Influence of credit accessibility on the growth of micro enterprises in Nakuru central business District, Kenya

Abstract

The role played by micro enterprises in Kenya is significant. Credit accessibility has a great influence on the growth of the enterprises. Despite this high supply of credit, microenterprise operators still remain confined in narrow markets where competition is high with small sales volumes and profit margins are low. The purpose of the study was to determine the influence of the accessibility of credit facilities on the growth of micro enterprises in Nakuru Municipality. The study was guided by four objectives namely influence of interest rates, demand for collateral, influence of business skills and nature of business towards the growth of micro enterprises. The target population included 300 micro enterprises. The study employed descriptive research design with a sample size of 169. Data was collected through use of questionnaires. Inferential and descriptive statistics were used as data analysis techniques with the aid of statistical package for social scientist (SPSS). The findings of the study indicated that interest rates affect the growth of micro enterprises, p=-.019(.819> 0.05). There was a negative non correlation between collateral and growth of micro enterprises, p=.059 (487> 0.05). A strong positive correlation existed between business skills and growth of micro enterprises, p = .655 (0.007 <0.05) and nature of business influenced the growth of micro enterprises with a chi square value of 24.967. p= .050. The study concludes that high interest rates affect growth of micro enterprises, use of collateral lowers on access to credit, business skills influences on the growth of micro enterprise and the nature of business influences on access to credit. The study recommends need for government to regulate interest rates by banks and other financial institutions, there should be a reduction in collateral acting as security, need to improve on business skills and generally improving the business by the micro enterprisers through investing in time resources and finances. The results of the findings formed a learning base for future growth of micro enterprises in Nakuru