Abstract:
Micro and Small Enterprise (MSEs) are a strong option for
Less Developed Countries (LDCs) to enable them create
employment, generate wealth and reduce poverty. The biggest
challenge of this development model in Kenya is that quite
often than not, the MSEs die off before their second
anniversary. One of the biggest constraints is their inability to
access credit to boost their sustainability and survival. This study looked into the factors affecting accessibility to credit by
MSEs in Kenya, a case study of Nyamira County. The specific objectives
were; to determine the effect of collateral on credit accessibility by
MSEs; to assess the effect of savings on credit accessibility by MSEs; to
establish the effect of entrepreneurial behavior on credit accessibility by
MSEs; and to analyze the effect of education and training on credit
accessibility by MSEs in Nyamira County. The theoretical framework
guiding this study was resource-based theory because credit is seen as
additional financial resource to an enterprise. The methodology
involved a descriptive survey design. The target population comprised of
74 MSEs sampled randomly from three markets in Nyamira County.
Questionnaires were used to collect primary data and collection of
relevant secondary data regarding MSEs was from the records of the
County office in charge of markets. Data was analyzed using descriptive
and inferential statistics, using SPSS version 17. Data presentation was
done mainly using tables. The study established that, all the factors
studied had varying effects on credit accessibility with savings having
the highest effect and education level of customers with least effect. The
study recommended that lending institutions should reduce the barriers
to credit accessibility for overall economic development, the application
of the concept of social business in Kenya, where the free market forces
will direct capitalist resources to benefit enterprise development among
the poor and also MSEs to use IT in their operations for efficiency and
effectiveness. Furthermore, it recommended that MSEs should train their
employees in customer care skills, in order to retain their customers as
well as extend their market share.
