Strategic Revolving Fund Practices and Performance of Micro and Small Businesses in Wajir County, Kenya

Abstract

Even though the vision 2030 framework recognizes the micro, small and medium enterprises’ sector as a key driver to achievement of middle income status in Kenya, their contribution to the achievement of this goal especially within Wajir County is dismal. In Wajir County, the 2016 Micro, Small and Medium Enterprises report showed that many of the businesses in the county were stuck at the micro level where only 14 businesses had graduated to medium scaled businesses. It was also among the counties with the lowest change in number of employees when comparing the inception period and the survey period recording a change of 1.4%. The report showed that besides lack of adequate operating funds, limited knowledge and information and poor strategic management skills were the major constraints to the performance of these enterprises. Hence, the county government of Wajir had stepped in to address this challenge by setting up the Wajir County Revolving Fund whose main mandate was to promote the development in Wajir County by providing different kinds of support to these businesses. Nevertheless, studies assessing the impact of the strategic activities/practices under the fund on the performance of the businesses in order to evaluate the effectiveness of the fund were conspicuously missing. This study therefore sought to investigate the effect of the strategic revolving fund practices on the performance of the micro and small businesses in Wajir County. The specific focus was to establish the effect of stakeholder support, strategic training, knowledge transfer and strategic leadership development on the performance of micro and small retail enterprises in Wajir County. The study was guided by the resource based view theory, the theory of constraints, the social capital or social network theory and the balanced scorecard model. The study applied a descriptive survey research design. The study targeted the 855 beneficiaries (business groups and individual businesses) who had benefitted from the fund as at 2018. The study applied stratified random sampling in selecting the sample. The study used semi-structured questionnaires which were administered to the chairpersons for the group businesses and the owners for individual businesses. In analyzing the information from the open ended questions, themes emerging from the responses given were coded and simple summaries generated. The quantitative data analysis was aided by the use of the Statistical Package for Social Sciences version 20. Both descriptive and inferential analyses were carried out. A multiple linear regression model was used to show the relationship between strategic revolving fund practices and the performance of micro and small retail businesses in Wajir County. The study found that stakeholder support, strategic training, knowledge transfer and strategic leadership development had positive and significant effect on the performance of the micro and small businesses. The study noted that knowledge transfer had the largest effect on the performance of these businesses. The study concluded that the county revolving fund through various strategic practices/activities under taken under the fund had transformed the performance of micro and small businesses in Wajir County. Several recommendations were made among them the Wajir County government through the department of trade and cooperatives should identify, form networks and present proposals to various parties in diverse industries/sectors whose support can tremendously transform the county revolving fund initiative. The study also recommends that this department should develop a concrete strategy for planning how stakeholders attached to the fund and beneficiary businesses interact and communicate and hold regular consultative meeting with these parties to ensure that they are actively engaged in the activities of the beneficiaries. The study also recommended that training teams attached to the fund should ensure that the concepts of business strategy and other strategic business concepts are deeply enshrined in the training sessions offered to beneficiary businesses.