Entrepreneurship Development by Micro Finance Institutions Effect on the Growth of Micro and Small Enterprises in Nairobi Central Business District: A case of Jitegemea Credit Scheme Nairobi

Abstract

Delivery of micro credit to operators of micro and small enterprises (MSEs) is increasingly being viewed as a strategic means of assisting the ‘working poor’. Several impact studies carried out on contribution of MFIs in the development of MSEs reveals different observations. There is no empirical study indicating the potential role of improved lending facilities by both formal and informal microfinance institutions in alleviating problems of access to credit to small businesses and accelerating business growth through offering of financial training and instilling financial discipline amongst the small and medium enterprises. Furthermore studies of microfinance institutions have shown that credit markets are segmented and unable to satisfy the existing demand for credit in the small business sectors. The purpose of this study was to investigate the effect of MFIs in the growth of MSEs in Nairobi Central Business District (NCBD). This research problem was studied through the use of a causal research design. The target population comprised of 2956 owners of the MSEs in Nairobi central business district funded by Jitegemea Credit Scheme. This research study used a stratified random sampling method to select 296 respondents. Primary data was collected using questionnaires. The data was analyzed using descriptive statistics. A simple regression model was applied to determine the relative importance of the independent variables with respect to growth of MSEs. The study found entrepreneurial development contributes the to growth of MSEs. The study concludes that entrepreneurship development such as financial and management counselling as well as workshops, entrepreneurial skills and seminars offered by Jitegemea Credit Scheme influence growth in the enterprises. This study recommends that guidelines by microfinance institutions to finance MSEs need to be flexible to accommodate the MSEs only when financial institutions appreciates and give technical assistant to the MSE would be contributing to the MSEs to ensure success in the SME sector.

Keywords: Entrepreneurship development, Micro Finance Institutions, Micro and Small Enterprises, Nairobi Central Business District, Jitegemea Credit Scheme