Effects Of Access To Credit On The Financial Performance Of Youth Enterprises In Nairobi, Kenya

The Microfinance institutions (MFI) and commercial banks offering financial credits do not provide credit access to the low income youth population due to inadequate collateral security. The objective of the study was therefore to find out the effectiveness of access to credit on the financial performance of youth enterprises in Nairobi, Kenya. Simple random sampling was used to select a sample size of 30 youth enterprises participants from the entire population of youth entrepreneurs in Nairobi. There was no need for a percentage sample size representative to the target population for this study, but the selected sample was deemed adequate for the study findings were used to make conclusions and recommendations of the study. This study targeted all youth enterprises within Nairobi, Kenya. Simple random sampling was used to select a sample size of 30 youth enterprises participants from the entire population of youth entrepreneurs in Nairobi. Questionnaires were used to collect data. A questionnaire for youth enterprises was structured with closed- ended and open ended items. The questionnaire had questions in groups of the various independent variables of the study. The study concludes that access to credit increases the capital base of businesses owned by Youth entrepreneurs in Nairobi to a very great extent; that lack of access to long-term credit for Youth entrepreneurs in Nairobi forces them to rely on high cost short term finance to a great extent, that access to credit increases the number of goals achieved in businesses owned by Youth entrepreneurs in Nairobi to a great extent and that lack of access to credit by Youth entrepreneurs in Nairobi constrains entrepreneurship and restrict their ability to diversify their products to a great extent. The study recommends commercial banks in Kenya and other financial institutions to increase access to long-term credit for Youth entrepreneurs in Nairobi so that they are not forced to rely on high cost short term finance, that they also harmonize lending conditions where credit is available and give the Youth entrepreneurs in Nairobi fieedom of choice on what to do with the money. Commercial banks in Kenya should also avail credit facilities to increase the number of goals achieved by businesses owned by Youth entrepreneurs in Nairobi. Commercial banks in Kenya should avail credit facilities to Youth entrepreneurs in Nairobi to enable them to diversify their products to a great extent and that Product diversification in businesses owned expand the output.