EFFECT OF MICRO FINANCE INSTITUTIONS ACTIVITIES ON THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES OWNED BY WOMEN IN MOGOTIO DISTRICT

Abstract

Despite the fact that recent statistics confirm that women’s economic activities play a crucial role in the growth of many world economies in the recent year, empirical studies have not looked at the specific effects of micro finances on small and medium scale enterprise owned by women. Hence the purpose of this study was to assess the effects that MFIs activities have on the enterprises that are owned by women. More particularly was to find out the various financial strategic practices that MFIs used to influence the performance of women owned enterprises in mogotio district. The general objective of this study was to examine the effects of some MFIs operating within Mogotio district in promoting, sustaining and improving women owned enterprises. However the specific objectives were: to assess the effects of micro finance institutions activities on the enterprises owned by women; to investigate the business challenges facing MFIs in service delivery to SMEs owned by women; and to examine the various financial strategic practices that micro finance institutions use to influence performance of women owned enterprises in Mogotio district. The study would provide information to all MFIs in designing and implementing effective and efficient activities directed towards women owned enterprises. The study was limited to women owned enterprises in Mogotio district. The target population was 626 WOS in Mogotio district by May 2013. Stratified random sampling was used to select WOS which were beneficiaries of 9 existing MFI`s in the district. Simple random sampling technique was used to select representative sample from every strata. A sample size of 190 respondents, (at least 30% of the target population) was involved in the research study. Questionnaires were used to collection quantitative data. The instruments of data collection were divided as per the variables and objectives to ensure that the content would be comprehensive and representative. Data was presented using frequency tables, pie-charts and histograms. Data analysis was done using both descriptive and inferential statistics. Specifically, chi-square, ANOVA, regression and correlation analysis was used with the aid of statistical package for social sciences computer software package (SPSS) version 21.0. The ANOVA test had a significance of P=0.000 which was a value less than 0.05 meaning that the joint combination of the Loan size, Repayment period, Premium and Interest rate had a significant effect on profits at 5% level of significance. The findings also indicate that MFIs face challenges in service delivery such: banks relying on personal profiles and track records in reviewing application the response; a 2 χ (4) =135.52 that was significantly different (p<0.001) indicates that 78(41.27%) strongly disagreed and 75(39.68%) agreed. On financial strategic practices such training the trainers on specific areas of entrepreneurship a 2 χ (4)=179.19 that was significantly different (p<0.001) indicating a positive impact. The study recommends that women should be trained on business education and equipped with entrepreneurial skills if they were to realize any profits and business growth.