Thesis:

Role of risk management practices on sustainability of small and medium sized enterprises in Garissa county, Kenya

Small and Medium-sized Enterprises continue to fail to maintain their performances. Such failure was associated with fluctuations in levels of service delivery, infrastructure, demand for services and goods. The major objectives of the study were to conduct investigation of the influence of v practices of risk management on the sustainability of SMEs in Kenya’s, Garissa County. The specific objectives included: To determine the influence of risk identification on the sustainability of SMEs in Garissa County; To examine the effect of evaluating business risks on the sustainability of SMEs in Garissa County; To establish how improvement in the risk mitigation process enhances the sustainability of SMEs in Garissa County. The theoretical framework in this study was guided by the Agency Theory. The study consisted of mixed methods approach. Qualitative and quantitative research was used since both approaches induced different aspects of risk management practices. The study adopted descriptive design since it is exploratory. The study was carried out in Garissa County. According to County Government of Garissa (2021) data on SMEs, there were over 6,000 in number with over 3,000 operating within Garissa township. This forms the target population in the study. Close to 254 traders had registered for bookkeeping and financial training to enhance their skills in business. This formed the accessible population in the study. Accessible population of 254 gave a sample size of 155 SMEs. The study sampled SMEs in different industries, and thus employ stratified sampling to sample the respondents. Each of the 11 identified industries contributed 14 traders in the sample. In addition, 5 financial services providers were sourced from the County to add up to the sample. Data collection involved the use of the semi-structured questionnaires. Qualitative data was collected using interviews with representatives of financial services organizations within Garissa County. Pre-testing entailed 10% of the sample size. Reliability of this study was tested using Cronbach alpha coefficient. The validity of the instruments was assessed through expert judgement. The questionnaires were administered directly to the respondents. The respondents filled the forms at their own free time. The data for the interviews was collected through recoding on phone for easier access, reference as well as transcription. Descriptive statistics including means, frequencies, percentages and generation of frequency distribution tables was used to analyze data through SPSS Version 24.0. Moreover, analysis of variance (ANOVA) was used to explore any relationships between the study variables. Lastly, the use of inferential statistics including regression analysis. The study found that risk identification influenced sustainability of SMEs in Garissa County in different ways including brainstorming about problems that may face the SMEs. The study also found that risk evaluation affected sustainability of SMEs despite the respondents not practicing the evaluations. The findings showed that mitigation of risk played different roles in sustainability of SMEs in Garissa County. The study concluded that about 50.9% of variations in sustainability of the SMEs in Garissa County were attributed to practices of risk management. The researcher recommended that SMEs owners should focus more resource input towards risk management. The County Government of Garissa should consider involving SMEs in entrepreneurial training to raise awareness about risk management. The financial institutions in Garissa County should support the SMEs to identify risks and raise awareness on their mitigation. Policy makers should use technology-based mechanisms in raising awareness about risk management practices. Future studies should be guided by the findings that low practices of risk management among the SMEs.