The INFLUENCE OF MICROFINANCE INSTITUTION’S FUNDING SERVICES ON THE FINANCIAL PERFORMANCE OF WOMEN-OWNED ENTERPRISES IN NAKURU CENTRAL BUSINESS DISTRICT

Abstract

Access to funding services remains a critical enabler of financial growth and sustainability for women-owned enterprises (WOEs), particularly in urban economic hubs such as Nakuru Central Business District (CBD). This study examined the influence of funding services offered by microfinance institutions on the financial performance of WOEs operating within Nakuru CBD. Guided by the Microfinance Credit Theory, the study employed a descriptive research design and targeted a sample of 200 respondents drawn from registered WOEs, out of which 165 valid responses were received yielding a response rate of 82.5%. Primary data were collected using structured questionnaires and analyzed through descriptive statistics, correlation, and regression analysis using SPSS. The descriptive findings indicated that most women entrepreneurs agreed or strongly agreed that microfinance institutions provided affordable interest rates, sufficient loan sizes, and funding that led to increased business revenue and expansion. The correlation analysis revealed a statistically significant positive relationship between funding services and financial performance (r = .258, p = .001). Further, regression results demonstrated that funding services had a significant predictive effect on financial performance, with a beta coefficient of β = 0.507, p < .05. ANOVA results confirmed the model's overall significance (F = 11.677, p < .05), and hypothesis testing led to the rejection of the null hypothesis. The study concluded that funding services offered by microfinance institutions significantly enhanced the financial performance of WOEs in Nakuru CBD. It recommended that microfinance institutions tailor their credit products to better meet the needs of women entrepreneurs, including lowering collateral requirements and increasing funding thresholds. Policy-makers were also urged to support frameworks that promote gender-inclusive financing mechanisms.