Effects of Micro-Financing on Growth of Small and Micro Enterprises in Mombasa County

Veronica W. Ngugi; Dr F. Kerongo

Abstract: Majority of small and micro enterprises in Kenya are mostly out of scope of formal banking services. They depend on MFIs loans to finance their business operations. The fundamental objective of this study was to assess the effects of Micro financing on growth of small and micro enterprises in Mombasa County. Despite access to credit SMEs growth remains a major problem. Access to credit should enable a business to achieve their growth objective. Despite this it is interesting to note that most of the SMEs could not survive third year of incubation period. Descriptive Survey method was employed in this study. The study adopted stratified and systematic random sampling method. The sample size was 157 SMEs. Semi-structured questionnaire was designed to facilitate the acquisition of data. Data was collected from 102 respondents; a response rate of sixty five percent. Sales; income and competitiveness were used as the independent variable while growth of SMEs as dependant variable. Descriptive statistics was used to analyze data. Results indicated that microfinance has positive effects on growth of SMEs. Majority of the owners indicated that microfinance has enabled them to expand businesses; build their business assets. Also ability of the business to complete was enhanced.

Keywords: Small and micro enterprises; Micro financing; SMEs? growth; Microfinance institutions; Mombasa County