulating policies that are supportive to the expansion of the enterprises. Key to these are the policies relating to rules and regulations which have been too stringent for many years. Further research on other factors that retard growth of enterprises can be carried out by other researchers. The factors that this study took into account are just a few out of the numerous that affect enterprises adversely. Cost of raw materials proper operating sheds are factors that could be studied.