The role of microfinance institutions on the growth of small and Medium enterprises a case of jua kali in eldoret town

Abstract

Finance has been identified in many business surveys as the most important factor determining the survival and growth of small and medium sized enterprises in both developing and developed countries. Despite their dominant numbers and importance in job creation, SMEs traditionally have faced difficulty in obtaining formal credit or equity. For example, maturities of commercial bank loans extended to SMEs are often limited to a period far too short to pay off any sizeable investment. This study will investigate the effects of Microfinance Institutions on the growth and development of SMEs in Kenyan rural areas. The study will be specifically carried out in Jua Kali industry in Eldoret to represent the SMEs trading. The study will sought to establish the effects of MFIs on the growth and development of SMEs; establish the sources of finance for the SMEs and investigate the constraints to the growth of SMEs. The study will adopt a non-experimental survey research design. Data will be collected using a structured questionnaire administered to 30 SME. Interview will guide administering to the staff of the SMEs .Interviews and observation will be carried out effectively. Data obtained will be processed and analyzed using SPSS.