EFFECT OF INFORMAL FINANCIAL SECTOR SERVICES ON THE PERFORMANCE OF WOMEN OWNED ENTERPRISES IN NAKURU TOWN, KENYA

Abstract

The informal financial sector provides savings and credit facilities for lower income households and small scale enterprises in urban areas. The informal financial sector mobilizes rural savings and small savings from low income urban households. Despite their success in providing monetary services to small businesses that would otherwise lack them, women entrepreneurs still record under performance due to lacking in adequate training, savings and accessibility of loan facilities that would otherwise assist in the improvement of their enterprise performance. Therefore, the study seeks to assess the effect of informal financial sector services on performance of women owned enterprises in Nakuru Town. To achieve this specific objectives were investigated being; cost of loans, savings culture and training facilities offered to women entrepreneurs and how these services affected the performance of women owned enterprises in Nakuru Town. The study rendered usefulness various groups investors, government and the women. The respondents took a long time to fill questionnaires to counter this follow up was done. In theoretical review in Chapter Two, two theories were discussed the Underpinning theory and Grameen Bank theory. An objective exploratory cross sectional survey research design was used. The target population was 28,160 women enterprises. Proportionate stratified random sampling technique was used at a sample of 384 women enterprises. Questionnaires were used to collect data. The findings revealed that there exist a positive and statistically significant relationship between informal financial sector cost of loan and performance of women owned enterprises (r=0. 507**; p<0.01); that there exist a positive and statistically significant relationship between informal financial sector savings and performance of women owned enterprises (r=0.369**; p<0.01) and furthermore, there exist a positive and statistically significant relationship between training and performance of women owned enterprises (r=0. 706**; p<0.01). The finding concluded that informal financial sector cost of loans, informal financial sector savings and informal financial sector training had a positive correlation with performance of women enterprises. In addition, cost of loan causes 0.405 positive coefficient variation in performance of women enterprises. Similarly, savings causes 0.177 positive coefficient variations in performance of women enterprises and finally training causes up to 0.461 positive coefficient variation in performance of women enterprises. The study recommends that cost of loan should be made favorable in terms of flexibility and favorable in their repayment period, interest rates charged of disbursement period of loans. Individual women entrepreneurs should be trained on demand deposits to raise the bulk of loan they may access. Informal financial sector should fast track training women entrepreneurs in book keeping, marketing skills and planning skills.