Entrepreneurial Determinants of Savings Mobilization among Micro and Small Enterprises in Trans Nzoia County, Kenya

Abstract

Savings mobilization among MSE’s is very significant, unlike credit, they are what MSE’s and individuals can accumulate and hold over time. The purpose of the study was to determine the entrepreneurial determinants of savings mobilization among MSE’s in Trans Nzoia County. The objectives of the study were to determine whether entrepreneurial determinants namely; financial literacy, savings incentive, customer experience and technological innovation influenced savings mobilization among MSE’s. This study used mixed research design. The target population was 2216 MSE’s. To get study sample both stratified and random sampling was used and 339 MSE’s were selected. Primary data was collected using semi structured questionnaire while secondary data was collected from a list of MSE’s registered with KNCCI Trans Nzoia County. Quantitative method was used to collect data on profiles of the enterprises and indicators of MSE’s savings mobilization, while qualitative method was used to collect data on respondent’s perceptions/opinions. A pilot test on research instruments had cronbach’s alpha scales within the threshold. Data analysis used both descriptive and inferential statistical analyses. In particular, the study used frequency tables, Pearson Chi-square, correlation and multiple regression to analyze the data. ANOVA results found financial literacy, customer experience and technology innovation as predictors of savings mobilization. The study findings indicated a significant relationship between financial literacy, customer experience and technology innovation on MSE’s saving mobilization. The study concluded that for financial institutions to improve savings mobilization they have to adopt innovative and growth oriented approaches. The study recommended that formal financial institutions to reach out to the informal financial institutions to promote financial literacy training program. Also, the government through ministry of finance ensure that all saving mobilization institutions train their clients on financial literacy. The savings mobilizations institutions to work with MSE’s on viable savings incentives. To improve on customer experience, financial institutions to consider specific social economic conditions and dominant economic activities of MSE’s. The financial institutions to design products and services in consideration of MSE’s gender, level of education and the number of family dependants. Also, financial institutions to create functional infrastructures before introduction of technological innovations. The policy recommendations of the study indicated that the government to develop education policy for entrepreneurship and financial literacy to be incorporated in all curriculums at all learning centers. The government to develop a policy to ensure that all savings mobilization institutions developed attractive savings incentives to induce MSE’s to start or increase savings mobilization. To improve on customer experience, government to develop a policy on rating of financial institutions based on customer feedback on quality of products and services then give tax relief of a certain percentage to the best rated financial institution. The government should develop a policy to finance MSE’s acquisition of technology based equipments at reduced and or subsidized rates or through installment payments.