FINANCIAL SERVICES AND FINANCIAL PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN CHANGAMWE SUB-COUNTY, MOMBASA COUNTY
Abstract
The purpose of the study was to investigate the effect of micro-finance services on financial performance of Small and Medium Enterprises in Changamwe Sub-County, Mombasa County. The study adopted descriptive survey research design to study the relationship between the variables. The target population of the study was 312 registered SMEs with five and above employees and have been operating for more than five years within Changamwe Sub-county. Simple random sampling technique was used to select a sample size of 175 respondents with the help of Fishers formula. The study was quantitative and primary data was collected by use of a structured questionnaire which was developed based on the research objectives. Data analysis was done with the help of Statistical Package for Social Science (SPSS) version 25 tool. Descriptive statistics and inferential statistics were the data analysis techniques used. Analysed data was presented in frequency tables. The study findings established that the microfinance institutions offer credit to small businesses with high interest rate and processing fees. However, despite the cost of credit been high, the microfinance institutions offer creditors favorable repayment terms. The microfinance institutions’ terms and requirements of offering credit to small businesses was punitive and locked many small businesses from getting credit facilities. This is because most of these small businesses did not keep formal business transaction records which are prerequisites for credit accessibility. The study concluded that small business owners have opened a fixed deposit account to enable small businesses accumulate savings for reinvestment. Also small business owners had formed group savings under the supervision of microfinance institutions. The group savings enables small business owners to pool funds from members to serve as collateral for credit access. The study recommended that small business owner/managers should mobilize savings through opening and maintaining fixed deposit account to enable small businesses to accumulate savings for reinvestment. In addition, the small businesses should form common interest groups under the auspice of microfinance institution to consolidate savings through funds pooling so as to enable the small businesses to access microfinance credit facility easily by using group savings as collateral.
Key Words: credit provision, savings mobilization, microfinance advisory services and training services
CITATION: Njuguna, D. K., & Ali, I. A. (2022). Financial services and financial performance of small and medium enterprises in Changamwe Sub-County, Mombasa County. The Strategic Journal of Business & Change Management, 9 (2), 846 – 861.
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DOI: http://dx.doi.org/10.61426/sjbcm.v9i2.2302
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