Determinants of the Performance of Youth Owned Micro and Small Enterprises: a Case of Mutarakwa Division, Bomet County, Kenya

Abstract

Many youth-owned micro and small enterprises in Kenya face a number of challenges that hinders their business performance. This study examined the determinants of performance of youth owned businesses in Mutarakwa Division, Bomet County in Kenya. This study focused on how finance, infrastructure, management, and marketing influence the performance of small enterprises owned by youth. Several literatures were reviewed to identify a gap that exists in relation to this study. The study adopted descriptive research design with a targeted population of 377 youths who operate micro or small-scale enterprises. A sample of 102 was selected from four strata using simple random sampling tazechnique. This study used questionnaires and interviews to collect the data. Data gathered from this study was cross-examined and analyzed using Excel and Stata (version 12) software. The findings of this study show that the majority (69.6%) of youth operating micro and small enterprises were males. The majority of the respondents (43.5%) were aged 26-30 years. The findings show that 80.4% of the respondents made a profit between Ksh 0 and Ksh. 10,000, which is a clear indication that the performance of the majority of youth-owned businesses in Mutarakwa Division were performing poorly. The study found that most of the respondents (71.7%) had incurred losses. The findings show that more than half (53.3%) of the respondents relied on personal savings as their source of start-up capital, 37% relied on loans, and 3.3% and 6.5% got their start-up capital from friends/relatives and family respectively. The Pearson’s correlation between the amount of start-up capital and monthly profit was 0.38. The study found that 72.8% of the respondents either disagreed or strongly disagreed that poor customer relationship and handling was a challenge to their marketing whereas 19.6% either agreed or strongly agreed. The findings indicate that 85.9% of the respondents rated the infrastructure as either poor or very poor and only 14.1% rated it as either good or very good. It was found 91.3% of the respondents believed that infrastructure had influence on the performance of their businesses, and only 8.7% believed that infrastructure did not have any influence on their businesses. The study established that most of the respondents (75%) went to up to secondary or college, 12% went to university, 9.8% did technical or vocational education, and only 3.3% either went to primary or had no formal education. Majority (67.4) of the respondents had no training in business management and only 32.6% had training in business management. It was also found that majority of the respondents (90.2%) had five or less years of experience in operating or managing a business. The results from Chi-Square test (χ2 (12) = 27.935 and p = 0.006) found a statistically significant association between the years of experience in business and monthly profit made. The findings of the study show that the four factors studied (access to finance, marketing, infrastructure, and managerial skills) had influence on the performance of youth enterprises in Mutarakwa Division. The national and Bomet County government should provide affordable alternative sources of finance for MSEs. Both the national and the county governments should ensure improved provision of necessary infrastructure. The government should try to link MSEs with private contractors so that the operators are able to secure market opportunities. The youth entrepreneurs should be trained on business management skills.