Effect of access to capital on the growth of youth owned micro and small enterprises in Kenya

The study sought to investigate the effect of access to capital on the growth of youth owned Micro and Small Enterprises in Kenya (MSEs). Youth-owned enterprises were selected from Nairobi County. A sample size of one hundred and twenty-seven (127) MSEs was selected. Both primary and secondary data was used in this study. The primary data was collected through a questionnaire as the main data collection instrument in the study. The study established that a majority of youth owned MSEs faced challenges in accessing capital due to the high cost of finance, high rates of interest, the high cost of accessing credit and collateral challenges. The study recommends the government to come up with appropriate policies that are effective in monitoring the implementation of interest rates as suggested by the Central Bank of Kenya. These will ensure that commercial banks and microfinance institutions adopt the effected interest rates changes, and hence encourage youth owned MSEs to access affordable micro-credit facilities. The study also recommends the need to having clear loaning policies to avoid misunderstanding on expectations regarding repayment period while addressing the interest rate on the borrowed loan and how the rates should be subsidized by the lending institutions. Finally, the study recommends MSEs training to address issues of bookkeeping procedures, inventory system, and business plan.