Factors influencing growth of small microenterprises in Ngurubani town, Kirinyaga county Kenya

Abstract

o Small and medium enterprises (SMEs) play a vital role in Kenya’s economy and are considered the backbone of industrial development in the country. However, few studies have examined their development, challenges and future prospects. In Kenya the SME sector has contributed over 50% of new jobs but despite their significance, SMEs are faced with the threat of failure with past statistics indicating that three out five fail within the first few months. The sustainable growth of the Kenyan economy is directly related to the rate of enterprise creation and development.The study therefore sought to examine the factors affecting growth of SME's in Ngurubani Town, Kirinyaga County, Kenya. The study reviewed literature based on availability of finances, use of entrepreneurial skills ,knowledge and use of marketing as a tool of enhancing growth and the level of use of technology in running the businesses. The study employed a descriptive survey research design on a target population of 200 SME's which was aimed at identifying the factors affecting their growth. The study was done in Ngurubani Town in Kirinyaga County, Kenya. The data for this research was collected using structured questionnaires. The data was analysed using Statistical Package for Social Scientists (SPSS) version 17 and chi-square test was used to determine the relationship between the different variables. The study established that most of the SME's borrowed loans from Banks as a source of financing but there were problems associated with interest rates, time taken to access the funds and the minimum requirements to qualify for the loans.Most Managers were not willing to employ people with entrepreneurial skills which could be associated with cost. Most managers accepted that marketing was important for the growth of their business but few had invested in it. All the managers agreed that technology would be an integral part of their business to grow but most had not invested in computers and internet. The study concludes that availability of finances,application of entrepreneurial skills, use of marketing and technology had influence on the growth of SME's . The study recommends; for the Government to explore on the best way to support financing of SME's. Also for managers to be encouraged to carry out marketing and adopt technology in running of their businesses.