Relationship between Women Entrepreneurs' Perception of Impact of NGO Interventions and Enterprise Performance

Transcription

1 Journal of Emerging Trends in Economics and Management Sciences (JETEMS) 3(3): Scholarlink Research Institute Journals, 2012 (ISSN: ) Journal jetems.scholarlinkresearch.org of Emerging Trends Economics and Management Sciences (JETEMS) 3(3): (ISSN: ) Relationship between Women Entrepreneurs' Perception of Impact of NGO Interventions and Enterprise Performance Ruth Jelagat Tubey Moi University, P. O. Box 898, Eldoret, Kenya. Abstract The Kenya government, the private sector and non-governmental organizations (NGOs) for quite some time now have developed support programmes to the MSEs in order to boost their performance and contributions towards development. This paper examines the extent to which the women entrepreneurs perception of NGO intervention measures has influenced the performance of their micro and small enterprises. The study used questionnaires, interviews, and observation in data collection among 195 sampled women entrepreneurs in Eldoret Municipality. The data was analyzed both qualitatively and quantitatively using frequency distributions, descriptive statistics, and regression analysis while chi-square distribution was used to establish associations between variables. Hypotheses were tested, inferences made from which generalizations and conclusions were drawn. The study found out that among the interventions provided to women entrepreneurs are credit, training and business counselling received by respondents in varying degrees. Furthermore, the relationship between the interventions and enterprise growth was significant. It was then recommended that NGOs should continue assisting women entrepreneurs, increase credit levels, put more emphasis on training and enhance business counselling follow-up sessions. Keywords: relationship, women entrepreneurs, perception, impact, NGO interventions, enterprise performance INTRODUCTION In recent years, many economies have come to realize the importance of the MSE sector in promoting income and employment generation especially in the Third World Countries. These countries have since then been engaged in designing support initiatives, programmes and policies that can promote and sustain the growth and development of the sector. The MSEs may generate new growth as is explained by the fact that these enterprises act as sources of technological change and generation of employment and as one of the major factors in maintaining socioeconomic stability. The recognition of the role played by women in the economy has led to the development of various programmes, projects and interventions aimed at assisting women in enterprise development inform of financing, training and business counselling services. This is particularly so because women face a multiplicity of constraints in business, such as ability to have access to financial services through formal lending institutions, lack of formal education, entrepreneurship and market knowledge, lack of managerial and technical skills, lack of time due to household responsibilities; socio-cultural constraints, legal constraints and institutional constraints. But given the great role women play in national development, they should be given incentives to enhance their contribution (Kogo, 1992; GoK, 1999). A large number of women entrepreneurs in Kenya have captured the attention of both the government and the private agencies as excellent agents for 242 implementation of a wide range of development goals and income generation in particular. Kenya boasts of over 500 NGOs registered in the country and working in diverse fields of development, which includes enterprise assistance through development of income generating activities. They have intervened in the MSE sector in the form of financing, training, and business counselling among other services. These interventions have been geared towards assisting the MSEs to achieve enterprise growth goals in terms of changes in sales volumes, profits, number of employees, and accumulation of assets and maintenance of records. Also, there have been many NGO programmes geared towards promoting women-operated enterprises, but as to the extent to which they have brought change to the performance of these enterprises; little is known (GoK, 1999). Training and Business Counselling for the Development and Growth of Micro-Enterprises World Bank (1991) notes that whether in the formal or the informal sector work itself has been the site of training. That although the twentieth century has witnessed a major shift in emphasis towards school and post school based training, recent years has been characterized by a revival of emphasis upon on-thejob training and upon close links with enterprises. This has led to an increased recognition of the successes of Latin American National training agencies, and a realization on that on-the-job training in the informal sector is often a highly organized and a successful phenomenon. Carnoy (1980) holds that

2 Journal of Emerging Trends in Economics and Management Sciences (JETEMS) 3(3): (ISSN: ) the ability of the formal sector to provide training is constrained by prevailing economic conditions. Abuodha and King (1990) assert that there is need for entrants in both the formal and informal sectors to be trained so as to enhance their flexibility and their response to the rapidly changing technology. This could be more advantageous if those likely to move across the sectoral boundaries could be identified and supported and they go on to say that this can take the form of a short orientation programme focusing on the key entrepreneurial skills they are perceived to be lacking. According to Lauglo (1994), enterprise-based training has many advantages over preparation either in schools or in vocational training institutes. However, the element of theory that learners acquire in the training institutions is a further vital ingredient in small development. Oketch (1993) holds that training in technical and vocational skill alone is insufficient. It must be combined with basic business, marketing and entrepreneurial skills. When the UNDP-funded Jua Kali project in Kenya offered short training programmes to owner-managers in the textile industry, it was found that they lacked management skills. It therefore started offering training in business management, accounts and bookkeeping and taught them how to prepare good business plans. Women entrepreneurs succeed less than men do (McCormick, 1991). Many of their business projects start from a desire to build on traditional skills, without assessing the market. The experiences of the leavers from the youth polytechnics indicate that female leavers have been unable to generate income from their training compared to males. One reason attributable to this, according to McCormick, is that female trainees have been limited to tailoring, dressmaking and business education, which either needs a larger start-up capital or are not in high demand in the market. Hence in the long term, skill training goes beyond existing traditional activities or building upon them at higher technological levels can help women move into genuine entrepreneurship. It is evident that the MSE sector plays an important role in income and employment generation as well as poverty alleviation, hence, the NGOs have developed support programmes such as credit, training and business counselling geared towards boosting the performance of the MSEs due to their enormous contribution to national development. However, while these support programmes have been implemented in Kenya by various NGOs, there is no sufficient empirical data to show the extent to which these interventions have brought change to the performance of women run enterprises. This paper, therefore, sought to determine, highlight and document how women entrepreneurs perception of the impact of NGOs interventions affects the growth of women-run enterprises. The Impact of Support Initiatives and Programmes Abuodha and King (1990) assert that there is need for entrants in both the formal and informal sectors to be trained so as to enhance their flexibility and their response to the rapidly changing technology. This could be more advantageous if those likely to move across the sectoral boundaries could be identified and supported and they go on to say that this can take the form of a short orientation programme focusing on the key entrepreneurial skills they are perceived to be lacking. But the impact has not been measured, especially among women entrepreneurs. Oketch (1993) holds that training in technical and vocational skill alone is insufficient. It must be combined with basic business, marketing and entrepreneurial skills. When the UNDP-funded Jua Kali project in Kenya offered short training programmes to ownermanagers in the textile industry, it was found that they lacked training in business management skills, accounts and bookkeeping and preparation of good business plans. MATERIALS AND METHODS The study was conducted in Eldoret Municipality, which is the administrative industrial centre for North Rift. The research design of the study assumed an exploratory approach which began with a survey of the study area to identify the number of NGOs involved in micro and small enterprise promotion and then followed by a purposive selection of four NGOs; namely; the Catholic Diocese of Eldoret, ACK, K- REP and World Vision-Eldoret to represent all the NGOs in the entire Municipality. The target population for the study comprised women entrepreneurs who had received NGO support/assistance from any of the NGOs based within Eldoret Municipality. The sampling frame constituted a source list of a total of 975 women entrepreneurs who had been in business between the year 2000 and 2002 and who had received NGO support from ACK, K-REP, World Vision-Eldoret and the Catholic Diocese of Eldoret. This list was obtained from the respective NGO records. From the above sampling frame, a sample size of 195 entrepreneurs was drawn, which represented 20 % of the population. This size was selected using simple random sampling technique. Thus given the variation in types of NGO interventions, 2, 35, 58 and 7 enterprises were picked for the exercise from Catholic Church, ACK, K-REP and World Vision, respectively. Primary data was obtained from the field using structured questionnaires, guided by an interview schedule and non-participant direct observation. To enhance quality of data, focus on 243

3 Journal of Emerging Trends in Economics and Management Sciences (JETEMS) 3(3): (ISSN: ) group discussions with leaders of women groups, key informants comprising of NGO officials, and four role models were used. The study utilized both qualitative and quantitative methods of data analysis. The qualitative data focused on descriptive statistics and frequency distributions while the quantitative analysis used inferential statistics in form of Chi-square distributions to analyze associations between variables. Both linear and multivariate analyses were used to determine relationships between variables. Lastly, paired sample T-test was utilized in determining the difference between variables. RESULTS AND DISCUSSION NGO Intervention Measures The study sought to establish which types of interventions were offered by the Catholic Church, ACK Church, K-Rep and World Vision. It was established that the NGOs provide training with 30.8% of the respondents being trained in record keeping, 97% in marketing,.% in customer care, 5.13% in human resource management and 5.14% in sourcing of funding. A significant 71.3% of them did not receive any form of training as an intervention measure despite the availability of such training. Of the 0 women entrepreneurs who accessed training, the majority (75%) had less than two weeks of training. The observations are in line with GoK (1999), which notes that on the whole, 88% of the entrepreneurs have not received business management training. This low exposure to training by the respondents' perception on the significance of training in enhancing their enterprise performance where only 5.0% indicating that they benefited very significantly with the majority 40% still saying they need training in book keeping. On credit as a form of intervention, 58.9% of the respondents indicated they had accessed credit, loan amounts averaging at Ksh 10,500 with majority 3.5% receiving loans of between Ksh 5000 and Ksh 15,000. Loan interests were surprisingly a constant amount of Ksh 1,000 per annum with loan duration being a maximum of 1 year. A majority (.0%) of the respondents indicated the amounts advanced were not adequate, but 53.0% of them did concur that the effect of the loans was significant. These observations are largely in agreement with those of the GoK (1999), that, of the formal source of credit, NGOs are the most important source by focusing the provisions of credit MSEs. The loans advanced to women ranging between Ksh 1000 and Ksh 20,000 account for the bulk of the respondents sampled countrywide (GoK, 1999). This shows that credit, as a form of support to women entrepreneurs, is still very low and needs to be improved. According to Arthur and Theocharides (1992), micro-enterprises can be strengthened by credit. Nonetheless, lack of credit has been noted as a constraint inhibiting growth of micro and small enterprises (Alila, 199; Felsenstein & Swartz, 1993). On business counselling as an intervention by NGOs to women entrepreneurs, the study revealed that a majority 89.7% had not had any counselling enterprise management. This suggests that NGOs are yet to take up counselling seriously as an intervention measure. GoK (1999) looks at counselling as part of non-formal training which encompasses all those learning and training activities and strategies which are undertaken outside of established training activities and strategies which are undertaken outside of established formal training institutions. They meet the short-term occupational needs of those who enrol in such programmes. It has been found to be cost effective providing best preparation for selfemployed and respects traditional values and, hence, offers the most appropriate formulae for absorbing women entrepreneurship. Entrepreneurs' Perception of Impact of NGOs Intervention and Enterprise Performance The study investigated the association between entrepreneurs perception of the impact of NGO intervention and the actual performance in terms of profit and sales. The dependent variables comprised actual enterprise performance, namely annual profit, sales and number of employees added after receiving business counselling. The variables were crosstabulated and the results are as discussed in the following sections. Perception of Effect of NGO Intervention on Enterprise Profits In an attempt to isolate impact of each intervention on the enterprise, each entrepreneur was asked to state perceived impact on each enterprise performance indicator. Each entrepreneur was to respond to the extent to which impact may have felt on the enterprise either 1 = less significant, 2 = significant or 3 = very significant. This was then cross-tabulated with profit as categorized into four groups of equal width. The finding indicates that credit and counselling intervention was statistically significantly associated with profit at 0.05 whereas training was statistically significant at 0.1 level of significance. The finding suggests that entrepreneurs who had received credit and on regular business counselling reported improved profit in their enterprises. Impact of training was not significantly associated with profit at P = This can be explained by the fact that training offered was found to be inadequate by most entrepreneurs. 244

4 Journal of Emerging Trends in Economics and Management Sciences (JETEMS) 3(3): (ISSN: ) Table 1: Profit and NGO Intervention df X2 Sign Dependent Variable: Profit Independent Variable: Credit Training Counselling Source: Field Data, The findings were based on sample size, N= 154 individuals that had relevant experience out of 195 respondents: N<195: Respondents with relevant data considered in the analysis Perception of Impact on Sales Using improved sales as another indicator of enterprise growth, the entrepreneurs were asked to state how credit, training and business counselling as interventions had affected their sales. The two variables were cross-tabulated to determine their association and hence determine if any relationship existed. The findings indicate that the three interventions were statistically significantly associated with sales volume attained. The finding suggests that entrepreneurs experienced a positive impact on profit as earlier discussed. Table 2: Sales and NGO Intervention df X2 Sign Dependent Variable: Sales Independent Variable: Credit Training Counselling Source: Field Data, The findings were based on sample size, N = 155 individuals that had relevant experience out of 195 respondents. Perception of the Impact of NGO Intervention on the Number of Employees Added At this stage, the study attempted to find out whether the new employees added into the enterprise could be associated with the interventions received. Owing to improved sale and profit as an indicator of enterprise growth, could the entrepreneurs add an extra employee? The findings indicated that there is a weaker association between employees added and intervention received, i.e. computed X 2 was statistically significant only at P = 0.1. The weaker association can be attributed to the nature of business studied, which was of micro nature. With relatives working in their premises as employees, this was further compounded by some-owner managers who accepted to work in their enterprises when they experienced more work load. Table 3: Employees added and NGO Intervention df X 2 Sign Dependent Variable: Independent Variables: Credit Training Counselling Source: Field Data, N=l 95 From the foregoing results, we conclude that there is considerable evidence to show that entrepreneurs had benefited from the various NGO intervention attributed to the significant association between actual enterprise performance and their perception of the impact of the interception. CONCLUSIONS AND RECOMMENDATIONS From the findings of the study, it can be concluded that NGOs operating in Eldoret Municipality provide support initiatives to small enterprises so as to enhance their performance and growth. The interventions include credit provisions, training and counselling of women entrepreneurs. The credit provided is still minimal and only reaches barely half the total number of women entrepreneurs in Eldoret municipality. However, a significant majority do not receive any form of training and those who are trained, especially in record keeping, marketing, customer care, Human resource management and sourcing of funds. It is clear that most of the entrepreneurs do not get across the broad kind of training and since benefits accruing from training are integrated and incremental, more still needs to be done in the field of training. The training duration seldom exceeds two weeks. This period should be increased. Business counselling is also available between NGOs in Eldoret Municipality but only an insignificant number of the respondents benefited. As noted, counselling meets short-term occupational needs, is cost effective and respects traditional values and hence needs to be developed further. Therefore, NGOs should devise strategies to ensure that counselling services reach and benefit all women entrepreneurs. REFERENCES Abuodha, C. & King, K. (1990). The building of an industrial Society: Change and development in Kenya's informal sector. IDS Discussion paper No. 292, University of Nairobi. Alila, P. O. (199). Informed Credit and Rural Enterprise Sector Development. FN McCormick D. and Pedersen P. O. Flexibility and networking in an African context. Nairobi: Longhorn Kenya. Carnoy, M. (1980). Segmented labour markets. In Carnoy, M. et al. Education, work and employment. Vol 2. Paris: IIEP. 245

5 Journal of Emerging Trends in Economics and Management Sciences (JETEMS) 3(3): (ISSN: ) Felsenstein, D. & Swartz, D. (1993). Constraints to Small Business Development Across the Life Cycle: Some evidence from peripheral Areas in Israel. Unpublished Government of Kenya, (1999). Report on a tracer study for Phase One of the MSETTP Project. Consultancy report prepared by Netcom Information Systems Ltd., Nairobi: MSETTP. Kogo, K. (1992). Gender Issues in the Informal Jua Kali. Lauglo, J. (1994). Vocational training modes: Sweden, Germany and Japan. International Encyclopaedia of Education (2 nd ed.). Oxford: Pergamon. McCormick, D. (1991). Manufacturing in miniature. Unpublished Manuscript. Oketch, H. O. (1993). Education and training needs for the Informal sector. Kenya papers for the ODA Research Project on education and training for the informal sector Nairobi, Kenya. World Bank, (1991). Skill acquisition and work in micro-enterprises: Recent from MIMEO. Washington. 24