Challenges of Small and Medium Enterprises in Kenya

Likewise, individuals may not need to borrow as much as a usual business loan minimum and to do so would put them in unnecessary debt. Thankfully, some credit unions can offer microloans as little as $200. Such loans could be the key factor for a local family to start a small town business, which promotes economic growth in a community. Without a credit union’s aid, these small businesses would be unable to even begin, thus taking away an opportunity for both the community and its

Another major characteristic of microfinance is that they have numerous loans to informally-organised businesses which are often in small amounts over a short-term period with turnover of the aggregate loan portfolio maturing several times during the year. These are unsecure loans with simple repayment structure and documentation, but interest rates are generally higher than those in the formal sector (Anderson, 2002).

Structural changes have paved the way for allowing SSA to become competitive and attract investment; such changes have helped fuel the productivity revolution by helping companies to achieve economies of scale (McKinsey: 2010). Such improved governance has seen a number of African firms moving from informality to formality (OECD: 2006).

Poverty, hunger, and malnutrition remain rampant across the world today. Countries such as Africa and Asia are struggling with high numbers of poverty and malnutrition, which is causing millions of men, women, and children to face death under the everlasting shadow of poverty. In order to eradicate the darkness of poverty, companies and institutions are taking up different initiatives to help those in poverty stricken countries. One such initiative is known as micro financing, which was created by a Bangladeshi economist, Muhammad Yunus. Micro financing are small loans given to people in poor countries who want to start a business or need some financial assistance. A famous website for micro financing is Kiva.org, which has been lending money to people since 2005 and has witnessed great success in doing so. The website has made the process of lending money to individual extremely simple and it is something that any individual can partake in. For example, If I wanted to lend some money to any of the numerous entrepreneurs on the website than I would first begin by choosing the lend category. After this, the website will list some of the most popular buyers on the right hand side and as of now, Emperatriz De América Group, which is a group of women who want to borrow money to buy fish. The website lets the lenders sort through different types of borrowers based upon how much money they are in need of. The one thing I liked the most about the website is

The SME sector is a significant component of the EU economy responsible for driving growth through entrepreneurship3.

In the sphere of small business financing, two categories of individuals are pertinent in the overall scheme of financing, they are those that invest their monies, as well as, the individuals that lend monies (Hodgetts, 2007). These two modes of funding produce the same results, which is the provision of the necessary capital needed to begin the business adventure of the individual. However, funding can at times be difficult to procure as reiterated by Nicole Taylor (2015), in her article “14 Creative Financing Methods for Startups. She offered numerous ways to procure these funds, such traditional loans, renting one home to others, credit cards, equity, online lending institutions, family and friends, as well as others. However, the dilemma remains, which way offers the best choice for the individual.

Fashion companies are capital intensive and access to credit is paramount for success to be attained. Fashion businesses in Nigeria's are categorically denied access. The few of them that have been able to secure loans or grants are members of Nigeria's elite.

A study of a sub-location of South Nyanza district in Western Kenya found that only 3% of the 896 titles had been used to secure loans, seven years after completion of the formalisation exercise in the sub-location. Another study of a pilot registration scheme in Uganda’s Rukungiri district found that, out of 228 households surveyed, only 15 had acquired loans in the previous five years, over 80% of those from sources other than commercial banks Musembi (2009 p.

Sometimes these microloans are given to those who are not successful for credit or larger bank financing. However the down part of this microloans are it is not sufficient for some business owners as their capital might be higher than planned. Microloans are more flexible in terms starting a business without paying a higher rent and higher liability. It is more suitable for businesses such as home based and basic business needs. The loan is designed in a way that the entrepreneurs will not feel burdened with a heavy debts on their shoulders and they are able to pay back the loans at the agreed time without additional issues. For example, if the entrepreneur is to open a small bakery shop based in their own shop house, with expected turn around less than RM10000 per month, then microloans would be

had increased from 11.2 million in 1990/91 to 17.8 million in 2001. This implies that 650,000 new people had been entering the labour market every year, (URT, 2005). Micro-enterprises tend to be more effective in the utilization of local resources using simple and affordable technology. They also play a fundamental role in utilizing and adding value to local resources. In Tanzania most micro-enterprises use local resources and affordable technologies to undertake their activities, these activities include:

Kenya is the regional leader in East Africa and this position is expected to be a constant over time. The economy is fairly diversified with a strong and well developed services sector. The financial services industry in particular is well developed and established, moreso the country is considered East and Central Africa’s hub for financial services.

First and foremost, we needed our monetary sources mapped out to overcome the financing gap many small firms face. The £10000 of savings of the entrepreneur was taken as the start-up capital to finance

The generation of self-employment in non-farm activities requires investment in working capital. However, at low levels of income, the accumulation of such capital may be difficult. Under such circumstances, loans, by increasing family income, can help the poor to accumulate their own capital and invest in employment-generating activities (Hossain, 1988). Commercial banks and other formal institutions fail to cater for the credit needs of smallholders, however, mainly due to their lending terms and conditions. It is generally the rules and regulations of the formal financial institutions that have created the myth that the poor are not bankable, and since they can’t afford the required collateral, they are considered uncreditworthy (Adera, 1995). Hence despite efforts to overcome the widespread lack of financial services, especially among smallholders in developing countries, and the expansion of credit in the rural areas of these countries, the majority still have only limited access to bank services to support their private initiatives (Braverman and Guasch, 1986). In the recent past, there has been an increased tendency to fund credit programmes in the developing countries aimed at small-scale enterprises. In Kenya, despite emphasis on increasing the availability of credit to small and microenterprises (SMEs), access to credit by such enterprises remains one of the major constraints they face. A 1995 survey of small and

BARRIERS TO SUCCESSFUL IMPLEMENTATION OF ADVANCED MANUFACTURING TECHNOLOGIES WITHIN SMALL AND MEDIUM INDUSTRIES IN KENYA

The importance of small and Micro Enterprises (SMEs) in the economy of any country cannot be overlooked. In fact for nearly 15 years, most researchers dealing with economic planning have highlighted the significance of these enterprises stating that they are a key player in realizing any country’s economic goals. As such, governments as well as other organizations with interest in development are laying plans and strategies to promote the establishment of Small and Micro Enterprises. This is seen as a move to ensure that there is full participation of SMEs in the country’s economy. The Small and Micro Enterprises have been known to contribute to a large extend as a source of innovation, entrepreneurial skills as well as source of employment. For example, statistics in 25countries of the European Union show that 99% of the jobs provided to its citizens come from the micro, small and medium-sized enterprises. Rowe (2008) points out that the British economy relies heavily on the participation of SMEs. On the other hand, 99% of the UK’s economy is composed of small and micro enterprises.