Market system strategies: Antecedents to financial uptake among women-owned MSMEs in informal settlements in Kenya
DOI:
https://doi.org/10.20525/ijrbs.v12i7.2873Keywords:
Market System Strategies, women-owned MSMEs, Financial Uptake, KenyaAbstract
Despite the effort to increase financial inclusion, women-owned Micro, Small, and Medium-sized Enterprises (MSMEs) continue to face challenges in the uptake of financial services. Low financial uptake is strongly associated with business failure leading to low income and living standards among women entrepreneurs in marginalized areas. Market system strategies are crucial in determining businesses' level of financial uptake. The study investigated the effect of market system strategies on the financial uptake of women-owned MSMEs in the informal settlement of Nyeri County. Specifically, it investigated the effect of business readiness, financial literacy, investor relationships, and investment impact on financial uptake among women-owned MSMEs. The study variables were anchored on Ricky Griffin's model, Theory of Change, and Refinancing theory. The study used a descriptive research design, specifically a cross-sectional design. The target population was 890 women-owned MSMEs in the informal settlements of Nyeri county. Proportionate stratified and random sampling were used to obtain a sample of 275 businesses representing approximately 30% of the study population. Data was collected using structured questionnaires. A pilot test was conducted using ten individuals to test and improve the study questionnaire Reliability was tested using Cronbach's alpha, where an alpha of 0.7 was the acceptable threshold. Regression analyses indicated that the market system strategies, business readiness, financial literacy, impact investment, and investor relationship positively and significantly affected financial uptake, with p-values lower than 0.05 alpha. The study found that businesses with better market system strategies have a higher financial uptake. Based on the findings of this study, it is recommended that policies and interventions aimed at improving financial uptake among women-owned MSMEs should focus on enhancing business readiness and financial literacy and building strong impact investment and investor relationships. The county government, NGOs, and others interested stakeholders should encourage women entrepreneurs in informal settlements of Nyeri county to seek training and support to develop their business skills and increase their understanding of financial uptake. Furthermore, the county and national governments should connect women-owned MSMEs with impact investors and establish relationships to provide funding, support, and mentorship. Finally, policymakers and stakeholders in the financial sector should consider creating an enabling environment that supports and incentivizes impact investment in MSMEs, especially those owned by women, to increase their financial uptake.
Downloads
References
Abey, F. (2018). Female or Women Entrepreneurship- Definition, Advantage, and Disadvantages. Retrieved from: www.mbaknol.com December 30, 2022.
Abu, B. M., Domanban, P. B., & Sekyi, S. (2016). Credit market participation by women-owned small-scale enterprises in Wa and Jirapa districts of the Upper West region of Ghana. Ghanaian Journal of Economics, 4(1), 71-97. https://doi.org/10.10520/EJC-5752fd181
Agrawal, A & Hockerts, K. (2019). Impact Investing Strategy: Managing Conflicts between Impact Investor and Investee Social Enterprise. Sustainability 2019, 11(15),4117; https://doi.org/10.3390/su11154117 DOI: https://doi.org/10.3390/su11154117
Amarteifio, E. N. A., & Frimpong, S. (2019). Investment readiness and access to external finance among Ghanaian small and medium-sized enterprises. International Journal of Entrepreneurship and Small Business, 37(2), 214-231. https://doi.org/10.1504/IJESB.2019.100104
Amentie, C., Negash, E., & Kumera, L. (2016). The barriers to Growth of Micro, Small and medium enterprises in Rockville. Journal of the Academy of Marketing Science, 23(4), 236-245. https://doi.org/10.1504/IJESB.2019.100104 DOI: https://doi.org/10.1504/IJESB.2019.100104
Anand, S., & Chhikara, K. S. (2013). A theoretical and quantitative analysis of financial inclusion and economic growth. Management and Labour Studies, 38(1-2), 103-33. https://doi.org/10.1177/0258042X13498009 DOI: https://doi.org/10.1177/0258042X13498009
Asongu, S. (2014). Financial development dynamic thresholds of financial globalization: evidence from Africa. Journal of Economic Studies, 41(2), 166-195. https://doi.org/10.1108/JES-03-2012-0039/full/html DOI: https://doi.org/10.1108/JES-03-2012-0039
Asongu, S. A. (2017). The effect of reducing information asymmetry on loan price and quantity in the African banking industry. Research in International Business and Finance, 41, 185-197. https://www.sciencedirect.com/science/article/abs/pii/S0275531916301222 DOI: https://doi.org/10.1016/j.ribaf.2017.04.020
Asongu, S. A., & Odhiambo, N. M. (2018). Information asymmetry, financialization, and financial access. International Finance, 21(3), 297-315. https://doi.org/10.1111/infi.12136 DOI: https://doi.org/10.1111/infi.12136
Aterido, R., Beck, T., & Iacovone, L. (2013). Access to finance in Sub-Saharan Africa: is there a gender gap?. World development, 47, 102-120.https://www.sciencedirect.com/science/article/abs/pii/S0305750X13000661 DOI: https://doi.org/10.1016/j.worlddev.2013.02.013
Bayero, M. A. (2015). Effects of Cashless Economy Policy on financial inclusion in Nigeria: An exploratory study. Procedia-Social and Behavioral Sciences, 172, 49-56. https://www.sciencedirect.com/science/article/pii/S1877042815003717 DOI: https://doi.org/10.1016/j.sbspro.2015.01.334
Daggers, J. & Nicholls, A. (2016). Academic Research into Social Investment and Impact Investing: The Status Quo and Future Research. In Routledge Handbook of Social and Sustainable Finance; , 5; Routledge: Abingdon-on-Thames, UK. https://doi.org/10.4324/9781315772578.ch5
Fanta, A., & Mutsonziwa, K. (2021). Financial literacy as a driver of financial inclusion in Kenya and Tanzania. Journal of Risk and Financial Management, 14(11), 561 DOI: https://doi.org/10.3390/jrfm14110561
Feeney, L, Haines, G H jr & Riding, A R (1999) Private investors investment criteria: insights from qualitative data, Venture Capital: An International Journal of Entrepreneurial Finance, 1, 121-145.https://www.mdpi.com/1911-8074/14/11/561 DOI: https://doi.org/10.1080/136910699295938
Fowowe, B. (2017). Access to finance and firm performance: Evidence from African countries. Review of development finance, 7(1), 6-17.https://www.sciencedirect.com/science/article/pii/S1879933717300106. DOI: https://doi.org/10.1016/j.rdf.2017.01.006
Fraser, S., Bhaumik, S. K., & Wright, M. (2015). What do we know about entrepreneurial finance and its relationship with growth? International small business journal, 33(1), 70-88. https://doi.org/10.1177/0266242614547827 DOI: https://doi.org/10.1177/0266242614547827
Gathungu, J. M. (2018). Entrepreneur financial literacy, financial access, transaction costs, and performance of microenterprises in Nairobi City County in Kenya. Global Journal of Management and Business Research, 18(A6), 41-51. http://erepository.uonbi.ac.ke/handle/11295/76441.
Howorth, C (2001). Small firms' demand for finance: a research note, International Small Business Journal, 19 (4), 78-86. https://doi.org/10.1177/0266242601194005 DOI: https://doi.org/10.1177/0266242601194005
Izabela, MS (2014). Financial Inclusion, Growth and Inequality: A Model Application to Colombia, 14-166. Washington, DC: International Monetary Fund. https://www.ceeol.com/search/article-detail?id=695994 DOI: https://doi.org/10.5089/9781498344838.001
Kamunge, M. S., Njeru, A., & Tirimba, O. I. (2014). Factors affecting the performance of small and micro enterprises in Limuru Town Market of Kiambu County, Kenya. International journal of scientific and research publications, 4(12), 1-20.https://www.academia.edu/10048947
Kasekende, L. & Opondo, H. (2003). Financing Small and Medium-scale Enterprises (SMEs): Uganda's Experience, Bank of Uganda Working Paper. https://nru.uncst.go.ug/handle/123456789/2198
Kinyua, A. N., (2014), Factors Affecting the Performance of Small and Medium Enterprises in the Jua Kali Sector in Nakuru Town, Kenya. http://ir-library.egerton.ac.ke/handle/123456789/2067 DOI: https://doi.org/10.9790/487X-16148093
Klasen, S., & Wink, C. (2002). A turning point in gender bias in mortality? An update on the number of missing women. Population and Development Review, 28(2), 285-312.https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1728-4457.2002.00285.x DOI: https://doi.org/10.1111/j.1728-4457.2002.00285.x
Lindvert, M., Yazdanfar, D., & Boter, H. (2015). Perceptions of financial sources among women entrepreneurs in Tanzania. African Journal of Economic and Management Studies, 6(2), 197-218. https://doi.org/10.1108/AJEMS-10-2013-0090/full/html DOI: https://doi.org/10.1108/AJEMS-10-2013-0090
Lusimbo, E. N. (2016). Relationship between financial literacy and the growth of micro and small enterprises in Kenya: A case of Kakamega Central sub-county (Doctoral dissertation, cohred, JKUAT).http://ir.jkuat.ac.ke/handle/123456789/2236
Mason, C. M. & Harrison, R. T. (1994) The informal venture capital market in the UK. In A. Hughes and D.J. Storey (eds.) Financing Small Firms Routledge, London, pp 64-111.https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1497772
Muathe, S.M.A. (2010). The Determinants of Information and Communication Technology Adoption by Small and Medium Enterprises within the Health Sector in Nairobi, Kenya. Unpublished Ph.D. Thesis, Kenyatta University
Mugenda, O. M., & Mugenda, A. G. (2003). Research Methods: Quantitative and Qualitative Approaches, African Centre of technology studies, Nairobi. Acts Press.
Mugenda, O. M., & Mugenda, A. G. (2012). Research Methods: Quantitative and Qualitative Approaches. Nairobi: Acts Press.
Musha, T. B. (2014). Factors influencing uptake of credit by Kenyan Youth in Nairobi County (Doctoral dissertation, University of Nairobi).http://erepository.uonbi.ac.ke/handle/11295/75140
Muturi, J. (2016). Factors Influencing the Performance of SMEs in Kenya: A Case of Independent Petroleum Dealers in Nairobi.http://erepo.usiu.ac.ke/11732/2237
Oluoch, F. (2019). Financial factors determining micro-loan uptake by women enterprise groups in Nakuru East Constituency, Nakuru County (Doctoral dissertation, Egerton University).Rad, T. & Tsai, L. (2006). The stock price performance of seasoned equity offerings: completed vs. withdrawn. Managerial Finance, 32 (3), 234-246. https://doi.org/10.1108/03074350610646744 DOI: https://doi.org/10.1108/03074350610646744
Rizzi, F.; Pellegrini, C.; & Battaglia, M. (2018). The Structuring of Social Finance: Emerging Approaches for Supporting Environmentally and Socially Impactful Projects. J. Clean. Prod. 170, 805–817. https://doi.org/10.1016/j.jclepro.2017.09.167 DOI: https://doi.org/10.1016/j.jclepro.2017.09.167
Scholtens, B. & Sievänen, R. (2013). Drivers of Socially Responsible Investing: A Case Study of Four Nordic Countries. J. Bus. Ethics, 115, 605–616. https://doi.org/10.1007/s10551-012-1410-7 DOI: https://doi.org/10.1007/s10551-012-1410-7
Shi, G. Bu, H.; Ping, Y. Tingchi Liu, M. & Wang, Y. (2016), Customer relationship investment and relationship strength: evidence from the insurance industry in China, Journal of Services Marketing, 30 , 2, pp. 201-211. https://doi.org/10.1108/JSM-03-2014-0088 DOI: https://doi.org/10.1108/JSM-03-2014-0088
Sohail, M. (2014). Women empowerment and economic development-an exploratory study in Pakistan. Journal of Business Studies Quarterly, 5(4), 210.https://www.iiste.org/Journals/index.php/DCS/article/view/12853
Temmerman, M., Khosla, R., & Say, L. (2014). Sexual and reproductive health and rights: a global development, health, and human rights priority. The Lancet, 384(9941), e30-e31. https://doi.org/10.1016/S0140-6736(14)61190-9 DOI: https://doi.org/10.1016/S0140-6736(14)61190-9
Van Auken, HE (2001). Financing small technology-based companies: the relationship between familiarity with capital and ability to price and negotiate investment, Journal of Small Business Management, 39 (3), 240358. https://doi.org/10.1111/0447-2778.00022 DOI: https://doi.org/10.1111/0447-2778.00022
Van Oudheusden, P., Klapper, L., Demirguc-Kunt, A., & Singer, D. (2015). The global findex database 2014: measuring financial inclusion around the world. World Bank, Washington, DC.https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2594973
Weber, O. (2016). Introducing Impact Investing. In Routledge Handbook of Social and Sustainable Finance; Lehner, O.M., Ed.; Routledge, Taylor Francis Group: Oxford, UK. https://doi.org/10.4324/9781315772578 DOI: https://doi.org/10.4324/9781315772578
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 Regina Kagiri , Stephen Muathe
This work is licensed under a Creative Commons Attribution 4.0 International License.
For all articles published in IJRBS, copyright is retained by the authors. Articles are licensed under an open access Creative Commons CC BY 4.0 license, meaning that anyone may download and read the paper for free. In addition, the article may be reused and quoted provided that the original published version is cited. These conditions allow for maximum use and exposure of the work, while ensuring that the authors receive proper credit.
