Factors influencing access to credit among entrepreneural youth: a case of Nairobi Commercial Zone

The youth comprise a significant proportion of the Kenyan population. Due to the prevailing high rate of unemployment, self employment is one of the avenues through which the youth can earn a living and contribute towards growth of the economy. One of the ways through which youth can gainfully employ themselves is through starting and operating their own businesses. This calls for entrepreneurial skills, availability of market and capital. For the youths to raise capital either for start up businesses or expansion of existing ones they need reliable sources. They can either finance such ventures through credit or through own savings. Studies have indicated that the youth are constrained in accessing credit. This study sought to establish the causes of poor access to credit specifically by the youth who operate small businesses in the commercial zone of Nairobi city. The study adopted a descriptive survey design. The unit of analysis was a sample of fifty-seven business operators (located in the commercial zone of Nairobi City and below 36 years of age) that was arrived at through stratified sampling technique,to which questionnaires were administered. In addition, one bank official was interviewed. The study found that gender had no relationship with access to credit. However age, nature of business, interest rates, collateral and application procedures are significant factors that business operators consider while accessing for credit. The study recommends that policies and national programmes that promote youth entrepreneurship by facilitating their access to finance be put in place. Of importance is a legal and regulatory framework that recognizes innovative strategies for lending to MSEs.