Factors influencing access to credit in the renewable energy sector: the case of biogas in Kenya

Abstract

The purpose of this study was to assess the factors influencing access to credit in the renewable energy sector: the case of biogas in Kenya. The study was guided by the following research question: what are the factors influencing credit access for firms in the biogas sub sector in Kenya. The research design was descriptive survey study in nature since it focused on more than one firm and it also focused on the status quo, in addition to describing the level of access by firms in renewable sector in Kenya. The target population of the study was the firms in biogas sub sector in Kenya. A sample of 48 firms was selected from all the firms using the random sampling technique and 40 of them responded satisfactorily. Both qualitative and quantitative data was collected using a questionnaire that consisted of both open ended and close ended questions. Data was analyzed using Statistical Package for Social Sciences (SPSS) and results presented in frequency tables to show how the responses for the various questions posed to the respondents. The data was then analyzed in terms of descriptive statistics like frequencies, means and percentages. Results from the study indicated that several factors determined the access of credit by the firms. These factors include age of firm, capital invested, size of the business, financial records, risk preference and access to information. All factors had a significant effect on access to credit and hence indicated that there was a low level of access to credit. The study concludes that firms in biogas sub sector had low access to credit from the banks. It was also possible to conclude that age of firm, capital invested, size of the business, financial records, risk preference and access to information influence the level of access to credit by renewable energy sector firms. The study recommended for regulatory policies that are BCE or small enterprises friendly including creation of credit information and training centers. Banks should customize biogas loan products that suit BCE's needs. BCEs should be encouraged to form bid to guarante.: each other when there is need to secure business loans.