Contribution Of Public Procurement Access On The Financial Performance Of Small And Micro Enterprises In Homa Bay County, Kenya

Abstract

ABSTRACT The small and micro enterprises (SMEs) have to date remained the driving engines of several countries including those in the European Union (EU), where they make up 57.4% of value added in the non-financial sector. In South Africa, they contribute over 36% to the country’s Gross Domestic Product (GDP). Locally, these establishments account for 92.2% of employment in Kenya. In spite of this, performance of the SMEs in a majority of the counties have not been that robust with over 71% of them closing down in their third anniversaries. This has led to several interventions from state and none state actors including their preferential treatment in public procurement activities. However, there is little information on success of these interventions on the performance of the SMEs in the country. Hence, the purpose of this study was to assess the contribution of public procurement access on the financial performance of small and micro enterprises in Homa Bay County, Kenya. Specific objectives were to; establish the extent to which tendering costs; winning a tender and public procurement regulations contribute to the financial performance of SMEs in the CBD of Homa Bay Town. The study was anchored on the contingency theory and adopted a descriptive survey design. Target population was 350 SMEs in the CBD of Homa Bay Town. Sample size was 187 and a total of 191 questionnaires were received back. Primary data was obtained through structured questionnaires. Reliability test was ascertained through Cronbach’s Alpha determination at a coefficient of 0.7 and above. Face, construct and content validity tests were done using expert reviewers. Descriptive analysis revealed that mean for amount incurred and if the amount was justified were found to be 4.0681 and 3.8586 respectively meaning that majority of the respondents agreed that tendering costs contribute to the financial performance to a high extent. Contract value=4.1047 and Number of contracts= 3.6911 implying that majority of the respondents felt that winning a tender contribute to the financial performance to a high extent. Public Procurement Regulations contribute to the financial performance to a little extent ( no bribery mean=2.2304, justified pay period mean=1.8848). Based on conclusion that tendering costs and winning a tender contribute to the financial performance to a high extent, the study recommends that devolved units should give tendering costs prominence since they contribute highly to financial performance. The study recommends that devolved units should give winning a tender due consideration since it contributes highly to financial performance. The study recommends that devolved units should work on ways of adjusting public procurement regulations since it contributes to their financial performance to a little extent. The study would be of great significance to devolved governments since they would know the extent of implanting tendering costs, winning tenders and public procurement regulations in order to improve on their financial performance.