African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4131

Full Length Research Paper

Effects of microfinance services on the performance of small and medium enterprises in Kenya

Irene Rotich
  • Irene Rotich
  • Moi University, Kenya.
  • Google Scholar
Charles Lagat
  • Charles Lagat
  • Moi University, Kenya.
  • Google Scholar
Japhet Kogei
  • Japhet Kogei
  • Moi University, Kenya.
  • Google Scholar


  •  Received: 11 July 2014
  •  Accepted: 09 March 2015
  •  Published: 14 March 2015

Abstract

The Micro, Small and Medium Scale Enterprises (MSMEs) sector in Kenya has grown tremendously over the last two decades but its growth is characterized by low productivity and survivalist enterprises. The sector is however very strategic in providing future employment for the economy. This paper reviews the effects of microfinance services on the performance of MSMEs using an explanatory research design. The study targeted 429 MSMEs registered by the Kiambu Municipal Council and sampled 270 enterprises. The study utilized multiple regression analysis set draw inferences on the study using SPSS statistical package. The study found access to savings schemes, managerial training and loan grace period to be statistically significant in determining the performance of MSMEs. This study concludes that increasing provision levels of micro finance will result in increased performance of micro enterprise. The study makes recommendations for microfinance service providers and policy development partners.

 

Key words: Microfinance, MSMEs, enterprises, performance, financial services.