Determinants of Performance of Youth Led Micro and Small Agribusinesses in Kenya

Abstract

Micro and Small Enterprises (MSEs) play an important economic role among the youth in Kenya. However, these MSEs face a mixture of success and failure with past statistics indicating that three out five fail within the first few months of operation, despite the Government’s effort to promote the sector. The purpose of the study was to determine the influence of marketing, resources, firm characteristics and entrepreneur characteristics on the performance of Youth led MSE's in the agribusiness sector in Kenya and investigate whether entrepreneurial culture moderates the relationship between these factors and performance. The study targeted a population of 354 youth led micro and small agribusinesses in Kiambu county. Due to dwindling availability of formal jobs in the county, most of the youth have reverted to self employment and engage in agricultural activities for their livelihoods. The sample was decided on the basis of the multi stage sampling technique where in the first stage, purposive sampling was used to select Kiambu county due to its rich agricultural background. The county was then stratified according to the the 12 administrative constituencies that divide the county. A random sample of 246 Micro and small agribusinesses led by youth in Kiambu county were drawn from each of the strata. The research design used followed a cross sectional survey strategy combining both qualitative and quantitative research approaches. Qualitative and quantitative data was collected through the use of questionnaires consisting of open ended and closed ended questions. The questionnaires were delivered to the respondents personally by research assistants who waited for the questionnaire to be filled. Data analysis was done using Statistical Package for Social Sciences (SPSS) version 24. Linear regression and correlation analysis was performed in order to answer the research questions and meet the research objectives. From the results, the presence of entrepreneurial culture was found to be evident from the fact that majority of the respondents exhibited strong entrepreneurial characteristics such as self direction, self esteem, self confidence, ability to deal with failure and a high inclination towards achievement. This entrepreneurial culture clearly manifested itself in the marketing strategies used with a majority of the youth staying away from the more traditional marketing strategies and taking up more entrepreneurial methods such as networking with friends and family as well as the social media platform to push their products and thus improve the performance of their enterprises in terms of sales volume and profits, with a slight growth in employee numbers. Additionally, the young farmers were able to tackle the perennial problem of lack of access to finances by ploughing back profits in to their enterprises and relying on savings and loans from family members to expand their enterprises. The study concluded that the youth, the government and the society at large need to put in more effort in changing the attitude that the youth have towards entrepreneurship so that we have many more youth taking it up as a first choice and not as a last choice. The MSEs need to come up with more innovative products and methods of production if they are to survive in this cut throat business environment. Additionally, the MSEs should look in to value addition, especially in the end products so as to be more profitable in their ventures. From the findings of the study, it came out clearly that there are other factors that affect the performance of these agribusinessess such as change in climatic conditions, outbreak of diseases, high cost of farm inputs and inadequare infrastructure and poor road networks. The study further recommends that the government needs to ensure that farmers are able to easily access farming advice in the form of extension officers actually visiting these farms in order to help improve the quality and quantity of production.