FACTORS AFFECTING THE ESTABLISHMENT OF SMALL AND MEDIUM - SIZED ENTERPRISES (SMEs) IN STAREHE CONSTITUENCY, NAIROBI COUNTY

Abstract

Small and medium business ventures around and within Nairobi County have experienced little growth in size. Close to half of the businesses fail after operating for a short while. This kind of failure unfortunately does not only affect new players; it also affects old and already established businesses hence the purpose of this study examined the factors affecting establishment of SMEs in Starehe, Nairobi County. The study was guided by the following specific objectives; to determine the effects of access to capital on establishment of SMEs in Starehe, Nairobi County, to explore the effects of government support on establishment of SMEs in Starehe, Nairobi County and to determine the effects of managerial skills on establishment of SMEs in Starehe, Nairobi County. This study was anchored by the following theories; Resource Based View and Positive Accounting Theory. The research design for this study was descriptive research design. The target people of the study consisted of SMEs taxpayers in Starehe, Nairobi County. This population was targeted to give comprehensive information that was significant for analysis and explanation of the data. The study population comprised of 373 SMEs within Starehe, as per the Nairobi County register. The sampling technique that was used in this study is stratified random sampling. The researcher used questionnaire as a tool for data collection. The questions presented to the respondents were closed ended questions. Both quantitative and qualitative data were collected. This study used both primary and secondary statistics, also used quantitative and non-quantitative methods to conduct the analysis of the results. The data analysis procedure involved the use of quantitative techniques whereby the information to be dealt with was derived from the questionnaires. The quantitative technique was used in employing statistical methods such as the ones listed below: The following techniques of analysis and interpreting data were used: Tabulation, Bar graphs, Pie charts and Percentage. Multiple regression analysis was used to establish the factors affecting establishment of SMEs in Starehe, Nairobi County. The findings revealed that Access to capital has a positive influence on Establishment of SMEs in Starehe in Nairobi County. The results showed that Government support practices have a moderate influence on Establishment of SMEs in Starehe in Nairobi County. Majority of the respondents agreed that Managerial skills had a negative influence on Establishment of SMEs in Starehe. The study concludes that Access to capital, Government support and Managerial skills have significantly affected Establishment of SMEs in Starehe in Nairobi County. This study recommends that the central government work with private sector financial providers to address the challenges facing SMEs in terms of access to finance. The role of government funding in resolving the financial crisis facing SMEs is a matter of controversy that needs to be thoroughly investigated. It is therefore important to examine the effectiveness of the electoral system in Kenyan literature and to look at the progress made in promoting fiscal reform by SMEs.