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FACTORS AFFECTING THE GROWTH OF SMES: A STUDY OF SMES IN KAJIADO DISTRICT

Jackson Mnago Ndungo, Mr. Kingford Rucha

Abstract


Purpose: The study was an assessment of factors affecting the growth of SMEs in the case of SMEs in Kajiado District.

Methodology: The study adopted a descriptive case study design. A sample of 42 SMEs was taken out of a population of 420 SMEs. This represented 10% of the population. Systematic random sampling was used to select the actual SMEs to be included in the sample. A questionnaire was the preferred data collection tool. It contained both open and close ended questions. A Likert scale was used to establish the extent to which respondents agree or disagree with research questions. The data was analyzed by the use of descriptive statistics such as mean mode, medians, and percentages. The findings of the study were presented using tables and graphs and bar charts.

Results: Findings in this study indicated that that the generic causes of SME failure in Kajiado District were access to finance, competition, technology, regulatory framework. The root causes of SME failure in Kajiado District were management incompetence and poor working capital management. The study also concluded that the root and generic causes identified in ILO (1972) are still persistent despite efforts by policy makers to address the causes.

Unique contribution to theory, practice and policy: It was recommended that the financial institutions and microfinance institutions offering finance should also offer training on working capital management to SMEs. The ministry of labor in a joint effort with the ministry of education should engage both private firms and NGOs in rolling out training services through e-learning with the support of emerging technologies such as internet and computers. It was also recommended that SMEs should increase their uptake of technologies in order to improve on their product quality. The ministry for justice should address the issues surrounding the poor regulatory framework by ensuring that the backlog of court cases is addressed. Emphasis should be laid on the value addition of products and the development of local, regional and international markets. The credit reference bureaus is a welcome move in addressing the information asymmetry brought about by the inherent moral hazard and adverse selection in SMEs.



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Keywords


growth, SMEs, generic factors, management competence, competition

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