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|An evaluation of effect of provision of micro-finance on the perfomance of micro-enterprises; a case study of youth micro enterprises under K-rep program, Kisii county, Kenya
|An evaluation of effect of provision of micro-finance on the perfomance of micro-enterprises
|Micro and Small Enterprises (MSEs) sector contributes 20% to the GDP of the Kenyan economy. The vision of micro ﬁnance is to promote the growth of micro enterprises. In pursuit of this vision, the rapid growth of Micro Finance Institutions (MFIs) has made MSEs access to credit more than doubled from 7.5% in 2006 to l7.9%in 2009. Despite this increase, a recent study has shown that over 50% of MSEs continue to have a deteriorating performance vw'th 3 in every 5 MSEs failing within months of establishment. This brings to question the effectiveness of the role of micro ﬁnance in promoting growth of micro enterprises. The overall objective of this study was to evaluate the effect of provision of micro ﬁnance on the performance of micro enterprises. The study was guided by the concept of micro ﬁnance which is the provision of ﬁnancial services to low income groups engaging in income generating activities. Objective of micro ﬁnance is to empower the poor. The study was conducted through a cross- section survey design. The population of study comprised 110 Youth micro enterprises under K- rep program in Kisii County. Simple random sampling technique was used to obtain a sample of 86 micro enterprises. A structured questionnaire was pre-tested for validity and reliability which was then administered to 86 youth micro entrepreneurs to collect primary quantitative data. The data were analyzed using descriptive statistics such as mean, percentages and frequency. A multiple regression analysis and Pearson correlation coefficient was used to establish strength, direction and signiﬁcance of relationship between extent of provision of micro finance and performance of micro enterprise. Data were presented using tables and graphs. The study ﬁndings indicated that provision of micro ﬁnance had signiﬁcant effect on the performance of micro enterprises. To enhance the performance, the study recommended inclusion of micro insurance in the microﬁnance package, extension of grace period from 1 to 3 months, raising minimum loan size and providing varying loan sizes to meet diversiﬁed business needs of youth entrepreneurs.
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