Credit Accessibility and Entrepreneurship by Youth Groups in Nyamira County, Kenya

Abstract

Youth entrepreneurs make significant contributions to the Kenyan economy. Their businesses account for about one-half (48%) of all micro, small, and medium-sized enterprises (MSMEs); and contribute around 20% to Kenya's Gross Domestic Product. Despite their potential, youth owned businesses in Kenya are less likely to grow, the main stumbling block being inadequate access to credit. The study established that financial requirements, knowledge levels, cultural elements, fund disbursement procedures and government policy influence accessibility of credit and entrepreneurship among youth groups in Nyamira County. A descriptive research design was employed for the study. The study targeted 200 youth groups drawn from Nyamira County that are in business funded by WEF, Uwezo and YEDF. A sample of 60 Youth groups was obtained by stratified random sampling. Youth group leaders were approached and questionnaires. The was collected and analyzed using SPSS, multiple regression and correlation and the findings were presented using graphs, tables and charts. The study established that the major knowledge aspects affecting access to credit include: lack of ; inadequate information on the services of the YEDF, Uwezo and WEF; also some government policies such as registration and licensing barriers, as well as numerous statutory requirements affect access to credit. Cultural elements identified include: social norms limiting youth access specific markets, gender discrimination and assigning more wage earning responsibilities to adults. Financial requirements affecting access to credit as identified by the study include: limited amounts being disbursed and short payback time. Finally the key funds disbursement procedures affecting access to credit include: the amount dispersed was at the discretion of the fund managers; low level of creativity and innovations on the part of the funds management and numerous documentation and the time it takes to process loans.