| dc.description.abstract | Small and Medium manufacturing firms are an integral sub-sector to the
Kenyan economy. However, they have limited access to finance, which limits
their growth. This paper examines the constraints of access to formal finance
by small and medium manufacturing firms in Kenya. The study uses the World
Bank (2013) Enterprise Survey data on Kenyan manufacturing firms and
applies the Probit regressions technique. The study finds that registration of
firms at the start of operation, as well as the experience of the manager of the
firm significantly improves access to formal finance by the small and medium
enterprise. However, the perception of the firm towards corruption, as well as
informal competition, negatively and significantly worsens the possibility of
access to finance by the SMEs.Based on these findings, the study suggests that the government should simplify and computerize business procedures in order to curb corruption, introduce
formal incentives that will entice firms to formalize, strengthen the Competition
Authority to carry out advocacy on anti-competitive behaviours, and initiate
joint public-private partnerships with manufacturing entrepreneurs on areas
of financial management and managerial skills. The study also recommends
further studies on practices of competitors from the informal sector, so as to
inform specific policies. Such studies would highlight various malpractices in
the informal firms, which are detrimental to the formal manufacturing SMEs in
terms of accessing formal finance and their growth in general. | en |
