FACTORS AFFECTING CREDIT ACCESS FROM MICROFINANCIAL INSTITUTIONS AMONG SMALL SCALE YOUTH ENTERPRISE FARMING PROJECTS IN KIAMBU COUNTY KENYA

Patricia Ndegwa

Abstract


Credit is an important instrument that can enable small-scale business operators overcome their liquidity constraints. The objectives of the study included to determine the effect of management skills on credit access among small-scale youth enterprise projects, find out whether interest rates affect credit access among small-scale youth enterprise; evaluate the effect of the number of lenders on credit access among small-scale youth enterprise projects and to find out the effect of collateral on credit access among small-scale youth enterprise projects in Kiambu County. This study adopted a cross-sectional survey design of the factors affecting credit access among small-scale youth enterprise projects in Kiambu County. The study population of the study consisted of all the small-scale youth enterprise projects in Kiambu County and the ministry of youth and sports department in Kiambu County. Primary data was collected by the use of questionnaires. Data was analyzed by the use of qualitative and quantitative techniques. The data was analyzed using SPSS to generate frequency distributions and percentages to assist the researcher in answering the research questions. From the study findings some of the factors that the respondents stated affected credit access were: interest rate charged by the banks, level of literacy, the number of lending institutions and the demand for collateral by banks. The coefficient for interest rates negatively relates to credit access among small-scale youth enterprise farming projects in Kiambu County. A unit decrease in interest rate leads to an increase in credit access by 31%, other factors remaining constant. It is indicated from the study findings that the number of lenders positively relate to credit access among small-scale youth enterprise farming projects in Kiambu County. The study findings show that the coefficient for collateral positively relates to credit access among small-scale youth enterprise farming projects in Kiambu County. It can be concluded that management skills, interest rates, the number of lenders and collateral affect credit access from micro financial institutions among small-scale youth enterprise farming projects. High interest rates charged by banks lead them to prefer personal savings and family sources of income. Since majority did not own assets they could not provide collateral for loans which is a requirement to access loan.

Key words. Credit Access, Youth Enterprises, Microfinance Institutions.

Credit is an important instrument that can enable small-scale business operators overcome their liquidity constraints. The objectives of the study included to determine the effect of management skills on credit access among small scale youth enterprise projects, find out whether interest rates affect credit access among small scale youth enterprise; evaluate the effect of the number of lenders on credit access among small scale youth enterprise projects and to find out the effect of collateral on credit access among small scale youth enterprise projects in Kiambu County. This study adopted a cross sectional survey design of the factors affecting credit access among small scale youth enterprise projects in Kiambu County. The study population of the study consisted of all the small scale youth enterprise projects in Kiambu County and the ministry of youth and sports department in Kiambu County. Primary data was collected by the use of questionnaires. Data was analyzed by the use of qualitative and quantitative techniques. The data was analyzed using SPSS to generate frequency distributions and percentages to assist the researcher in answering the research questions. From the study findings some of the factors that the respondents stated affected credit access were: interest rate charged by the banks, level of literacy, the number of lending institutions and the demand for collateral by banks. The coefficient for interest rates negatively relates to credit access among small scale youth enterprise farming projects in Kiambu County. A unit decrease in interest rate leads to an increase in credit access by 31%, other factors remaining constant. It is indicated from the study findings that the number of lenders positively relate to credit access among small scale youth enterprise farming projects in Kiambu County. The study findings show that the coefficient for collateral positively relates to credit access among small scale youth enterprise farming projects in Kiambu County. It can be concluded that management skills, interest rates, the number of lenders and collateral affect credit access from micro financial institutions among small scale youth enterprise farming projects. High interest rates charged by banks lead them to prefer personal savings and family sources of income. Since majority did not own assets they could not provide collateral for loans which is a requirement to access loan.

Key words: Credit Access, Microfinancial Institutions, Youth Enterprises

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