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Allan Kibet Kibichii - Master Student (Finance), Jomo Kenyatta University of Agriculture and Technology, Kenya

Dr. Fredrick Wafula - Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya


The main goal of the study was to assess the effect of microfinance services on the growth of small and medium scale businesses. The research was focused on small and medium scale businesses in Nairobi County. A descriptive survey research design was used to assess the various business categories in Nairobi County.  The collection of data was done through the utilization of a well-structured questionnaire and secondary data matrix. Additionally, a stratified random sampling approach was utilized to select 225 SMEs from a target population of 100,982 registered SMEs by Nairobi County Licensing Department. This was considered to be representative of the whole population of Nairobi County. The findings were offered and explained through the utilization of tables with percentages, frequencies, standard deviations, and means. Furthermore, multiple regression was undertaken to explain the link between the loan provision, insurance provision, and training provision and growth of small as well as medium businesses. Based on the study, the research participants concurred that microfinance institutions have strongly and positively impacted the growth of their enterprises by way of their products. Also, the regression analysis outcomes found that there is a significant relationship between the growth of small and medium businesses and the provision of loans, insurance with r-square magnitudes of 0.83,0.48, and 0.74 respectively. Moreover, the ANOVA outcomes also agree with the presence of a statistically significant relationship between the predictor variables and the dependent variable with an F value <0.05. Premised on the findings of the study, it was determined and concluded that indeed the growth of SMEs in terms of sales, business expansion, and increase in the number of employees is impacted by changes in loans, insurance, and training provision and that relationship is positive. The research also found out that the loans and training provision had the highest impact on the growth of small and medium businesses in Nairobi County as illustrated by the strong positive correlation and relationship. Also, the research recommends that stakeholders and governments need to promote the availability of MFIs products and enrich them. Additionally, future studies should focus on the country as a whole as well as other counties so as the offer more data details about the impact that products being offered by microfinance has on the growth of small and medium enterprises. 

Full Length Research (PDF Format)