Socio Sector In Kenya

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EFFECTS OF MICRO FINANCE SERVICES ON THE GROWTH OF MEDIUM AND SMALL ENTERPRISES CHAPTER ONE 1.0 INTRODUCTION 1.1Background of the study Promotion of MSE sector in Kenya is a viable and dynamic strategy for attaining the national goals which includes employment creation, balanced development between sector and sub sectors and poverty alleviation.This sector have been the means through which accelerated growth and rapid industrialization have been achieved.Koech(2011) The Kenya Government’s commitment to foster growth of MSEs emerged as a key strategy in1986 report. Results from MSE baseline survey show that the sector has contributed 13.8 percent of Kenya’s Gross Domestic Product (GDP) Mwangi(2011). Maalu, et. al.…show more content…
The micro enterprises employing less than eleven people accounted for about 99.3% of the total people employed in the enterprises sector leaving only 0.7% to the small enterprises which employs less than fifty people and medium which employs less than five hundred people.In full recognition of the above, the government clearly stated its intentions to create job opportunities by further diversification of micro and small enterprises through capacity building using micro finance programs.This was specified by the NARC government ‘s promise in 2003 to create 500,000 jobs annually,the bulk of which would be derived from the SMEs (GOK…show more content…
The informal systems are not regulated and not subsidized but they are member based and come in three distinct forms, financial arrangement among relatives and friends, tradional money lenders and rotating saving and credit associations (ROSCAS). The formal subsidized system comprises of organization on institutions, which provide financial services and receive financial support from foreign aid agencies.These institutions undertake micro finance operations that are not regulated but are heavily subsidized.The main actors here are NGO micro finance and Government agencies Dondo (1997). The formal sector comprises institutions that are financially self-sustaining and have operated in the financial sector for a long time. These include commercial banks insurance companies andsaving and credit co-operative societies (SACCOS). Due to the unreliability of informal systems and the difficulties in lending conditions of formal financial sector, majority of micro-enterprises can only gain access to credit through formal subsidized system mostly from Micro Finance Institution.The emerging potential market of micro finance is so diverse that MFI are unable to meet the demands of micro-entrepreneurs requiring either start up credit for expansion and growth Dondo

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