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Research Paper | Management | Kenya | Volume 4 Issue 4, April 2015 | Popularity: 6.7 / 10

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Factors Influencing Growth of Youth Owned Small and Medium Enterprises in Nairobi County, Kenya

Huka Sharu, Dr. Wario Guyo

Abstract: Small and Medium enterprises (SMEs) contribution to the Kenyan economy is widely acknowledged, they cut across all sectors of the economy and provide many employment opportunities and generate widespread economic benefits. Youth owned small and Medium Enterprises are faced with several challenges in their operations. SMEs face a mixture of success and failure with past statistics indicating that three out five fail within the first few months of operation. The general objective of this study was to investigate the factors influencing the growth of youth owned small and medium enterprises in Nairobi County. The study also sought to find out the influence of entrepreneurial skills, credit access, government policy and market access on the growth of youth owned small and medium enterprises in Nairobi County. This study adopted a descriptive research design. The target population of this study was all the 1319 youth owned SMEs in Kenya registered with Youth Access to Government Procurement Opportunities Program (YAGPO). This study used a stratified random sampling method to select 10 % of the target population. The sample size of this study was therefore 132 youth SME owners. The study used primary data that was collected by use of questionnaires. In this study the collected data was edited and coded into a statistical package (Statistical Package for Social Sciences (SPSS) version 20) for analysis. Both descriptive and inferential statistics were used to analyze quantitative data. In descriptive statistics, the study used frequency, mean, standard deviation and percentages. A multivariate regression analysis was also carried out to determine the relationship between dependent variable and the four independent variables. The study established that entrepreneurial skills influence the growth of youth owned SMEs most followed by market access, government policy and credit access. The study established that some of the youth who had started SMEs had no training in business. This study therefore recommends that the government of Kenya should set up conferences and seminars to train entrepreneurs on business planning, book keeping, marketing, financial management and customer relations. The study also established that a good number of SME owners did not have access to credit. The study also recommends that financial institutions should consider reducing their requirements to fund the youth in their businesses. For instance, the can remove the collateral requirement in seeking for financing. The study also found that short repayment period and high interest rates were a challenge in obtaining a loan for their business. This study also recommends that financial institutions should increase the loan repayment period and reduce the interest rates. The study also established that government policies like business registration process, licensing and registration requirements and certification from various ministries affect the growth of SMEs negatively. The study therefore recommends that the government of Kenya should reduce the cost and smoothen the process of licensing and business registration.

Keywords: Credit access, Entrepreneurial skills, Government policy, Market access, SME growth Youth

Edition: Volume 4 Issue 4, April 2015

Pages: 973 - 980

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