Socio-Economic Factors Affecting Small and Medium Enterprises in Kariokor Market, Kamukunji Constituency, Nairobi County, Kenya
In sub-Saharan Africa, small and medium-sized enterprises, or SMEs have become the most important pillar of a growing economy. In fact, they produce 80 percent of all jobs and represent nearly 90 percent of all businesses. This sector in Kenya contributes significantly to its economy by way of taxes, utilization and conservation of local resources, foreign exchange, and provision of goods and services. However, the sector is characterized by challenges of which access to financial resources is most significant. The overall objective of this study is to understand how social economic factors such as the access to finance by SMEs, alternative sources of funding to SMEs and accessibility to microfinance services affects small and medium enterprises in Kariokor Market which is the representative case study. Research design is in form of a descriptive study where data was collected using questionnaires that were administered to the target population. The research used contingency theory and resource based theory. Simple random sampling methods were used to draw sample cases used for this study. The research used a conceptual framework in conceptualizing the factors affecting small and medium enterprises. The data was analyzed by generating descriptive statistics such as percentages, and measures of central tendency. The data was presented by using tables and figures. SPSS (statistical software package) was used to generate the descriptive statistics and to establish the relation between the dependent and the independent variables of the study. The study findings will act as a reference point to other researchers in the same field thus facilitating their studies, and will provide relevant information that will help the government in planning and formulating and implementing policies. The data was coded and analyzed qualitatively and quantitatively using SPSS. The study found that access to finance, laws and regulation and availability of management experience are the key socio-economic factors affecting the performance of businesses in Kariokor Market. The study recommends that banks and other financial institutions should come up with creative policies that make it easy for SMEs to access financing, and both the National and County Governments of Kenya should lessen the time taken to obtain licenses by reducing bureaucracy and they should support training entrepreneurs to better manage their businesses.
Key terms: Socio-Economic Factors, Small and Medium, Market