AN EVALUATION OF THE EFFECT OF FINANCIAL INSTITUTIONS ON THE

GROWTH OF SMALL-SCALE BUSINESSES IN KENYA, A CASE STUDY OF SMES

IN KISII COUNTY

NAJMA ALI SANTUR

A Research Project Submitted to the Kenya National Examination Council in Partial

Fulfillment of the Requirement for the Award of the Diploma in Business Finance to.

November, 2022

1
 Declaration and Recommendation

Declaration
This Research Project is my original work and has not been submitted to any other institution for
examination award.

Signature………………………….. Date ….………………

NAJMA ALI SANTUR

ADM NO: 23965

RECOMMENDATION

This Research Project has been submitted for examination with my approval as the College
supervisor.

Signature………………… Date……………………

MR. LABAN SONGOK

Lecturer,

School of Business

East Africa Institute of Certified Studies

2
 Dedication
I dedicate this project to my parents who have been encouraging, all the way to succeed and the
endless support that they have accorded me to the completion of this work.

3
 Acknowledgement
I am grateful to my Supervisor Mr. Laban for his professional guidance and positive criticism
which he gave me throughout the process of this study. I also acknowledge the management of
East Africa Institute of Certified Studies for their support while conducting the research project.

4
 Abstract

The general objective of the study was to establish the effect of financial institutions on the
growth of small scale business in Kenya, a case study of SMEs in Kisii County. The study was
guided by the following specific objectives; to establish the effects of trustee services by
financial institutions on the growth of SMEs; to determine the effect of credit facilities by
financial institutions on the growth of SMEs; to find out the effect of investment advice by
financial institutions on the growth of SMEs. The study adopted a descriptive research design to
obtain pertinent and precise information on the current status of the phenomena, situations and
5
groups under study (Mugenda and Mugenda 1999). The study targeted 450 registered small-scale
businesses in the area of study. Stratified random sampling was utilized to obtain a sample of 45
SMEs which 10% of the target population as recommended by (Mugenda and Mugenda 1999). A
closed ended questionnaire was used as the data collection instrument. This instrument was self-
administered in order to increase the response rate. The researcher enhanced reliability of the
questionnaires by subjecting it to a pilot test. The guidance and criticism of my supervisor was
used to enhance validity of the questionnaires. Data was analyzed using descriptive statistics
methods such as mean, weighted averages and frequencies. Analyzed data was presented in form
of frequency tables, percentages and explanations. The study found that; trustee services on the
growth of SMEs ensures credit accessibility, on the other hand, the study found out that interim
trustee services on the growth of SMEs enhances accountability and it also facilitates financial
management. Credit facilities on the growth of SMEs in Kisii town enhances credit accessibility,
similarly, the study found out that credit facilities on the growth of SMEs in Kisii town, leads to
impressed growth of the business, increased profit to SMEs and it also leads to increased overall
performance of SMEs. Investment advice on the growth of SMEs facilitates business expansion,
on the other hand the study found out that investment advice on the growth of SMEs, enhances
economic growth, leads to increased savings and it also enhances financial stability of SMEs in
the area. The study recommended the following; For SMEs in Kisii town to improve in financial,
growth and general performance they should perceive and enforce proper auditing procedures
and control mechanisms. SMEs in Kisii town should properly institute systems of control
measures improve the reporting process and also give rise to reliable reports which enhances the
accountability function of management of an entity. SMEs in Kisii town should prepare reliable
financial information which is a key responsibility of the management of every private
institution. The study recommends that further study should be done on; the impact of business
control measures on organizational performance

6
 Table of Contents
Declaration and Recommendation ...............................................................................................ii

Dedication...................................................................................................................................... iii

Acknowledgement........................................................................................................................iv

Abstract.......................................................................................................................................... v

List of Figures...............................................................................................................................ix

List of Tables..................................................................................................................................x

Abbreviations and Acronyms......................................................................................................xi

CHAPTER ONE............................................................................................................................1

INTRODUCTION......................................................................................................................... 1

1.1 Background to the Study........................................................................................................... 1

1.2 Statement of the Problem.......................................................................................................... 2

1.3 Objectives of the Study..............................................................................................................3

1.3.1 General Objective of the Study.............................................................................................. 3

1.3.2 Objectives of the Study...........................................................................................................3

1.4 Research Questions....................................................................................................................3

1.5 Significance of the Study...........................................................................................................3

1.6 Scope of the Study.....................................................................................................................4

1.7 Limitations of the Study............................................................................................................ 4

1.8 Assumptions of the Study..........................................................................................................4

1.9 Operational Definition of Terms............................................................................................... 5

CHAPTER TWO...........................................................................................................................6

LITERATURE REVIEW.............................................................................................................6

2.1 Concept on Microfinance.......................................................................................................... 6

2.2.1 The Grameen Solidarity Group theory................................................................................... 8

2.2.2 Village Banking Theory......................................................................................................... 8

7
2.3 Empirical Literature Review..................................................................................................... 9

2.3.1 Effects of Trustee Services on the Growth SMEs.................................................................. 9

8
2.3.2 Effect of Credit Facilities on the growth of SMEs............................................................... 11

2.3.3 Effect of Investment Advice on the growth of SMEs........................................................... 13

2.4 Research Gap........................................................................................................................... 16

2.5 Summary of Literature............................................................................................................. 17

2.6 Conceptual Framework............................................................................................................ 18

CHAPTER THREE..................................................................................................................... 19

RESEARCH DESIGN AND METHODOLOGY..................................................................... 19

3.1 Research Design...................................................................................................................... 19

3.3 Target Population..................................................................................................................... 19

3.4 Sample Design......................................................................................................................... 20

3.5 Data Collection Instruments.................................................................................................... 20

3.5.1 Reliability of the Research Instrument................................................................................. 20

3.5.2 Validity of the Research Instruments.................................................................................... 20

3.6 Data Analysis........................................................................................................................... 20

3.7 Data Presentation..................................................................................................................... 21

CHAPTER FOUR....................................................................................................................... 22

DATA ANALYSIS INTERPRETATION AND PRESENTATION.......................................... 22

4.2.1 Response Rate....................................................................................................................... 22

4.2.2 Gender Respondents............................................................................................................. 22

4.2.3 Education Level.................................................................................................................... 23

4.2.4 Effect of Trustee Services on the Growth of SMEs.............................................................. 24

4.2.5 Effects of Credit Facilities on the Growth of SMEs............................................................. 24

4.2.6 Effects of Investment Advice on the Growth of SMEs........................................................ 25

CHAPTER FIVE......................................................................................................................... 27

5.0 SUMMARY OF THE FINDINGS, CONCLUSIONS AND RECOMMENDATIONS.... 27

9
5.1 Summary of the Findings........................................................................................................ 27

5.2 Conclusion...............................................................................................................................27

5.3 Recommendation to the Study.................................................................................................28

5.4 Suggestions of Further Study.................................................................................................. 28

REFERENCES............................................................................................................................ 29

Appendix: I Introductory Letter................................................................................................31

Appendix: II Questionnaire........................................................................................................32

Appendix: III Work plan............................................................................................................35

Appendix: IV Budget.................................................................................................................. 36

List of Figures
Fig 2.1 Conceptual framework…………………………………………………………………..18

10
 List of Tables
Table 3.1 Target Population……………………………………………………………………...19
Table 3.2 Sampling Frame……………………………………………………………………….20

Table 4.1 Response Rate22

Table 4.2 Gender Respondents22

Table 4.3 Education Level23

Table 4.4 Effect of Trustee Services on the Growth of SMEs Table

4.5 Effects of Credit Facilities on the Growth of SMEs25 Table 4.6

Effects of Investment Advice on the Growth of SMEs 26

11
 Abbreviations and Acronyms
NGOs -Non-governmental Organizations

MFIs - Microfinance Institutions

MIX - Microfinance Information Exchange

SMEs - Small and Medium scale Enterprises

12
 CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

The advent of small and medium scale Enterprises (SMEs) throughout the world is noticeable
and has received international attention. This is partly because SMEs play a critical role in
employment creation, innovation, advancement and sustainable development. According to the
World Bank (2010), micro, small and medium-sized enterprises are socially and economically
important as they represent 99 per cent of an estimated 19.3 million enterprises in the EU and
provide around 65 million jobs representing two-thirds of all employment. In Africa, SMEs form
a greater majority of businesses and employ a significant portion of the population.

The role of small and medium scale enterprises (SMEs) in national economic development
cannot be overemphasized especially in income generation and distribution, capital
accumulation, employment generation, poverty reduction and the empowerment of people
especially women (Lisa, 2009). SMEs help in creating a new class of small entrepreneurs leading
to the expansion of the middle class and a wider distribution of income. Small firms can survive
in rural areas of the country because of their location flexibility, their lower requirement of
infrastructure, their nature to serve small geographic markets and their firm commitment to local
development (Lisa, 2009).

At the household level, SMEs are believed to be able to over time increase household incomes,
diversify household income sources, reduce household poverty and vulnerability levels through
the easy access to basic needs such as education and health care and earn entrepreneurs respect in
the community. This is even more visible in rural Ghana where on farm incomes are no more
reliable due to weather and other challenges.

SMEs are growing faster than agriculture. This is partly due to the fact that access to land is now
difficult and women for instance do not own land and agriculture is mainly rain fed; making
agriculture a seasonal activity. This means that the people can no longer depend on agriculture to
sustain their livelihoods. The population of the district is made up of about 55 per cent women
according to the 2004 District database. (.Consequently, these women who are not allowed to
own land invariably will venture into starting their enterprises to earn a living. This partly
explains why SMEs have grown very fast in this rural community to diversify their sources of
incomes and livelihood.

The issue of finance has been central in the operations of rural SMEs because such services
enable entrepreneurs to start, grow and sustain business without which most rural SMEs will
begin small and eventually die small, without ever having to see any expansion in terms of
output and profits in these rural communities that mostly lack the finances to start these
enterprises. Financial products have therefore become a centre stage issue because with such
products one can have access to the other resources that will kick the business started. By virtue
of their nature and what they offer, rural SMEs do not employ high levels of technology and
sophisticated infrastructure; hence the little financial assistance they receive can be the beginning
of a vibrant venture in the future. Financial assistance has therefore been noted as a fulcrum
about which rural SMEs revolve to grow sustainably.

1.2 Statement of the Problem

According to some proponents of Microfinance (such as Yunus, Otero and Littlefield), micro
enterprise is seen as one option to reduce poverty levels. Microfinance is seen as playing a
pivotal role about which many families and SMEs revolve to engage themselves in business to
cater for their children’s needs and themselves. According to Asiama et al, (2007) sustainable
access to microfinance helps alleviate poverty by generating income, creating jobs, allowing
children to go to school, enabling families to obtain health care and empowering people to make
the choices that best serve their needs. Critics however doubt MFIs’ contribution to SME growth
and have expressed concern over the overestimation of what microfinance can do in bettering the
livelihoods of people especially the poor (Asiama et al, 2007). A study by Hulme and Mosley
(1996) confirms the inability of microfinance to reduce poverty as it was found that most
contemporary schemes have been less effective than they seek to achieve, and that microfinance
is not a panacea for poverty alleviation and that in some cases the poorest people have been
made worse-off. Microfinance can therefore not be the silver bullet in the fight against poverty
and rural enterprise sustenance in Ghana and other developing countries (Hulme and Mosley,
1996). There is the tendency, as Boudreaux and Tyler (2008) suggest, to overestimate the
“micromagic of microcredit.” deAghion and Morduch (2005) have, however, warned that
rigorous impact studies have been few and have had mixed results. Non of the reviewed studies
focuses on the effect of microfinance institutions on the growth of SMEs in Kisii County. This
was the knowledge gap this study aimed to fill.

1.3 Objectives of the Study

1.3.1 General Objective of the Study

The general objective of the study will be to establish the effect of financial institutions on the
growth of small-scale business in Kenya, a case study of SMES in Kisii County.

1.3.2 Objectives of the Study

The study will be guided by the following specific objectives;

i. To establish the effects of trustee services by financial institutions on the growth of

SMEs;
ii. To determine the effect of credit facilities by financial institutions on the growth of
SMEs;
iii. To find out the effect of investment advice by financial institutions on the growth of
SMEs.

1.4 Research Questions

The study will be guided by the following research questions;

i. What are the effects of trustee services by financial institutions on the growth of SMEs;
ii. What are the effects of credit facilities by financial institutions on the growth of SMEs;
iii. What are the effect of investment advice by financial institutions on the growth of SMEs

1.5 Significance of the Study

It would enable policy makers in charting the way forward for integrating various MFIs in
national development agenda; It will also serve as a guide to MFIs on the need to upgrade their
services to meet required standards; MFIs would also be informed on the types of assistance
needed by SMEs and the training required to help their clients on sustainable basis and It would
contribute to the body of knowledge on similar studies and serve as reference for future research.

1.6 Scope of the Study

The study shall focus on the effect of microfinance credit firms on the growth of small scale
business in Kenya, a case study of SMES in Kisii County during the month of June 2017.

1.7 Limitations of the Study

The study will not take the state of microfinance institutions in the country as a whole because of
time and other resource constraints which confined the study to only in Kisii County. This made
it difficult to generalize the results to cover the whole country; however, it is believed that since
the issues of microfinance institutions in one county are not different entirely from other
counties the results will still be used for policy making.

In collecting data, the researcher may encounter some instances where some respondents are
busy selling and not ready to give any information. The researcher has to wait several minutes
before respondents sit and answer questions. Other respondents may be fearful that they are
going to be made to pay more taxes by the county Assembly and so are not ready to give
information. Extra minutes have to be used to explain the intention of the researcher vividly to
some respondents before they agreed to answer the questions. Despite these limitations the
researcher will be able to make headway and collect the necessary data to fulfill the objectives of
the study.

1.8 Assumptions of the Study

It will be assumed that the respondents are available during the research period and provided
viable and reliable information for analysis.
1.9 Operational Definition of Terms

Business : Refers to an organization or economic system where goods and

services are exchanged for money
Enterprise : Refers to an entrepreneurial activity, especially when
accompanied by initiative and resourcefulness.
Credit terms : These are the conditions that have to be met before the loan is
approved.
Economic Growth : Will refer to an increase in the market value of the goods and
services produced by an economy over time

Micro-finance : The provision of financial services to low – income clients

including the self – employed.
Organization : Refers to a social entity formed by group of people, an intricate
human strategies designed to achieve certain objectives.
Policy : Broad guidelines spelling out the expectation of the
organization on long term basis.
Security : Saving clients want to be sure that their savings are safe and
that the institution that collects them is stable.
 CHAPTER TWO
LITERATURE REVIEW

2.1 Concept on Microfinance

Microfinance will be defined as the provision of financial services to poor or low income clients
who are normally excluded from traditional financial systems as they are considered
“unbankable” due to lack of collateral, steady employment and a verifiable credit history
(Westover, 2008). It refers to a movement that envisions the poor or low income clients having
permanent access to an appropriate range of financial services that include credit, savings,
insurance and fund transfers (Yunus, 1997). In this regard, microfinance also means integrating
the financial needs of all people into national mainstream financial systems. This move relieves
those who find it difficult accessing finance from the hustle they go through in accessing
financial services to support their businesses.

To the Microfinance Information Exchange (MIX, 2011), microfinance refers to a variety of

financial services that target low-income clients, particularly women. This definition brings to
light the issue of women’s empowerment through the availability of small loans. Microfinance
is, therefore seen as a catalyst in assisting the poor and especially women, who are mostly
affected by conditions of loans simply on the grounds of not possessing property to serve as
collaterals. To Hagen (2004), microfinance does not only mean providing very poor families
with small loans to help them engage in productive activities or grow their small businesses but
over time, microfinance has come to include a broader range of services such as credit, savings,
insurance, money transfer facilities, as developers have come to realize that the poor who lack
access to traditional formal financial institutions require a variety of financial products to help
them grow their businesses, support their households and to engender sustainable livelihoods.

For analytical purposes, the MIX (2011) defines microfinance services as the ones opposed to
financial services in general, but as retail financial services that are relatively small in relation to
the incomes of both individuals and SMEs, and to the Asian Development Bank (ADB, 2011)
microfinance plays an important role in both the household and the SME levels by helping
people with services such as deposits, loans, money transfers and insurance to the poor and low-
income households to support the household and their microenterprises. The inclusion of
insurance in microfinance, popularly called ‘micro insurance’ aims at insuring the businesses of
SME clients so that in cases of default in paying loan and the collapse of businesses, there
becomes an option to revamp the businesses.

This helps SMEs to withstand unforeseen situations and to also recover from shocks from the
business environment in the bid to making SMEs sustainable. This component of microfinance is
however limited in the Ghanaian situation due to factors such as volatile business environments
and the low capital portfolio of most of the MFIs. In the same light, microfinance is considered a
service that offers poor people access to basic financial services such as loans, savings, money
transfer services and micro insurance (Consultative Group to Assist the Poor; CGAP, 2010,
Helms 2006). Todaroand Smith (2009), however see microfinance not only as the supply of
credit, savings and micro insurance but also some financial services made available to the poor
and vulnerable people who might otherwise have had no access to them or could not borrow only
on highly unfavourable terms.

The ongoing definitions depict that the term ‘microfinance’ encapsulates more than savings,
loans and insurance for the poor. The term ‘micro’ reoccurs in the meaning of microfinance
services because the financial status of clients suggests that they receive loans in small amounts
or limited services. Microfinance has therefore come to serve the needs of these people who are
otherwise not ‘attractive to the traditional sector banks’ and to also diversify the financial
services platform.

The ongoing definitions depict that microfinance as a service, a product, a movement and a vision
that encapsulates savings, loans and insurance for the poor. This way, microfinance services aim to
provide working capital which can help the recipient to start or improve a small scale business and
thus improve and sustain his or her livelihood and their family who would otherwise have been in
poverty. Very broadly defined institutional wise, microfinance might even include old and informal
lending services from friends or family members (Helms, 2006). This highlights that the scope of
microfinance encapsulates a number of financial services both formal and informal as posited by
Helms (2006). This also complicates the regulation environment of microfinance institutions. Steel
and Andah (2003), note that microfinance involves small financial transactions with low income
households and micro enterprises, using non standard
methodologies such as character-based lending, group guarantees and short term loans. Here, the
solidarity concept is applied in the sense that when the loan is given, the repayment of the loan
gives the other group members the chance to also get similar loans.

2.2 Theoretical Literature Review

2.2.1 The Grameen Solidarity Group theory

This theory is based on group peer pressure whereby loans are made to individuals in groups of
four to seven (Berenbach and Guzman, 2014). Group members collectively guarantee loan
repayment, and access to subsequent loans is dependent on successful repayment by all group
members. Payments are usually made weekly (Ledgerwood, 2009).

According to Berenbach and Guzman (2014), solidarity groups have proved effective in
deterring defaults as evidenced by loan repayment rates attained by organisations such as the
Grameen Bank, who use this type of microfinance theory.

They also highlight the fact that this model has contributed to broader social benefits because of
the mutual trust arrangement at the heart of the group guarantee system. The group itself often
becomes the building block to a broader social network (2014).

2.2.2 Village Banking Theory

Village banks are community-managed credit and savings associations established by NGOs to
provide access to financial services, build community self-help groups, and help members
accumulate savings (Holt, 1994). They have been in existence since themid-1980s. They usually
have 25 to 50 members who are low-income individuals seeking to improve their lives through
self-employment activities. These members run the bank, elect their own officers, establish their
own by-laws, distribute loans to individuals and collect payments and services (Grameen Bank,
2000). The loans are backed by moral collateral; the promise that the group stands behind each
loan (Global Development Research Centre, 2006).

The sponsoring MFI lends loan capital to the village bank, who in turn lend to the members. All
members sign a loan agreement with the village bank to offer a collective guarantee. Members
are usually requested to save twenty percent of the loan amount per cycle (Ledgerwood, 2009).
Members’ savings are tied to loan amounts and are used to finance new loans or collective
income generating activities and so they stay within the village bank. No interest is paid on
savings but members receive a share of profits from the village bank’s re-lending activities.
Many village banks target women predominantly, as according to Holt (1994, p.158) “the model
anticipates that female participation in village banks will enhance social status and intra-
household bargaining power Bornstein, D. (2008)

2.3 Empirical Literature Review

2.3.1 Effects of Trustee Services on the Growth SMEs

Small and Medium Enterprises (SMEs) are the backbone of the British economy. They are vital
suppliers, customers and employers, representing approximately 99.3 per cent of private sector
companies in the UK. They generate an annual turnover of £1.6 trillion and employ 15.2 million
people. However, British SMEs do not have the economic or political heft that the German
Mittelstand Germany’s widely admired and powerful SME sector - does.

Although the answer to this question is by no means simple, this report sheds light on two
essential components required for the SME sector to flourish and successfully drive economic
growth on a national scale. Trust and transparency lie at the heart of social life and are the key
building blocks of democracy and a healthy economy. These values enable fair financing and
profitable investments, allowing new companies to emerge and grow into maturity.

Trust in politics, banks and businesses were severely hampered after the 2008 financial crisis. An
array of scandals in the public and private sectors over the last few years has further eroded it and a
sense of distrust has embedded itself in our business culture. This has created a deep rupture between
politics, business and the media and represents one of the biggest issues of our time, which became
clearly visible in the European Parliament Elections in May 2014 and in the dramatic changes to the
UK political landscape. According to Edelman’s 2015 Trust Barometer, globally, government is the
least trusted institution for the fourth consecutive year. In the UK, the
trust level in government is 43 per cent and is only slightly more favourable in business, at 52
per cent.

Despite ample studies and political parties vowing to support SMEs and create a fertile
environment for them to grow and drive the wider economy, business leaders perceive a weak
and inadequate response from government. They see opaque local councils, untrustworthy
authorities and a void where no high level organisation champions their needs.

Several organisations that speak for the SME sector in the UK have called for greatertrans
parency and increased severity in addressing a culture of late payments. According to the
Federation of Small Businesses, 73 per cent of SMEs experienced late payment during 2014
.This represents serious problems that not only relate to cash-flow issues, but also translate into a
waste of valuable time and energy that should be spent elsewhere – one quarter of FSB members
experience late payments and spend three or more hours a week addressing problems relating to
them. Government initiatives designed to tackle this poor payment culture, such as the Prompt
Payment Code, have been helpful and well-intentioned but have not solved the problem. Indeed
for some SMEs these measures have further eroded their trust in the authorities. While large
businesses are commonly identified as the principal offenders, the public sector has also been
part of the problem, being a late payer itself. This latter issue is something that the coalition
Government recognised and, in February 2015, introduced new rules forcing the public sector to
pay contractors and sub-contractors within 30 days.

The lack of local knowledge and expertise to respond to local needs and circumstances is another
problem that further erodes trust in authorities. SME business leaders are not always aware of the
programmes and support offered by local government, which translates into a perceived lack of
transparency and, again, emphasises distrust and disappointment in authorities.

According to the London Stock Exchange, one of the key challenges in Britain is tocreatethe
adequate environment to support SMEs scaling up to large-cap companies, which would
strengthen the UK’s competitive advantage in the world.
This year might prove to be a good one for SMEs. Red tape has been reduced to make it easier
for SMEs to tender for state contracts. The Prompt Payment Code, although still voluntary, will
enable the naming and shaming of companies that are guilty of poor payment practices from
April 2016. It will have the ability to sanction signatories and enable SMEs to challenge them.
Furthermore, devolution to Northern city regions will enable local solutions.

Overall, the horizon looks brighter for SMEs at a business level and also at a policy level, as they
now have a dedicated SME minister in the form of Anna Soubry. The fact that small business has
a champion not only in government but also in the Cabinet is certainly a promising sign.
However, as this report will illustrate, there is a good deal of work to bedone to address the
current deficit in trust and transparency that exists between SMEs and the key institutions they
interact with. This report will look at where the specific problems are and suggests some
potential long-term solutions.

Something that becomes clear from the report – discussed further in the following pages – is that
the institutions that put in personal calls and meetings with SMEs and give a personalised service
to their clients are far more likely to be trusted by SMEs.

They are seen to be acting in a more transparent way, which in turn engenders that trust. With the
advance of increasingly sophisticated digital and automated solutions it is tempting for service
providers to “digitise” all their services. However, what is clear is that the personal touch cannot, and
should not, be forgotten in the hunt for digital efficiencies. If an institution loses its human face, it is
in danger of losing its sense of trustworthiness in the eyes of the clients it serves

2.3.2 Effect of Credit Facilities on the growth of SMEs

Credit facilities are a fundamental part of the economic fabric especially in developing countries
of which Kenya is one of them. They play a crucial role in furthering growth, innovation and
prosperity of citizens. Most policy makers, planners and academicians acknowledge that the
future of a country’s competitiveness and economic growth heavily depend on the private sector
in which SMEs play a major role (Rutashobya, 2003). They are recognized as seedbed for
indigenous entrepreneurship, which may lead to economic prosperity.
A crucial element in the growth of any SME is access to funding (Carpenter, 2001).
Unfortunately, most SMEs are faced with many challenges in accessing funding. In developing
countries, most SMEs rate access to funding as a major constraint. They may not access funding
from local banks at all, or get fewer amounts than they apply for due unfavorable lending
conditions.

A number of studies have shown that financing is a greater obstacles for SMEs than it is for large
firms, particularly in the developing world, and that access to finance adversely affect the growth
of the SME sector more than that of large companies (Schiffer & Weder,2001), (Beck et al.,
2005). Most studies by the World Bank show that access to funding by SMEs is perceived as one
of the main obstacles to their growth. The international development community has listed SME
access to funding as an important policy priority.

Credit facilities are part of the financial system in Kenya. Credit facilities receive savings from
members in form of shares or deposits and from this created pool; they serve the credit needs of
members through personal loans. The principle underlying lending by Credit facilities is that not
every member will request for a loan at the same time (Ongore, 2001). Credit facilities are not
foreign to Africa. There existed indigenous savings associations known by different names
(“ekubi” in Ethiopia, “sanduki” in Sudan, “enusi in Nigeria, “chilimba” in Zambia and so on) but
all of them consisted of simple organizations in which savings and credit were administered on
rotating basis by the members. Examples of such organizations in Kenya include the women’s
“mabati” or “makuti” groups. These groups meet at intervals (weekly, monthly and so on) and
each of the members contribute a fixed amount.

Loans to members are granted for almost any productive purpose but the upper limit cannot
presently exceed four times the members’ shares or deposits and with a maximum repayment
period of 48 months. The security for loans is usually composed of the member’s own savings in
addition to two or three guarantors whose considered shares and those of the members must
exceed the amount of loan applied for. This is to ensure that in case of default, the loan can be
recovered fully from the shares of the member and those of his/her guarantors (circular by
Commissioner of Cooperatives, 1997). Repayment of loans is usually made by installments
through salary deductions. The maximum rate of interest charged on loans is 1% per month on
the outstanding balance, which translates into annual rate of 12% p.a. although a lower rate is
allowable. Members can also repay outstanding loan in order to qualify for another loan or where
the member has left the common bond of the society (Burnett, 1997).

According to Munyiri (2006), Credit facilities which are started locally in the financial sectors of
many countries, are more attractive to customers thus deeply entrenching themselves. In, they
have solid bases of small saving accounts constituting a stable and relatively low-cost source of
funding and low administrative costs (Branch, 2005). More so, Credit facilities are able to
advance loans at interest rates lower than those charged by other financial providers. In addition,
Credit facilities have the ability and opportunity to reach clients in areas that are unattractive to
banks such as rural or poor areas. The core objective of Credit facilities is to ensure members
empowerment through mobilization of savings and disbursement of credit (Ofei, 2001). Credit
facilities in Kenya in their struggle to achieve this objective have been able to mobilize over
Kshs.200 billion in savings (Co-operative Bank of Kenya, 2010).

There is rising number of financial institutions and other sources of finance to SMEs in Kenya.
This is largely due to the fact that the government is recognizing the potentially significant
contribution of SMEs to the realization of Vision 2030 development roadmap. The effect of
funding source on SMEs growth in Kenya is yet to be established

2.3.3 Effect of Investment Advice on the growth of SMEs

Advice on Investment shows that Kayonza district has got various Training and Advice on
Investment services which that include; provisions of investment briefings on terms and
conditions of the loan before acquiring loan, provision of investment seminars and workshops to
members, provision of tour to successful members business before loan is awarded to clients,
VSLA also make follow up visit to their clients in order to provide business advice on monthly
basis and they have created members working team who are guarantors and advisors.

The respondents further stated that these advice on investment services influence the growth of
SME in the district positively in that advice on investment has increased capital base increased of
members business, increased profitability of members business, made members business expand
its branches, made members acquire assets, made members business cash flow to improve and all
in all advice on investment has made progress from hand to mouth to planning for the future.
The relationship between training and advice on investment services and SME growth whereby
the respondents N is 366 and the significant level the results indicate that independent variable
has positive moderate correlation to dependent variable equal to and the value is .000 which is
less than 0.01. When value is less than significant level, therefore researchers conclude that
variables are correlated and null hypothesis is rejected and remains with alternative hypothesis.
This means that there is a significant relationship between training and advice on investment
services and SME growth Investment decision refers to determination made by management as
to how, when, where and how much capital (how much capital to spend and/or debt to acquire) is
to be spent on investment opportunities including determining costs and returns for each option.
It also refers to the capacity of an SME to know or understand the demands of external fund
providers such as investors, SMEs or venture capital funds and hence be able to access the funds
for growth and startups.

Both supply and demand-side constraints explain why smaller firms are less willing to use debt
financing and rely on internal equity or, if external financing is required, why they prefer debt
over outside equity including „contentment proposition‟ (Bell and Vos 2009). SMEs are more
vulnerable often lacking access to capital as well as funding sources. Growth SMEs access to
funding for investement is constrained by the demand side weaknesses. Most of the SMEs are
usually not investment ready. The owners of the SMEs are usually not willing to external
funding while those that are willing fail to understand what investors are looking for; for
instance, how to sell themselves and their businesses to these investors. A large portion of the
SME sector does not have access to adequate and appropriate forms of credit and equity.

Kaufmann and Valderrama. (2008) consider that investment behaviour can be described as
aggressive, innovative, proactive, risk taking, and autonomy seeking. Owner-managers tend to
concentrate on the day-to-day at the expense of investments. La Rocca, et al (2011) warn that
typical entrepreneur‟s features such as: impulsive character i.e. speed is preferred to accuracy
(uncalculated risk and carelessness), inability to change problem solving strategies (low degree
of flexibility) and inability to learn from mistakes (risk of vicious circle trap) may affect
negatively the process of investment decision making.
Ahiawodzi and Adade (2012) aver that the main constraint that SMEs often face is access to
capital and this places significant constraints on SME development. Cook and Nixon (2005)
observe that, notwithstanding the recognition of the role of SMEs in the development process in
many developing countries, SMEs development is always constrained by the limited availability
of financial resources to meet a variety of operational and investment needs. They estimate that
about 90% of small enterprises have credit access as their major constraint to new investment.

Despite the important contribution to economic growth by SMEs they continue to face numerous
challenges including; inadequate infrastructural facilities, challenges with attracting skilled
manpower, high rate of enterprise mortality, lack of a facilitative operating environment,
restricted market access, and onerous regulatory requirements. However, one of the main areas
of concern is access to funding for investment growth. SMEs require adequate financing to meet
needs at each stage of their life cycle, from creation through operation, development, expansion
and beyond. Financing is necessary to help them set up and enhance their operations, develop
new products, and invest in new staff or production facilities (Kilonzo, 2011). Many small
businesses start out as an idea from one or two people, who invest their own money and probably
turn to family and friends for financial help in return for a share in the business. But if they are
successful, there comes a time for all developing SMEs when they need new investments to
expand or innovate further. Access to funding and the high cost of finance for investment growth
through the traditional channels have been major constraints to SMEs hence the need to explore
alternatives like table banking (Oteh, 2010).

As put by Masinde (2013), the advantages of table-banking is that: all the money belongs to the
group; member‟s savings are not taken away but instead used for loaning; ability to mobilize
savings among the poor; interest earned remains with the group; periodic bonus and dividends;
education and agriculture booster; capacity building of the groups on group dynamics,
entrepreneurship, business skills, record keeping and many other areas relevant to our area of
operation and, banking at the convenience of members‟ homes or table.

Traditionally, the firm‟s market value and real decisions were considered to be unaffected by its
financial structure and financing policies, since in the theoretical context generated by
Modigliani and Miller‟s theorem (1958), capital markets were perfect, fiscal neutrality reigned
and, therefore, external funds (shares, bonds and debt) and internal funds (self-financing) were
perfect substitutes for each other. This led to an approach to investment theory in which the
firm‟s problem of intertemporal optimization is solved without reference to financial factors, or
including them on the basis of assumptions valid in a context of perfect capital markets. Given
the hypothesis that all firms have the same access to the capital and information markets and the
cost of capital is exogenous, in traditional models the dominant notion is of the “representative
firm” (Brannen, 2010).

Savings and investments by SMEs are as vital to financial well-being and security as to a healthy
economy. People with in table banking are better able to weather economic shocks such as a loss
of income, to build assets for the future, and are less reliant on credit to cover unexpected
expenses. Informal saving clubs also enable further welfare enhancing actions such as
entrepreneurial activities and access to education and training. At the macroeconomic level,
saving/investment clubs such a table banking drive growth by enabling SMEs to lend to
businesses, and by financing – directly or indirectly – investment in companies (Bauer, et al
2008). The ways in which SMEs operate can range from holding surplus income as cash, through
simple informal saving mechanisms such as savings and loan clubs, to complex investments, or
non-financial saving such as property or livestock. Some of these approaches are more suited to
short-term investments and income smoothing, whilst others provide long-term investments.
Innovations such as smart cards and mobile phone banking have opened up access to formal
saving opportunities for SMEs who previously lacked access to financial services. SMEs, thus,
increasingly buy even quite complex investment products online, including across borders.
SMEs shift their investment portfolios into less risky, more liquid, financial assets in times of
instability, although this effect may be muted by low short-term rates of return (Nahmias, 2012).

2.4 Research Gap

Morduch (2000), did a study on microfinance sustainability, he says that for microfinance
programmes to be sustainable however, they are said to be able to reach as many people as
possible in order to accumulate excess capital. Thus, financially sustainable banks will not
necessarily be able to gain sufficient access to wider capital markets.
(Lisa, 2009) did a study on the role of small and medium scale enterprises (SMEs), he says that
this SMEs in national economic development cannot be overemphasized especially in income
generation and distribution, capital accumulation, employment generation, poverty reduction and
the empowerment of people especially women.

The above mentioned scholars has left a gap on the effect of microfinance credit firms on the
growth of small scale business in Kenya, a case study of SMES in Kisii County.

2.5 Summary of Literature

The issue of finance has been central in the operations of rural SMEs because such services
enable entrepreneurs to start, grow and sustain business without which most rural SMEs will
begin small and eventually die small, without ever having to see any expansion in terms of
output and profits in these rural communities that mostly lack the finances to start these
enterprises. Financial products have therefore become a centre stage issue because with such
products one can have access to the other resources that will kick the business started. By virtue
of their nature and what they offer, rural SMEs do not employ high levels of technology and
sophisticated infrastructure; hence the little financial assistance they receive can be the beginning
of a vibrant venture in the future. Financial assistance has therefore been noted as a fulcrum
about which rural SMEs revolve to grow sustainably.
 2.6 Conceptual Framework
Independent Variables Dependent Variable
Trustee services
Credit accessibility
accountability
financial management

Credit facilities Growth of SMEs

loan availability
Business growth
business growth
Profitability
self esteem high production

Investment advice
business expansion
economic growth
greater market share

Government policies

Organization structure
Intervening Variables
Researcher, 2017
Fig 2.1 Conceptual framework
The conceptual framework discusses in practical terms how microfinance operates when
introduced as an input in a business and the output that is expected in terms of addressing the
challenges of the business. The section analyses the conditions that make microfinance services
sustainable to be able to reach its target consumers. These include the issues such as widened
breadth and depth of outreach, service quality and cost recovery.

CHAPTER THREE

RESEARCH DESIGN AND METHODOLOGY

3.1 Research Design

The study adopted a descriptive research design to obtain pertinent and precise information on
the current status of the phenomena, situations and groups under study (Mugenda and Mugenda
1999).

3.3 Study Area

The research was carried out in Kisii County. Kisii County has been chosen because it is one of
the fastest developing counties in Kenya, in terms of economy and population, Oyugi (2014).
Kisii County is located in southwest Kenya between latitude 0030’ and 0058'south and longitudes
34O 42' and 350 05'East. The town covers a total area of 15.5 km 2 .The County is bordered by
Homabay, Nyamira, Narok and Migori Count ies. Kisii County has a highland equatorial climate
hence it has a double maxima rainfall regime, averaging about 2015 mm annually. It has a hilly
topography with several high hills and valleys.

3.3 Target Population

The target population in this study referred to all the small scale business within the town, who
run small scale business. The study targeted 450 registered small scale businesses in the area of
study.

Table 3.1 Target Population

Category Target Population

Kisii town 170
Suneka 110
Ogembo 90
Nyakoe 80
Total 450

3.4 Sample Design

Sample design refers to the rule and procedure by which some elements of the population are
included in the sample. This study used stratified sampling design. The study used 10% of the
target population to draw a sample of 45 respondents, Mugenda and Mugenda (1999)
recommends a sample of 10%-30% of the target population is suitable for a study.
Table 3.2 Sampling Frame
Category Target Population Sample
Kisii town 170 17
Suneka 110 11
Ogembo 90 9
Nyakoe 80 8
Total 450 45

3.5 Data Collection Instruments

The study used closed ended questionnaires as the instrument to collect data. Best and Khan
(1992) notes that questionnaires enable the researcher to explain the purpose of the study and
give meaning of terms that may not be clear.

3.5.1 Reliability of the Research Instrument

The researcher enhanced reliability of the questionnaires by subjecting it to a pilot test. Four
questionnaires were given to four respondents using the test-retest method; modifications will be
made to take care of some gaps identified in the questionnaire items.

3.5.2 Validity of the Research Instruments

According to Polit and Hungler (2007), validity is to whether instruments measures what is
supposed to measure given the context in which it was applied. The guidance and criticism of my
supervisor ensured the validity of the questionnaires.
3.6 Data Analysis

Collected data was analyzed using descriptive statistics that will involve percentages, mean and
weighted averages

3.7 Data Presentation

Analyzed data was presented in form of tables graphs and pie charts
 CHAPTER FOUR

DATA ANALYSIS INTERPRETATION AND PRESENTATION

4.2.1 Response Rate

The study sought to find out the response rate of the respondents, table 4.1 shows the results.

Table 4.1 Response Rate

Instrument Frequency Percentage

Reached respondents 41 91

Not reached 4 9

Total 45 100

Source: Author (2017)

Table 4.1 shows that 41 questionnaires were administered. The completed questionnaires were
edited for completeness and consistency; this represented 91% total number of the respondents.

4.2.2 Gender Respondents

The researcher sought to find out the gender of respondents in the company. Table 4.2 shows the
results.

Table 4.2 Gender of Respondents

Gender Frequency Percentage

 Male 28 68
Female 13 32
Total 41 100
Source: Field Data (2017)

It is evident that 68% of the respondents were male while 32% of the respondents were female.
This shows that the majority was male and the minority was female.

4.2.3 Education Level

The researcher sought to find out the level of education of the respondents in the organization,
table 4.3 show the findings.

Table 4.3 Education Level

Category Frequency Percentage

Degree Holder 24 59
Diploma Holder 13 32
Certificate 4 9
Total 41 100
Source: Field Data (2017)

From table 4.3 it’s clear that majority of the respondents were degree holders representing 59%
of the total number of respondents, while the minority were diploma and certificate holders
represented by 32% and 9 % total number of the respondents respectively. This implied that the
respondents were of more degree holders than diploma and certificate holders.
4.2.4 Effect of Trustee Services on the Growth of SMEs

The study sought to find out the effect of trustee services on the growth of SMEs, table 4.4
shows the results.
Table 4.4 Effect of Trustee Services on the Growth of SMEs
Effect of Trustee Strongly Agree Undecided Disagree Strongly ∑fi ∑fiwi ∑fiwi
∑fi
Services Agree 5 4 3 2 Disagree
1
Ensures credit 23 13 3 2 0 41 180 4.39
accessibility
Enhances 30 11 0 0 0 41 194 4.73
accountability
Facilitates 33 6 0 1 1 41 191 4.65
financial
management
Source: Field Data (2017)
It was established that trustee services on the growth of SMEs ensures credit accessibility, 4.39
total average weight supported this view, on the other hand, the study found out that interim
trustee services on the growth of SMEs enhances accountability and it also facilitates financial
management 4.73 and 4.65 total average weight supported this respectively.

4.2.5 Effects of Credit Facilities on the Growth of SMEs

The study sought to find out the effects of credit facilities on the growth of SMEs in Kisii town,
table 4.5 shows the results.
Table 4.5 Effects of Credit Facilities on the Growth of SMEs
Effects of Credit Strongly Agree Undecided Disagree Strongly ∑fi ∑fiwi ∑fiwi
∑fi
Facilities Agree 5 4 3 2 Disagree
1
Enhanced credit 13 23 3 2 0 41 170 4.15
accessibility
Increased growth 30 11 0 0 0 41 194 4.73
of the business
Increased profit to 13 23 3 2 0 41 170 4.15
SMEs
Increased 16 10 4 8 3 41 151 3.68
performance of
SMEs
Source: Field Data (2017)
It was revealed that credit facilities on the growth of SMEs in Kisii town enhances credit
accessibility, this was supported by an average weight of 4.15, similarly, the study found out that
credit facilities on the growth of SMEs in Kisii town, leads to impressed growth of the business,
increased profit to SMEs and it also leads to increased overall performance of SMEs, 4.73, 4.15,
and 3.68 total average weight supported this respectively.

4.2.6 Effects of Investment Advice on the Growth of SMEs

The study sought to find out the effects of investment advice on the growth of SMEs in Kisii
town, table 4.6 shows the results.
Table 4.6 Effects of Investment Advice on the Growth of SMEs

Effects of Strongly Agree Undecided Disagree Strongly ∑fiwi ∑fiwi

∑fi
Investment Agree 5 4 3 2 Disagree
Advice 1
Facilitates 16 10 8 4 3 41 155 3.78
business
expansion
Enhances 30 10 1 0 0 41 194 4.71
economic growth
Enhances SMEs 33 6 0 1 1 41 192 4.68
growth
Increased savings 23 13 3 2 0 41 180 4.39
Enhances 30 11 0 0 0 41 194 4.73
financial stability
of SMEs
Source: Field Data (2017)
It was found out that investment advice on the growth of SMEs facilitates business expansion,
this was supported by 3.78 total average weight, on the other hand the study found out that
investment advice on the growth of SMEs, enhances economic growth, leads to increased
savings and it also enhances financial stability of SMEs in the area, 4.71, 4.68, 4.39, and 4.73
total average weight supported this respectively.
 CHAPTER FIVE
5.0 SUMMARY OF THE FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

5.1 Summary of the Findings

5.1 1Effect of Trustee Services on the Growth of SMEs

It was established that trustee services on the growth of SMEs ensures credit accessibility, on the
other hand, the study found out that interim trustee services on the growth of SMEs enhances
accountability and it also facilitates financial management the majority number of the
respondents supported this respectively.

5.1.2 Effects of Credit Facilities on the Growth of SMEs

It was revealed that credit facilities on the growth of SMEs in Kisii town enhances credit
accessibility, similarly, the study found out that credit facilities on the growth of SMEs in Kisii
town, leads to impressed growth of the business, increased profit to SMEs and it also leads to
increased overall performance of SMEs, the majority number of the respondents supported this
respectively.

5.1.3 Effects of Investment Advice on the Growth of SMEs

It was found out that investment advice on the growth of SMEs facilitates business expansion, on
the other hand the study found out that investment advice on the growth of SMEs, enhances
economic growth, leads to increased savings and it also enhances financial stability of SMEs in
the area, the majority number of the respondents supported this view.
5.2 Conclusion

The study concluded that; trustee services on the growth of SMEs ensures credit accessibility, on
the other hand, the study found out that interim trustee services on the growth of SMEs enhances
accountability and it also facilitates financial management. Credit facilities on the growth of
SMEs in Kisii town enhances credit accessibility, similarly, the study found out that credit
facilities on the growth of SMEs in Kisii town, leads to impressed growth of the business,
increased profit to SMEs and it also leads to increased overall performance of SMEs. Investment
advice on the growth of SMEs facilitates business expansion, on the other hand the study found
out that investment advice on the growth of SMEs, enhances economic growth, leads to
increased savings and it also enhances financial stability of SMEs in the area.

5.3 Recommendation to the Study

The study recommended the following;

For SMEs in Kisii town to improve in financial, growth and general performance they should
perceive and enforce proper auditing procedures and control mechanisms

SMEs in Kisii town should properly institute systems of control measures improve the reporting
process and also give rise to reliable reports which enhances the accountability function of
management of an entity.

SMEs in Kisii town should prepare reliable financial information which is a key responsibility of
the management of every private institution.

5.4 Suggestions of Further Study

The study recommends that further study should be done on;

The impact of business control measures on organizational performance
 REFERENCES

AfDBand OECD (2005) African Economic Development Outlook 2004/2005.

Asiama, J. P. and Osei, V. (2007).Microfinance in Ghana: An overview: Asian
Development Bank (2011), Microfinance Development Strategy.
Boudreaux, K. and Tyler C. (2008).The “Micromagic” of Microcredit. The Wilson Quarterly:
Pp 27-31.
deAghion, B. A., andMorduch, J. (2005). The Economics of Microfinance. Cambridge: MIT
Press.
Hagen, H. M(2004).Sustainability of Financial Institutions; Financial Services for poor people.
Hassan, M., andTufte, D. R. (2001).The X-Efficiency of a Group-Based Lending Institution: The
Case of the Grameen Bank. World Development 29 (6):1071-82
Helms, B. (2006) Access for All: Building Inclusive Financial Systems. World Bank:
Washington, DC 105
Hulme, D. and Mosley, P. (1996).Finance Against Poverty, volumes 1 and 2, London Routledge

Lisa T. S. P. (2009) Small Firms: Definition, Growth Factors and Their role in Economic
Development. Malaysian Institute of Management, Kuala Lumpur, Petaling Jaya.
Littlefield, E., Murduch, J. andHashemi, S. (2003). Is Microfinance An Effective Strategy to
Reach the Millennium Development Goals? Washington. DC
McGuire, P. B., Conroy, D. J. and Thapsa, G. B. (1998).Getting the Framework Right: Policy
and regulation for microfinance in Asia.The Foundation forDevelopment Cooperation.
Brisbane.
Mugenda and mugenda (1999) Quantitative Research Methods., 2nd edition.
Moon, S. (2007).Empirical Quantitative Case Study in Operations Management.
Morduch, J. (2000).The Microfinance Schism.World development, Vol. 28 no. 4, pp 617-
629.Pergamon, Britain.
Polit and Hungler (2007), Social Research Methods Qualitative and Quantitative Approaches,
3rd Edition: Allyn and Baron, London.
Otero, M. and Rhyne, E. (1994).The New World of Microenterprise.Finance -Building Healthy
Financial Institutions for the Poor.Kumarian Press, West Harford, Connecticut.
Steel, W F. and Andah, D.O. (2003).Rural and Micro Finance Regulation in Ghana:

Implications for Development and Performance of the Industry. Africa Region Working Paper
Series No. 49, June 2003.
Todaro, M. P. and Smith, S. C. (2009).Economic Development. Pearson education limited,
Edinburgh Gate, Harlow- England.
Westover, J. (2008). The Record of Microfinance: The effectiveness/ineffectiveness of
microfinance programs as a means of alleviating poverty. Electronic Journal of
Sociology. ISSN 1198-3655.
World Bank (1994).Findings-Africa Region, Number 26, Washington DC 108
Yunus, M. (1997).The Grameen Bank. In Reasons for Hope.Kumarian Press, West Hartford
 Appendix: I Introductory Letter
I am a student in Kisii University pursuing a diploma in business administration. In order to
fulfill the diploma requirement I am now undertaking a proposal on ‘An evaluation of the effect
of financial institutions on the growth of small scale business in Kenya, a case study of SMEs in
Kisii County’. I will highly appreciate if you spare some of your time to help me through the
questions.

This exercise is strictly for academic purposes and any information given will be treated with
utmost strict confidence.

Thanks in advance.
 Appendix: II Questionnaire

I am Obure Jerusah, a student in Kisii University pursuing a diploma in business administration.

In order to fulfill the diploma requirement I am now undertaking a proposal on ‘An evaluation of
the effect of financial institutions on the growth of small scale business in Kenya, a case study of
SMEs in Kisii County’

Thanks in advance.

Please answer the following questions according to the instructions given.

PART A: BIO DATA

1. Please indicate your gender
Male [ ]
Female [ ]
2. What is your highest level of education?
Degree Holder [ ]
Diploma Holder [ ]
Certificate Holder [ ]
 PART B: EFFECT OF TRUSTEE SERVICES ON THE GROWTH OF SMEs

To what extent do you agree that the following are the effect of trustee services on the growth of
SMEs?

Strongly Agreed Undecided Disagreed Strongly

agreed disagreed
5 4 3 2 1
credit accessibility
accountability
financial management

PART: C EFFECTS OF CREDIT FACILITIES ON THE GROWTH OF SMES

1. To what extent do you agree that the following are the effects of credit facilities on the
growth of SMEs in Kisii town? Key: 5 strongly agree 4.Agree, 3 Undecided 2.
Disagree, 1.Strongly disagree

Effects of credit facilities on the Strongly Agreed Undecided Disagreed Strongly

growth of SMEs agreed disagreed
5 4 3 2 1
Enhanced credit accessibility
Increased growth of the business
Increased profit to SMEs
Increased performance of SMEs
 a) EFFECTS OF INVESTMENT ADVICE ON THE GROWTH OF SMES

2. To what extent do you agree that the following are the effects of investment advice on the
growth of SMEs in Kisii town? Key: 5 strongly agree 4.Agree, 3 Undecided 2.
Disagree, 1.Strongly disagree
Effects of investment advice on the Strongly Agreed Undecided Disagreed Strongly
growth of SMEs agreed disagreed
5 4 3 2 1
Facilitates business expansion
Enhances economic growth
Enhances SMEs growth
Increased savings
Enhances financial stability of
SMEs
 Appendix: III Work plan
Phas
ACTIVITY MONTHS
e

June
April May
2017
2017 2017

Proposal writing
1
Editing, reading
2
printing

Submission of
3 copies to department
for verification
 Appendix: IV Budget
ACTIVITY COST

Kshs

Transport 2000

Telephone 1000

Stationary (Typing and printing) 3,000

Miscellaneous 1,500

Total 7,500