Financial Inclusivity Enablers and Performance of Small Medium Enterprises in Uasin-Gishu County, Kenya

Abstract

The performance of SMEs is heavily reliant on the presence of financial inclusion facilitators, which can determine their success or failure. These facilitators encompass a range of initiatives and systems designed to assist SMEs in obtaining financial services and achieving greater integration. The main aim of the study was to determine the effect of factors that promote financial inclusion on the performance of small and medium firms in Uasin-Gishu county. The specific objectives were to ascertain the effect of digital financial services on the performance of SMEs in Uasin-Gishu County, to investigate the effect of credit access on the performance of SMEs in Uasin-Gishu County, to evaluate the effect of financial literacy programs on the performance of SMEs in Uasin-Gishu County, and to assess the effect of agent banking on the performance of small and medium enterprises in Uasin-Gishu County. The explored theories encompass the diffusion of innovation theory, credit rationing theory, dynamic capacities theory, and institutional theory. This inquiry employed a crosssectional survey as its research design. The study primarily focused on SMEs in UasinGishu County that possess a single business permit. These enterprises employed less than twenty individuals. 1300 SMEs were included in the target population. Sample size included 306 SMEs. The researcher employed a method of stratified proportional sampling. The bulk of the material was derived from a methodical survey that mostly consisted of closed-ended questions. Initially, we will employ 10% of the ultimate sample size as an approximation. A total of 31 respondents were selected at random from this pool. The study employed inferential statistics to evaluate hypotheses. Prior to doing the regression, the research performed diagnostic tests to assess the assumptions. Pearson's correlation analysis revealed a positive and statistically significant relationship between agent banking, digital financial services, credit access, financial literacy programs, and the success of SMEs. The managerial recommendations included digital financial services, staff training, strategic borrowing, financial literacy, and agent banking. Several policy recommendations were made, such as the construction of digital infrastructure, the expansion of credit accessibility, the promotion of financial literacy, and the enlargement of agent banking networks.