Sources of finance for Nairobi based "Jua Kali" business firms

Abstract

This study sought to find out the problems facing Jua Kalil businessmen in raising finance and the sources that they use to raise finance. The need for this study arose from the fact that small business firms like the "Jua Ka Li." businesses cite lack of finance as the major constraint hampering their growth. In order to achieve the objectives, primary data was collected from "Jua Kali" businessmen operating in the Eastlands region_ of Nairobi. This was accomplished through the use of a questionnaire which 'vas addressed to the own er-s of these business firms and administered by the researcher. Data anaTysis revealed that most "Jua Kali" businesses are started on an individual basis through personal savings. The analysis also found that the major constraint facing "jua Kali" businesses is lack of adequate capital and once the initial capital problem has been overcome they can almost sustain themselves through the use of retained earnings,. Retained earnings was found to be the most important source used to finance over 75 per cent'of the entire working capital needs of these enterprises. Lack of market was also found to be another cause of lack of finance after "Jua Kali'' businesses are operational. On the whole, the study found that Jua Kali business firms suffer from inadequate institutional financing principally because of lack of collateral to pledge.