Factors affecting grouth of small scale enterprise in Kenya

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A Research proposal Submitted in Partial Fulfillment for the Award of Diploma in Business Administaration to the Mount Kenya University JULY 2013 ACKNOWLEDGMENT I take this occasion to thank the Almighty GOD for blessing me with his grace. I extend my sincere gratitude to my MKU supervisors for giving the right guidance while undertaking this research proposal.
My thanks to my beloved parents whom am forever indebted to for their inspiration, love, financial and moral support they have offered me since the onset up to the completion of this proposal. DECLARATION I declare that this research proposal is my original work and has not been presented in any other university. This project has been submitted for examination with my approval as the University supervisor.
In the recent past, small scale medium enterprise sector in Kenya has witnessed a myriad of challenges which has affected their growth amid government concerted efforts of empowering small scale traders. The purpose of this research proposal therefore will be to assess the challenges facing small scale enterprises in Kenya, the extent to which government policies affects the growth of small scale enterprises and the contributions of small scale enterprises to the economy. A descriptive research design will be adapted for the study. The population of the study shall consist of small scale traders at Wajir Soko Mjinga market.
A simple random sample will be taken from the traders at Soko Mjinga market, representatives of the traders and senior official from the office of the governor Wajir County. Data will be collected using a structured questionnaire for the traders and an interview guide for the county government officials. Descriptive statistics will be used for the study.
This topic will entail the introduction of the research proposal, statement of the problem, objectives of the study, research questions, and significance of the study and the limitations of the study. . 1 Background Of The Study In the recent past, detailed attention has been paid to the small scale enterprise sector with a great deal of funds being channeled to the same. This has been the case because this sector is strongly coming up due to its target population. The small scale enterprise sector has been recognized as an integral component of economic development and a crucial element in the effort to lift countries out of poverty. Small- Scale businesses are driving force for economic growth, job creation, and poverty reduction in most developing countries.
They have been the means through which accelerated economic growth and rapid industrialization have been achieved (Harris et al, 2006; Sauser, 2005). The sector targets unemployed youths who are majority of the population and who do not have the necessary capital to start their own business. These people are found in rural and urban areas of the developing countries. However, though the contributions of small scale enterprises to economic actualization have been generally acknowledged, entrepreneurs in this sector face many obstacles that limit the growth of their business and long-term survival.
Starting a business is a risky venture and scholars have warned that chances of small enterprises owners making it past the five-year mark are very slim (ILO, 2005). Major challenges facing small scale traders include lack of financial resources, lack of management experience, unhealthy competition, poor government policies, general economic conditions, failure to maintain business records, factors such as poor infrastructure, and poverty, high cost of borrowing funds and dumping of cheap foreign products among others.
Therefore, an understanding of the challenges affecting the small scale enterprise in Kenya will help the policy makers come up with interventions measures geared towards addressing the challenges and formulate policies that will stir growth of the sector. 1. 2 Statement Of The Problem Of late the government has been encouraging youth’s majority who are unemployed to start their own small scale business to become self reliant.
The government through the relevant ministry has been supporting these nitiatives by giving out funds at low interest rates, formulating policies that favor small scale entrepreneurs and giving training to youths to sharpen their entrepreneurship skills. However, despite these efforts by the government the sector is faced with a myriad of challenges that hampers its growth. The research proposal will therefore seek to analyze the challenges affecting the growth of small scale enterprises in Kenya 1. 3 Objectives Of The Study This research proposal will seek to establish -: 1. The main challenges facing small entrepreneurs at Wajir Soko Mjinga market. 2.
How the national government policies affects the growth of the small scale business enterprise sector. 3. How Wajir County government policies affects the small scale traders in Wajir. 1. 4 Research Questions 1. What are the main challenges facing small scale traders at Wajir Soko Mjinga market? 2. What strategies are employed by small scale traders in countering the challenges that they face? 3. How do government policies affect the growth of small scale enterprises? 4. How shall county government policies affect the growth of entrepreneurship in the county? 1. 5 Significance Of The Study
The study will be useful and contribute to the following areas The study will enable the policy makers address the challenges facing entrepreneurship sector in Kenya. The study will explain how the policies of the new county government will affect small scale traders in Wajir County. 1. 6 Justification Of The Study Whilst various studies have been done on challenges affecting growth of small scale enterprise in Kenya, they have mainly focused on the large towns. Even though the factors facing small scale traders in small and large towns may be the same, their dynamism may differ.
From this perspective, it is imperative for the factors affecting these traders in small towns to be explored and analyzed. 1. 7 Limitations of the study Lacks of cooperation from interviewees – This, may be due to their busy schedule. However, the researcher should explain to them the purpose of the research and they will be able to avail themselves. The researcher may find it difficult to access enough materials needed for the study. 1. 8 Scope of the study The study will cover Wajir Soko Mjinga market, Wajir County government offices and ministry of industrialization Wajir branch.
The researcher will starts with Soko Mjinga market then to the other offices. The category of the researcher’s interviewees will entail the small scale entrepreneurs and officials within Wajir county government and ministry of industrialization. The study will cover the periods from year 2012 when Wajir Soko Mjinga market was commenced to 2013 CHAPTER TWO 1. 0. LITERATURE REVIEW The small scale enterprise sector is recognized as an integral component of economic development and a crucial element in the effort to lift countries out of poverty (Wolfenson, 2001).
The Kenya vision 2030 blueprint recognizes the crucial role of small scale enterprises in Kenya in industrial development and emphasizes the development of industrial parks in five towns  Kisumu, Mombasa, Eldoret, Nakuru and Nairobi – to spur industrial growth. To address the challenges facing youths the Kenya government established the youth enterprise development fund in the year 2006 as a key strategy that will increase economic opportunities for youths and reduce unemployment among the youths who account for over 60% of the unemployed in the country.
According to economic survey (2006), small scale enterprise sector contributed greatly in economic development. However, despite their impact past statistics indicate that three out of five businesses fail within the first few months of operation (Kenya National Bureau of Statistics, 2007). These problems include lack of access to credit, inadequate managerial and technical skills, and low levels of education, poor market information, inhibitive regulatory environments, and lack of access to technology (Harper 1974; ILO, 1989; House et al. 991).
Lack of credit has also been identified as one of the most serious constraints facing SMEs and hindering their development (Oketch, 2000; Tomecko & Dondo, 1992; Kiiru, 1991). Infrastructure as it relates to provision of access roads, adequate power, water, sewerage and telecommunication is also a major constraint in the development of SMEs (Bokea, Dondo and Mutiso, 1999). According to Amyx (2005), one of the most significant challenges facing small scale businesses is the negative perception towards SMEs.
Potential clients perceive small businesses as lacking the ability to provide quality services and are unable to satisfying more than one critical project simultaneously. However, despite the various studies in the sector a lot remains to be done to fully understand and address the myriad of challenges facing the sector. CHAPTER THREE 3. 0 RESEARCH METHODOLOGY 3. 1 INTRODUCTION This chapter outlines the overall methodology that is to be used in the study. This includes research design, the population and sample of the study, data collection methods and accompanying research procedures to be used in the study, data analysis and presentation. .
The appropriate design that will be used in the study will be descriptive research design. The purpose of descriptive research will be to produce an accurate representation of persons, Saunders (2009). The design will assist the researcher in determining the challenges facing small scale traders particularly traders at Wajir Soko Mjinga market, as well as identifying the challenges that hinder sustainable growth. 3. 3 POPULATIONS AND SAMPLE. 3. 3. 1 POPULATION Target population will include those people who will be forming the audience rom where the sample will be derived for interviews and questionnaire. The target population of the study will be traders at Soko Mjinga market, officials at the governor’s office Wajir and officials from the ministry of industrialization Wajir branch. The researcher will select fifty traders, one official from the governor’s office and one official from the ministry of industrialization. 3. 3. 2 SAMPLE The study will adopt random sampling method. On the governor’s office and ministry of industrialization, judgmental sampling will be used. 3. 4 DATA COLLECTION METHODS AND TOOLS.
For traders the data will be collected by use of questionnaire that will be filled by each of the respondents while an interview guide will be used for the governor’s office and ministry of industrialization. 3. 5 DATA COLLECTION INSTRUMENTS For traders data will be collected by use of questionnaire that will be filled by each of the respondents while an interview guide will be used for the governors and ministry officials. The questionnaire will be administered to traders and each of the sampled respondents will be contacted personally through telephone by the researcher before actual presentation of the questionnaire.
The questionnaire will be pilot tested to test the validity and reliability before distribution to respondents. 3. 6 DATA ANALYSIS Data will be analyzed using descriptive statistics. Descriptive statistics will be used to summarize, describe and present data; quantitatively through use of tables, graph and charts. Further, qualitative techniques will be used to analyze qualitative responses answers from open ended questions and unstructured interviews that will be conducted on officials from the county governors and ministry.

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