Thesis:

Analysis of microfinance financing approaches to growth of micro, small, and medium enterprises in Marsabit county, Kenya

This study aimed to assess the impact of microfinance institution (MFI) financing approaches on the development of micro, small, and medium-sized enterprises (MSMEs) in Marsabit County. Limited access to financing has hindered the growth of MSMEs, motivating this research through key objectives: examining the effects of microfinance loan accessibility on MSME growth in Marsabit County, investigating how interest rates offered by microfinance institutions impact the growth of MSMEs in Marsabit County, exploring the effects of loan repayment conditions on the operational growth of MSMEs in Marsabit County; and evaluating the influence of microfinance literacy training programs on MSME development within the county. The study's literature review was framed around financial intermediation theory, microcredit theory, and the resource based view (RBV) of firms. A correlational research design was employed to analyze the relationship between microfinance financing approaches and MSME growth. The target population consisted of 1,000 registered MSMEs in Marsabit County, with a sample drawn from youth engaged in the agribusiness value chain, as provided by the World Food Programme. Using stratified sampling, a representative sample size of 91 MSMEs was determined through the Cochran formula. Primary data were collected via questionnaires, the main data-gathering tool. The study found that microfinance approaches significantly impact the growth of MSMEs in Marsabit County. Key findings indicate that while access to microfinance loans is critical for MSME growth, many entrepreneurs face challenges such as high-interest rates, complex application processes, and limited financial literacy. These barriers hinder optimal utilization of financial services. The study concluded that addressing these issues through targeted interventions, such as lowering interest rates, streamlining loan processes, and providing robust financial literacy training, can significantly enhance MSME sustainability and growth. It is recommended that microfinance institutions adopt more inclusive and flexible lending practices while collaborating with local stakeholders to implement advanced training programs tailored to the unique needs of various business sectors in the region