FACTORS AFFECTING THE GROWTH OF SMALL AND MEDIUM SIZE ENTERPRISES IN KENYA
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The importance and role of small and medium-sized enterprises (SMEs) to realizing macroeconomic objectives of societies, especially in developing nations, has attracted the attention of researchers in the entrepreneurship discipline for decades. SMEs face a number of growth and performance restraints especially in accessing: finance, markets, training and technology. Research carried earlier on SMEs reveal that the growth and performance in most of them are less than satisfactory. The study aimed to establish the factors affecting the growth of small and medium size enterprises in Kenya. Specifically, the study focused on the effect of finance, innovation, technology, and government policy on the growth of small and medium size enterprises in Kenya. The study used a descriptive research design. The target population comprised owners of SMEs dealing in vending of foods, clothing, beverages, electronics, auto parts, construction materials and general retailers and wholesale merchandisers in Nairobi County. A sample size of 317 respondents was selected by use stratified random sampling technique. Primary data was collected using self-administered questionnaires. Data analysis was done by use of Statistical Package for Social Sciences (SPSS Version 25.0). Filled questionnaires were referenced and items in the questionnaire were coded to enable data entry. Frequencies, percentages, mean score and standard deviation were estimated for all the quantitative variables and information was presented in form of tables and graphs. Inferential data analysis was done using multiple regression analysis. The research found that lack of awareness of funding opportunities for long term credit by financial institutions has influenced the growth of asset value in business. The research revealed that knowledge in business planning will enable business to improve in performance. The research established that even with the existing immense amount of trade-related information and the possibility of accessing national and international databases, many small enterprises still continue to rely heavily on private or even physical contacts for market related information. Moreover, the research found that incubation policy, and MSE business registration regime affects the growth of small and medium size enterprises in Kenya to a moderate extent. Also, the study found that the number of successful entrepreneurs had been constant for the last 5 years while the number of employees had decreased for the last 5 years. The study concluded that the role of Governments and its relevant institutions should be to facilitate the dialogue, and to create instruments and formulate policies in partnership with the banks to promote the financial aspects of successful SME development. The study recommends that owner managers of SMEs should be sensitized on how to access credit information through funding programs provided by financial institutions. It also recommends the need for government to develop policies which will be able to enhance credit guarantee services for SMEs to access financing in Kenya. The government should offer some supporting services to enhance management skills and knowledge so as to enable the entrepreneur to manage their business and exploit the available business opportunities as well as being creative and innovative.