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Working Capital Management and Financial Performance of Small and Medium-Sized Enterprises (SMEs) and SACCOS in Kenya

Author

Listed:
  • Temba Geoffrey Simiyu

    (Post graduate student, Technical University of Mombasa)

  • Lienora Achieng

    (Post graduate student, Technical University of Mombasa)

  • Namuri Vifu Makoti

    (Post graduate student, Technical University of Mombasa)

Abstract

Small and medium-sized enterprises (SMEs) play a critical role in driving economic growth, creating employment opportunities and promoting local revenue generation in Kenya. However, they face various challenges such as limited financial resources, inadequate infrastructure and volatile market conditions. Effective working capital management (WCM) is essential for SMEs to overcome these obstacles and achieve sustainable success. The aim of this research is to examine the impact of WCM on the financial performance of SMEs in Kenya. This paper uses literature review methodology to draw conclusions. The literature review provides insights from various studies that highlight the importance of credit management and internal factors that influence organizational performance. An efficient WCM is crucial for ensuring the financial stability of companies, especially SMEs. Poor WCM can lead to financial challenges and possible bankruptcy, while effective management can significantly increase financial efficiency. WCM involves monitoring a company's current assets and liabilities to ensure timely commitments while minimizing associated costs. This research contributes to understanding the importance of WCM for SMEs in Kenya and provides stakeholders with practical insights to improve financial performance through effective WCM strategies tailored to the Kenyan context.

Suggested Citation

  • Temba Geoffrey Simiyu & Lienora Achieng & Namuri Vifu Makoti, 2024. "Working Capital Management and Financial Performance of Small and Medium-Sized Enterprises (SMEs) and SACCOS in Kenya," East African Finance Journal, East African Finance Journal, vol. 3(2).
    • Handle: RePEc:cwk:eafjke:2024-08
    DOI: 10.59413/eafj/v3.i2.2
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    References listed on IDEAS

    as
    1. Ibrahim Makina & Robert Kenga’ra, 2020. "Effect of Working Capital Management on Performance of Commercial SMEs in Mombasa County, Kenya," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 4(12), pages 436-443, December.
    2. Folajimi Festus Adegbie & Appolos Nudubisi Nwaobia & Grace Oyeyemi Ogundajo & Olusoji David Olunuga, 2020. "Inventory Control and Financial Performance of Listed Conglomerate Firms in Nigeria," Journal of Management and Strategy, Journal of Management and Strategy, Sciedu Press, vol. 11(2), pages 41-55, May.
    3. Umar Abbas Ibrahim & Abdulqadir Isiaka, 2021. "Working capital management and financial performance of non financial quoted companies in Nigeria," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(3), pages 241-258, April.
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    Cited by:

    1. Nanjala Lydia Nyongesa & Prof. Muganda M. Munir & Dr. Charles G. Kamau, 2024. "Revenue Controls and financial performance of Small and Medium Enterprises in Eldoret Town, Kenya," African Journal of Commercial Studies, African Journal of Commercial Studies, vol. 5(3).

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