FINANCIAL INCLUSION, BUSINESS SIZE AND PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES OF FISH TRADING ALONG LAKE VICTORIA REGION, KENYA

Abstract

The overarching goal of financial inclusion is mostly to ensure that almost all the unbanked population is drawn into formal financial system where they can enjoy the benefit of unlimited access to appropriate and affordable financial services. However, surveys conducted have indicated that less than 50% of Kenya’s populations are financially excluded. The purpose of the study was to examine the financial inclusion, business size and performance of Small and Medium Enterprises of fish trading along Lake Victoria region Kenya which had being seen to be a dominant source of fish in Kenya and contribute to approximately 94% of all the fish landing annually in the past decade. The study therefore was to find out whether fish traders were financially included. The specific objective of the study was to determine the effect of access to bank, examine the usage of financial services, establish the effect of knowledge of finance on financial performance and to investigate the moderating effect of business size on the influence of financial inclusion on performance of small and medium enterprise of fish trading along Lake Victoria region Kenya. The study was anchored on positivism philosophy while credit rationing theory was used as a guide to the study. Mixed research design was adopted in the study. Target population of 4,500 respondents with a sample size 173 of traders was selected using the Yamane formula. Questionnaire and interview schedules were used as data collection instrument. The study data were analyzed using descriptive and inferential statistics which include mean and mode. Descriptive statistics was computed to summarize and describe the demographic characteristics of the respondents. Moderated multiple regressions was used to test hypothesis on financial inclusion and performance. Data was presented using tables and graphs. The researcher found a positive correlation between financials inclusion and performance of small and medium enterprises of fish trading along Lake Victoria region, Kenya. Simple linear regression results showed that access to finance had a positive significant effect on performance of Small and Medium Enterprises of fish trading along Lake Victoria region (Coefficient of correlation 0.403, p=0.000<.005, t=5.499). Usage of finance had a positive significant effect on financial inclusion among small medium enterprises (coefficient of correlation 0.698, p=0.000<.005, t=12.166). Knowledge of finance had a positive significant effect on performance of small and medium enterprises of fish trading along Lake Victoria region Kenya (0.577, p=0.000<.005, t=8.817). Business size had a positive significant moderating effect on the relationship between financial inclusion and performance of small and medium enterprises of fish trading along Lake Victoria region, Kenya (coefficient of correlation 0.584, p=0.000<.005). Furthermore R square rise for the two models indicated significant effect. The study rejected all the null hypothesis. The study recommended that since the study findings have shown that access to finance is significant hence business owners should seek funding inclusion to enable performance. The study findings have shown that usage of finance is significant hence available funds should be utilized to enable performance maximization. The study findings have shown that financial knowledge is significant hence business owners should acquire financial skills through training and experience to improve performance. The study findings have shown that size of business was of significance hence business owners should make their business to grow so as to increase chances of financial inclusion and performance of their businesses.