An Evaluation of Financing and Development of Small and Medium Enterprises in Mombasa County, Kenya

Abstract

The purpose of this research was to establish the relationship and the link between financing institutions and the level of development, growth of small and medium enterprises in Mombasa County. In the course of the research it was found out that many factors contribute to the growth and development of SMEs in Mombasa County as it is also envisaged in other parts of the country. However the element of financing came out clearly as a major factor that contributes positively to the development of SMEs. The research covered various categories which included but not limited to formal, informal, public and private owned enterprises. It was interesting to note that most of the SMEs could not survive the third year incubation period which was attributed to lack of adequate and relevant financing information. Empirical evidence from this study suggests that SMEs operators need information on available bank loans, sources of business finance, SMEs loan schemes, information on venture capital and other types of finances. This study was realized through the use of questionnaires both open and closed ended. A descriptive research design approach was employed to collect data from service, manufacturing, commerce and trade among other small and medium enterprises in Mombasa to actualize the objectives of this research. The data was then tabulated quantitatively in form of charts, tables and percentages and analyzed using SPSS and Ms. Excel. Further to this research, it was observed that generally Mombasa County has a weak enterprise finance information system that could not support, in particular, the information needs of SMEs. The findings revealed that general knowledge and awareness of financing options available to SMEs in Mombasa County are weak. This research will be of great importance to small and medium enterprises by opening their eyes to alternative sources of finance and probably giving them a better chance of development and become competitive in the global corporate setting. It may also go a long way in helping the policy makers come up with rules and regulations governing SMEs financial development. Some recommendations that the study made include the government involvement in setting out of policies to help in finance uptake by SMEs. In conclusion, the underlying issues are that all must be involved in order to use SMEs as wealth creating instrument as portrayed in Kenya’s vision 2030 (GoK, 2007).

Key Words: Financing, Development of SMEs in Mombasa, Kenya