Microfinance Institutions’ Social Intermediation and Micro and Small Enterprises Survival in Thika Town, Kenya

The continuous rapid growth of microfinance institutions in Kenya seems not to offer enough solution to the micro and small enterprises survival challenges with more than a one-third of MSEs start-ups collapsing within the first three years. It is the high rate of collapse and low rate of survival of MSEs that motivated this research to fill the existing gap on the missing linkage between MFIs and MSEs survival. This study looked at the role of the social intermediation services offered by MFIs on survival of MSEs in Thika Town which is both an industrial town and a business hub. A descriptive study design was adopted. Stratified and purposive sampling methods were used to select a sample 272 MSEs. Findings indicated that; regular microfinance participation help reduce loan application and payment bureaucracy while keeping entrepreneur updated on available opportunities. Training equips MSEs owners with necessary managerial skills on financial management, book keeping, and business operations. Group liability eliminates the need for collateral security when accessing loan while it increases the amount of loan accessed. Networking increases business link widening goods and services markets and allows for formation of business clubs. Finally, it was found that training was the most sought service followed by group liability, microfinance participation, and networking. From the study findings, the researcher recommends that MSEs continue seeking for social intermediation services and especially networking to improve their competitiveness and create a competitive advantage over their competitors boosting their survival.

Keywords –Social Intermediations, Micro and Small Enterprises (MSEs), Microfinance institutions (MFIs), Survival