Role Of Microfinance on Growth of Small and Medium Enterprises in Urban Centers in Kirinyaga County

Abstract

Microfinance institutions have a role to play on small and medium enterprises performance. The current study sought to find out the role of Microfinance institutions on small and medium enterprises performance in urban Kirinyaga County. Specifically the study sought to determine the effect of performance evaluation on small and medium enterprise performance, effect of training on small and medium enterprises performance and to establish the effect of the use of information technology on small and medium enterprises performance. The study was guided by Small and medium Firm Growth Theory, the Micro credit theory, Life Cycle Theory, Poverty alleviation Theory, and Games Theory of Microfinance. Descriptive research design was adopted to answer the research questions. Stratified sampling technique was used to select a sample size of 158 respondents. Descriptive, correlation and regression analysis design were applied to analyse the data. The study found a negative significant relationship between performance evaluation and small and medium enterprise performance, a positive significant relationship between training, use of information technology and small and medium enterprises performance. There is need to develop performance evaluation metrics customized for every small and medium enterprise, all small and medium enterprises should be sensitized to have a fully-fledged information systems rather than the current scenario of accounting systems among the majority. Training should be enhanced to ensure that small and medium enterprise benefits optimally.