Discussion Paper No. 88 of 2008 on Factors Affecting Growth of Micro and Small Enterprises in Kenya

Abstract

The study analyzes the current status of micro and small enterprises (MSEs) in Kenya and the factors affecting their growth. Analysis of the 1999 MSE National Baseline Survey data is done using multiple regression, where firm growth is the dependent variable. The overall aim of the study is to identify mechanisms that would enable the sector make significant contributions in employment creation, innovation, industrial development, economic growth and poverty reduction. The study established that those enterprises that are registered; those that sub-contract; those where the owner has at least secondary school education, those operating in the services sector, and those with a large capital base achieve higher levels of growth. The study recommends different policy approaches that could be considered to encourage the growth and development of MSEs in Kenya.