FACTORS AFFECTING GROWTH OF SMEs: A CASE OF JUA KALI MOTOR GARAGES IN SHAURI MOYO, NAIROBI, CITY COUNTY

EPHRAIM NKONGE MAGAMBO

Abstract


The role played by small and medium size enterprises has been recognized the world over due to their ability to create employment at low cost, contribute to Gross Domestic Product, alleviation of poverty, equitable distribution of income, utilization and conservation of local resources, earning and conserving foreign exchange, provision of goods and services at reasonable  cost .  However, despite their immense contribution to the economies they are faced with a myriad of challenges including; unfavourable Legal and Regulatory Framework and lack of finances. The specific objectives of the study were to find out how those challenges affect growth and performance of the SMEs with particular reference to the Jua Kali Motor Garages in Shauri Moyo, Nairobi, City County. The review of firm growth theories by various proponents revealed that initially the entrepreneur requires some form of education to run an enterprise. They also require financial resources or capital and as the enterprise evolves to the next stage of growth the entrepreneur requires managerial skills and human as well as other resources. The research design was a case study of Jua Kali motor garages in Shauri Moyo, Nairobi, City County. The target population was 78 garages under three associations and a sample of 34 garages was selected from different categories of garages according to service rendered using stratified random sampling. Data was collected using questionnaires and interviews. It was analyzed using descriptive statistics by use of SPSS Computer software. From the correlation analysis it was clear that all the tested variables were significant as all of them had a p value of less than 0.05.   It can be noted  that lack of finance was the highest factor affecting business growth as it had a correlation values of 0.757 and a significant value of 0.0003 < 0.05, followed by Legal and regulatory framework which had a significant correlation of 0.59. The study established that business registration in Kenya was not a major impediment to business growth due to the digitization of the systems. The study also concluded that the stringent requirements to access finances are the main reason why most SMEs cannot access finances. The study also concluded that lack of technology did not affect the service quality of the garages though it had an effect on customer focus. The study recommends that for the expected return from investing in the Jua Kali sector to increase, there should be an improved outlook which is associated with a swing in government policy to encourage business formation and development through; the flexibility of tax regime to make it more user friendly. The study also recommends that all financial organizations/schemes should be adequately published to enable networking among agencies and institutions. As a result, clients approaching one institution will be made aware of the best option for their requirements. Since most of the respondents have a bad loan repayment history which is the major impediment of loan accessibility hence lack of finance. Further study can be conducted on the effects of Loan loss also in the determination of the interest rates level. The Jua kali artisans in Nairobi City County will benefit from the study as it will contribute to the knowledge of the small business sector and assist in streamlining their operations. 

Key Words: SMEs, Growth


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References


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