Working Capital Mgt

Effects of Working Capital Management on the Growth of Small and Medium Enterprises in Kenya: A Case of Small and Medium Textile Enterprises in Nairobi Central Business District

Waheho E. W

Abstract

Several Kenyan businesses operate in different business sectors of Small and Medium Enterprises (SMEs) and contribute wealth to Kenyan economy in terms of value creation. For the success of any Kenyan enterprise, the financial management of assets is so crucial. Thus, this research focused on the effects of working capital management on the growth of SMEs with specific interest in the clothing and textile sector within the Nairobi Central District. The variables of the study included; cash management, receivables management, payables management and inventory management. In this study, descriptive survey design was adopted. The population for this study included the small and medium enterprises which retail clothing and textile in Nairobi.

The study targeted both owners and employees in these businesses with a sample size of 80 respondents. The research instrument used a structured questionnaire. Descriptive statistics were used to analyze the data. This was presented in pie charts, graphs, bar charts and tables. Multiple regression was used to generalize the results from the sample to the population.

The study concluded that SMEs in the clothing and textile sector in Nairobi are not good at managing their working capital. Owners/managers experience was found to be more important than application of theories of both inventory and cash balances in majority of the SME in the study. The SMEs lacked resources to manage their receivables. The study recommended that SMEs establish a credit control department with a full-time credit officer and follow credit control policy procedures. SMEs must also have collection policies to ensure that amounts owing are collected as quickly as possible.

Introduction

Small and medium enterprises – in the

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