AN ASSESSMENT OF CHALLENGES AFFECTING THE COMPETITIVENESS OF SMALL AND MEDIUM SIZED ENTERPRISES IN BARINGO COUNTY

Abstract

Over the past ten years, economic planners have realized the importance of the small enterprise sector in achieving national economic development goals. However, more often than not lack of capacity to tackle the challenges they face have led to the underperformance of the SMEs in the country. Studies done in this area have not been specific at the local level where the business environment is constantly evolving and giving rise to newer challenges that affect their competitiveness. Therefore, this study was done to assess the challenges affecting the competitiveness of SMEs in Baringo County. Specifically the study sought to; establish the current challenges being experienced by SME's in the business environment; to determine the extent to which these challenges affect the competitiveness of SMEs; and to determine extent to which the strategies employed in response to these challenges by the SMEs affect their competitiveness in Baringo County. The study employed survey research design targeting all the 2647 SMEs operating within Baringo County from where a sample comprising of 347 respondents was obtained using simple random sampling technique. Data was collected using questionnaires and analyzed using both descriptive and inferential statistics with the aid of Statistical Package for Social Scientists computer software version 21.0. The findings indicate that the access to finance remain the most significant challenge affecting the competitiveness of the SMEs in the area (β = 0.687, p=0.000, α = 0.05).The findings also revealed that lack of formal business training and skills (β = 0.301; p = 0.000, α = 0.05) significantly affected the competitiveness of the SMEs in the area. Findings also revealed that technology had a significant impact on the level of competitiveness of the SMEs (β = -0.231 p = 0.000, α = 0.05). Finally, it also emerged that access to market information (β = -0.540; p = 0.000, α = 0.05), was also a significant challenge to the competitiveness of the SMEs in the area. The study concluded that all the independent variables only explain 44% variation in the competitiveness of the SMEs. It is recommended that stakeholders should do capacity building especially in terms of risk management for the SMEs owners in order for them to be able carefully evaluate the risks in their business and to motivate them to consider applying for more funds for the expansion of their business. This training can also help them to come up with more realistic expansion plans without affecting their competitiveness. The SMEs owners also need general training in business management in order for them to strategically operate their businesses. More studies need to be done to establish the influence of business training on the strategic investments decisions of the SMEs in the area and also the influence of strategic relocation to potential areas on the performance of the SMEs.