Socio-Economic Factors That Affect Small and Medium Enterprises in Kariokor Market, Kamukunji Constituency, Nairobi County, Kenya.

Abstract

In sub-Saharan Africa, small and medium-sized enterprises, or SMEs, have become the most important pillars of growing economy. In fact, they produce 80 percent of all jobs and represent nearly 90 percent of all businesses in Sub-Saharan Africa. This sector in Kenya contributes significantly to its economy by way of taxes, utilization and conservation of local resources, foreign exchange, provision of goods and services. However, the sector is characterized by a number of challenges of which access to financial resources is most significant. The overall objective of this study is to understand social economic factors such as the access to finance by SMEs, alternative sources of funding to SMEs and accessibility to microfinance services. The study looked at the factors that affect small and medium enterprises in Kariokor market as the representative case study. Research design is in form of a descriptive study, data was collected using Questionnaires that was administered to the target population; the research used contingency theory and resource based theory. Simple random sampling methods was used to draw samples of the cases used for this study. The research used conceptual framework in conceptualizing the factors affecting small and medium enterprises. The data was analyzed by generating descriptive statistics such as percentages, and measures of central tendency. The data was presented by using tables and figures. SPSS (statistical software package) was used to generate the descriptive statistics and to establish the relation between the dependent and the independent variables of study. The findings will act as a reference point to other researchers in the same field thus facilitating their studies the study findings will provide relevant information that will help the government in planning and also to formulate and implement policies. The data was coded and analyzed qualitatively and quantitatively using SPSS. The study found out that access to finance, laws and regulation and availability of management experience are the key socio-economic factors affecting the performance of businesses in Kariokor Market. The study sought to establish the factors affecting the performance of micro and small enterprises in Kariokor Market in Nairobi County. A total of 274 questionnaires were administered and the study managed to obtain 200 completed questionnaires representing 73% response rate. The study therefore recommends that banks and other credit giving financial institutions should come up with creative policies that make it easy for the SMEs to access financing, both National and County governments of Kenya should lessen the time taken to obtain license by reducing bureaucracy and illuminating some hurdles along the way. further a research is needed covering all the markets in the county to find out whether the same factors are affecting other traders and research that covers medium and large farms.