The Effects of Financial Institutions Intervention on the Growth of Small Enterprises in Kenya: A Survey of Public Service Transporters in Kisii Municipality

The small enterprises (SEs) play an important role in the Kenyan Economy. According to the Economic Survey, the sector contributed over 50 percent of new jobs created in the year 2005. Despite their significance, past statistics indicate that three out of five businesses fail within the first few months of operation. Approximately 80% of Kenya enterprises are Small enterprises which are highly attractive to banks. There has not been clear understanding of the key drivers of small enterprises growth. Kisii town is a home of 20 financial institutions, all of which offer almost the same financial services to the small entrepreneurs within the Municipality and yet there is a mixture of growth and lack of it in small enterprises in the municipality. This project was to investigate the effects of the financial institutions intervention in growth of Small Enterprises in Kisii Municipality. The specific objectives were: To establish the role of credit provision on growth of Small enterprises in Kisii Municipality, to determine the adequacy of financial training offered by financial institutions in helping the small enterprises to grow, to determine the role of marketing information on growth of small enterprises in Kisii Municipality. From the sampling frame a representative sample of 90 respondents were obtained randomly and a survey was conducted on this sample using both structured and un-structured interview schedules. Data from the respondents was analyzed and translated into useful information using the statistical package for social sciences (SPSS) and the Minitab statistical software. Frequency distributions and multiple regression analysis were used to draw conclusions. Most of the businesses were more than a year in operation before the credit was granted. The study also established that most of the businesses obtained loans from banks. More than half of the sample had accessed credit from a bank. Second is micro credit financing institutions where the respondents reported to have got loans from SACCO, Chamas and friends and relatives also play a significant role in the provision of these services. The study revealed that interests could be expensive but manageable. The survey established that accessibility and availability of micro credit are positively related to financial performance of Small enterprises. The study concludes that accessibility to credit affects financial performance of Small enterprises positively. The easier it is to access credit, the higher the financial performance of the Small enterprises. However, access to credit is not that easier from the financial institutions considering the many requirements one has to meet before the credit is approved to the entrepreneur for use in the business. The study concludes that availability of credit positively affects financial performance of small and medium businesses. This is an indication that as credit becomes more available, the financial performance of business becomes better and hence a chance for business growth. Financial training was found to be playing a crucial role in growth of small enterprises, especially in assisting the businesses to repay back their loans in order to get more credit in future. The research further found out that the accessibility to marketing information and its availability to the entrepreneurs also affects the transporters in a positive way in their performance of the businesses.The study recommends that the government and financial institutions should make micro credit more accessible and available to enhance growth and development of Small enterprises through increased profitability as it was found that accessibility and availability of microcredit have positive impact on the performance of Small enterprises.The study also recommends that the government through it central bank should have financial policy that will help offer better interest rate that will enhances the accessibility of credit and enhance reduction of interest rates so as to uplift the financial performance of Small enterprises as it was found that high interest rates had a negative relationship with financial performance of Small enterprises.The study recommends further on financial training as it was found to be playing a crucial role in growth of small enterprises, especially in assisting the businesses to repay back their loans in order to get more credit in future. The researcher further recommends for the accessibility to marketing information and its availability to the entrepreneurs in order to positively assist the entrepreneurs in their day to day activities which was found to affect the financial performance of SMEs. The results of this study are expected to assist the county government and stakeholders to formulate and implement appropriate policies aimed at developing and empowering Small entrepreneurs. Keywords : Enterprise, Experience, Finance, Demand, Competition, Entrepreneu

The Effect of Types of Agricultural Credit Programmes on Productivity of Small Scale Farming Businesses in Kenya: A Survey of Kimilili Bungoma Sub County

Agricultural credit is considered as one of the strategic resources for pushing production to the high horizons consequently raising the living standards of the rural poor farming community. Harnessing the potentials of credit to stabilize and perhaps increase resource productivity and output growth in Agriculture is particularly justified when farmers face very low savings capacity, poorly developed rural financial markets and availability of appropriate farm technologies whose adoption is constrained by shortage of funds. Agriculture demands different forms of inputs to be productive, among which, credit is indispensable.Based on the need to promote an innovative, commercially-oriented and modern agriculture, Agricultural credit as a key constraint facing the farmers in food production was chosen for this study.The study examined the effect of Agricultural credit programmes on the productivity of rural farming households in Kimilili Bungoma Sub County.The study adopted a cross sectional survey design, wheredata was collected, with the use of a well-structured questionnaire, from 123 randomly selected small-scale rural farmers, who are users of micro-credit based on their statement, through multi-stage sampling technique.The data was processed and analyzed using the Statistical Package for Social Sciences (SPSS). Descriptive statistics was used to analyse the qualitative data while cross-tabulations were done to examine the relationship between variables. Farmers’ perceptions about the effect of credit were measured on a likert scale. The findings of this study showed that, Agricultural credit has the capacity to enhance the income of farmers who utilize it by more than 100% and this clearly defines the role of credit in the farming sector. Credit not only helps to expand the economies of size but also helps to increase the productivity of farms from the available resources. All the three types of credit i.e. seasonal, development and agribusiness credit complement each other in addressing the value chain. i.e. production ,processing and marketing. It is recommended among other things that, the government should provide attractive incentive system to farmers so as to boost production from the smallholder sector. Along with this, “Soft loans” should be advanced to farmers on very generous terms. The findings of this study suggest that, agricultural credit is productive, but its outreach is limited to a small proportion of the population. Its outreach should therefore be expanded and collateral requirements relaxed so that credit has its desired impact. There is little doubt that, agricultural credit channeled in the right direction can have significant anti-poverty effects, and that broadening the outreach of formal lending institutions can be a step forward in the right direction. Keywords: Credit, Productivity,Income, Agriculture credit, Seasonal credit, Development credit, Agri- business credit

The Effect of Government Sectoral Expenditure on Poverty Level in Kenya

Poverty eradication has been one of the policies that has been pursued since independence years in Kenya. This study investigated the effect of sectoral government expenditure on poverty level in Kenya. Private Consumption per capita, a proxy measure for poverty, was the independent variable while education sector expenditure, health sector expenditure, agriculture sector expenditure and infrastructure sector expenditure were the independent variables. Time series data for the period of 1964-2010 was used and was tested for unit root using Augmented Dickey Fuller test whereby all variables were found to be integrated to I(1). The lag length as selected by Vector Autoregressive model was three. Co-integration analysis and error correction mechanism were used to establish presence of long run and short run relationships among the study variables. Presence of co-integration was confirmed using the Johansen test which showed there was one co-integrating equation. Vector Error Correction model indicated that there was a stable long run relationship between poverty level and sectoral government expenditure in Kenya. The regression results showed that agriculture sector and health sector expenditures have a positive and significant effect on poverty level while infrastructure sector expenditure has a negative and significant effect on poverty level. The effect of education sector expenditure on poverty level was insignificant. It is recommended that the government in Kenya increases expenditure allocation to agriculture and health sectors. Keywords: Poverty, government sectoral expenditure, co-integration, vector error correctio

Factors Affecting the Financial Performance of Listed Companies at the Nairobi Securities Exchange in Kenya

With the increasing trend of sudden corporate failure in both global and local context, shareholders and other stakeholders are increasingly becoming more concerned of the financial performance of their firms. The study therefore aimed to find out the factors affecting the financial performance of listed companies at Nairobi Securities Exchange in Kenya. It was informed by trade off and the agency theories. The study adopted an explanatory research design and 29 listed firms (excluding listed banks and insurance companies) which have consistently been operating at the Nairobi securities exchange during the period 2006-2012 were sampled. Purposive sampling technique was used. The analysis of the data collected from financial statement followed a number of basic statistical techniques. Descriptive statistics (mean and standard deviation) and inferential statistics (Pearson correlation and multiple-regression) were used to analyze data. Pearson correlation was used to ascertain the interrelationship between the variables, whereas multiple-regression was used to assess the extent of the effect of the independent variables on the dependent variable. Study findings showed that leverage had a significant negative effect on financial performance (?1 = -0.289, ?<0.05). Findings also showed that liquidity had a significant positive effect on financial performance (?2 = 0.296, ?<0.05). Company size had a significant positive effect on financial performance (?3 = 0.480, ?<0.05). The study also revealed that company age had a significant positive effect on financial performance (?4 = 0.168, ?<0.05). The study provides some precursory evidence that leverage, liquidity, company size and company age play an important role in improving company’s financial performance. The study suggests that there is need to determine an optimal debt level that balances the benefits of debt against the costs of debt and developing sound techniques of managing current assets to ensure that neither insufficient nor unnecessary funds are invested in current assets as maintaining a balance between short-term assets and short-term liabilities is critical. The study also suggest that firms should expand in a controlled way with the aim of achieving an optimum size so as to enjoy economies of scale which can ultimately result in higher level of financial performance. Keywords: Financial Performance, Liquidity, Leverage, Company Size and Ag

Factors Affecting Sacco Membership in Kenya: A Case of Nairobi County

Despite SACCOs being on the forefront to offer financial services to their members, they are faced with a myriad of challenges which include: poor customer care services, poor governance, lack of member confidence, low use of technology, insufficient financial services, high registration costs and increasing interest rates among others. There exists a gap in literature which this study aims to fill by trying to examine the factors affecting SACCO membership in Kenya. Specifically, the study sought to investigate the influence of financial services offered by SACCOs, members’ income and cost of SACCO services on SACCO membership in Nairobi County, Kenya. The accessible population of the study were members from 10 selected SACCOs within Nairobi County namely: Afya SACCO, Elimu SACCO, Hazina SACCO, Kenya Bankers SACCO, Kenya Police SACCO, Mwalimu National SACCO, Safaricom SACCO, Sheria SACCO, Ukulima SACCO and Kimisitu SACCO. A survey research design was used. The target population of the study consisted of 197,527 members who were drawn from the 10 selected SACCOs operating in Nairobi County. The sample size was 150 respondents from the 10 selected SACCOS in Nairobi County. Structured questionnaire were used to collect primary data. A regression model was estimated. The autonomous duration of SACCO membership by the sampled members all factors held constant was 7.35 years. On financial services offered by SACCOs, the results indicated that a unit drop in the rating of financial services reduced SACCO membership duration by 0.46 years. On absolute income of members, the results indicated that a unit increase in member’s absolute income had a positive impact in SACCO membership by 0.480 years. On the cost of SACCO membership, the results indicated that unit increase in cost of SACCO membership was likely to act as a prohibitive factor reducing duration of SACCO membership by 0.15 years. The following recommendations were made in lieu of the study’s objectives:- SACCOs should improve their financial services to attract members and retain them for many years. Some of the ways through which SACCOs can improve their financial services are through providing quarterly statements, providing loans which have short and long payment durations based on members capability and through the provision of insurance loans among others. On absolute income of members, SACCOs should continue to accommodate existing members as well as focus on targeting new members in the market who have high absolute incomes and thus high disposable incomes. On cost of SACCO services, SACCOs should ensure that that they have reasonable membership costs with no hidden charges. Members should be well informed about the costs they are likely to incur before they apply for membership.  This study will be useful both to researchers and academicians and policy makers. Researchers will use it as a reference for different studies, and by enabling the development of more studies under the field of factors influencing SACCO membership not only in Nairobi but Kenya at large. Policy Makers will understand factors which affect SACCO membership so as to make judicious policies which will have robust impacts on the members and society at large. Keywords: Savings and Credit Co-operative Societies, membership, financial services, members’ income

Factors Affecting Completion of Government Funded Projects, a Survey of Projects in the Ministry of Water and Environment

One of the major problems faced by projects is on timely task completion which is the ultimate goal in any project. The purpose of this study was to investigate factors affecting completion of government projects in the Ministry of Water and Environment. The study sought to identify the effects of timeliness of payments of contracts; skills of project manager; political intervention and project planning process on completion of projects in the Ministry of Water and environment. The research design employed in this study was the survey method where the top management in the Ministry of Water and environment were targeted. A sample size of 30 respondents was selected – 15 respondents from Ministry and 15 Contractors who have been engaged in the Ministry’s projects before. The researcher used primary data (questionnaires and interviews) to carry out the study. The questionnaires included structured (close-ended) and unstructured (open-ended) questions. Data was analysed using descriptive statistics. The descriptive statistical tools helped the researcher to describe the data and the features of data that were of interest. The mode (most commonly attained measurement or value) was used more so to analyse the responses in the questionnaires. This was used as the response/measurement that appears most in a particular question/variable among a sample of subjects. From the findings the researcher concluded that, the success of any projects is dependent on a number of factors which include timeliness of payment which affects completion to a great extent (mean of 3.7), Skills of the project manager moderately influences completion (mean of 3.4), political interferences on the other hand influences completion to a great extent (mean of 3.6) and project planning which influences completion to a moderate extent (mean 3.1). The researcher recommends that though teamwork management is employed to a great extent among the building professionals in Kenya, completion of government projects courses should be incorporated in the training of professional to enhance their skills to higher levels, payment procedures should be simple and well laid down, those involved in projects should be familiarize themselves with dispute resolution procedures, there should be a culture change in our political group and goals should be communicated at commencement of a project

Effects of Human Resource Audit on Employee Performance in Secondary Schools in Kenya; A case of Non Teaching Staff in Secondary Schools in Nyamache Sub County.

Human Resources Audit measures human resource outputs and effectiveness under the given circumstances and the degree of utilization of human resource skills. The purpose of the study was to assess the effect of Human resource Audit on employee performance in secondary schools in Nyamache Sub County. The specific objectives for the study included establishing the skills of non-teaching employees working in secondary schools in Nyamache Sub County, to find out whether Human resources comply with the managerial policies, procedures and legal provisions and to establish whether Human Resource competence affects performance. The study was carried in selected secondary schools in Nyamache Sub County. The study involved selected non-teaching Staff working in secondary schools to assess the effect of Human resource Audit on employee performance in secondary schools in Nyamache Sub County. The study used descriptive research design because it assessed the nature of prevailing conditions. The target population for the study was 500 employees working in secondary schools in Nyamache Sub County. The study sampled 150 respondents; simple random, stratified and purposive sampling technique was used to select a sample for this study. Data was analyzed using descriptive statistics specifically frequencies, percentages; and likert scale analysis.  The data was presented using frequency tables and then findings were interpreted. .The study will be significant to policy makers, the Ministry of Education, school managers of secondary schools and other researchers. .The study observed that secondary schools in Nyamache Sub County embraced Human resource Audit since when respondents were asked if they have a Human resource Audit program in school a bigger percentage said they do. The study also established that employees were compliant with managerial policies, procedures and legal provision provided by the government. The study found out that employee competence affects the performance of employees.  The study recommended that there should be training programs in schools to ensure that all the employees in the organization are trained on new skills and competence increased in order to perform better

Money Supply, Inflation Rate, Exchange Rate and Growth of Domestic Private Investment in Kenya

The objective of the study was to evaluate the effect of selected macroeconomic variables on the growth of the domestic private investment. The study used a time series quarterly data spanning 1997 t0 2018.  Autoregressive Distributed Lag (ARDL) model was adopted to examine if changes in select macroeconomic variables determine the growth of domestic private investment in Kenya. These selected macroeconomic variables are; central bank rate, the repo rate, t-bill rate, money supply, exchange rate, and inflation.  The bound cointegration testing procedure revealed the existence of a long-run cointegration. The long-run cointegrating model estimated shows that private domestic investment varies significantly and negatively with the central bank rate and the commercial lending rate as well. However, an increase in the money supply increases the level of investment. Another significant observation is that moderate inflation is critical in increasing the level of investment. These results point to one critical revelation; monetary policy conduct is essential in driving private domestic investment. An error correction model shows that 62% of deviation from the cointegration path is corrected with a quarter

Stock Market Reaction to Mergers and Acquisitions Announcements in Emerging Markets. Evidence from Mergers and Acquisitions Firms Listed in Eastern Africa Securities Markets

Stock market reaction to mergers and acquisitions announcements is a topical issue in corporate finance. Consequently, the topic has received attention in equal measure; however, the bulk of these studies are skewed towards the developed financial markets. The foregoing evidence raises a fundamental question; is the empirical evidence exhibited in developed financial markets applicable in the emerging markets? Using data from listed firms in Eastern Africa securities market involved in mergers and acquisitions for the period 1996- 2015, we computed cumulative abnormal returns for different holding period. Parametric t test was used to test the significance of the abnormal returns. Our findings revealed that acquirer firm shareholders earned a significant positive cumulative abnormal return during the entire event window that is [-20, +20].  On the other hand, cumulative average abnormal return findings revealed that acquiring firms earned positive return immediately after the acquisition announcement. However, the positive performance was short lived, four days after M&A announcement returns declined sharply. Keywords: Mergers and acquisition, cumulative abnormal return and Cumulative average abnormal return

Effect Of Mobile Phone Financial Services Usage On Business Performance In Rural Areas: A Case of M-pesa Uses in Kisii County.

The proliferation of mobile devices and technologies has brought about the introduction of a number of value added services, new technologies involving mobile transactions, while creating important commerce opportunities ranging from mobile banking to mobile payments. This study sought to establish the effect of mobile phone financial services usage on business performance in rural areas of Kisii County. The researcher used 30% of the target population resulting to 327 respondents.  Data was analyzed using percentage mean, minimum, maximum standard deviation, cross tabulations and multi-linear regression. The study found out firms that use mobile phone financial services register higher profits compared to firms that don’t use the mobile phone financial services. Therefore the researcher recommends that Mobile Network Operators to come up with more financial services that will be useful in the rural areas where the banking services are not common and come up with ways to ensure money sent to a wrong number can be retrieved even after the wrong receiver has withdrawn it. Key words: financial services, mobile phone, M-pes