Effects of Non-Financial Services of the Micro Financing Institutions on Performance of Entrepreneurship: A Study of Selected Counties in Western Kenya

Abstract

While Micro and Small Enterprises (MSEs) plays a pivotal role in the development of many national economies, their growth is dodged with numerous challenges. Apart from financial setbacks, past studies cite Non-financial services including operator's competencies and capacities. Commonly Microfinance Institutions (MFIs) and other financial intermediaries are known to include capacity building as support services as component of loaning MSEs. The objective of this study was to determine the effects of non-financial services on the performance of MSEs in Western Kenya counties of Kisumu, Siaya and Vihiga. The Non-financial services measured included, Training programmes, Marketing Assistance, Business Networking and linkages and Information technology.  The study targeted 65,698 licensed MSEs out of which a sample of 398 was selected.  The study employed descriptive survey design and used structured questionnaires to collect primary data. Data was analyzed using statistical software (SPSS) and presented in descriptive and inferential statistics.  Using the ANOVA and coefficient of correlation the study results revealed that Non-financial services significantly explain the variance in MSE Performance since Fo= 16.396> F(4, 378) = 2.39; αo = .001< αc = .05. The study concluded that Non-financial services contribute to MSEs growth and development. The study recommends that intermediary Agencies to enhance capacities of MFIs to deliver quality and appropriate NFS to MSEs, and also MFIs to encourage cost recovery on NFS provision to sustain their service support to MSEs. The study suggests that future research should address greater focus on modalities of establishing relevant content and processes that should be included in Non-financial service delivery that should target MSEs.