Influence of Fiscal Asymmetric Decentralization on Performance of Women‐Owned Micro‐Enterprises in Kenya

The core component of decentralization is fiscal decentralization by which the government transfers revenues or allows the subordinate government levels to raise their own funds. Women owned businesses account for about 48% of all micro, small, and medium-sized enterprises (MSMEs), which contribute around 20% to Kenya's GDP. However, although the government of Kenya has made several efforts in support of women owned micro enterprises, a mismatch between male and female owned businesses still exists. The general objective of this study was to evaluate the influence of fiscal asymmetric decentralization on performance of women owned microenterprises in Kenya. Specifically, this study examined whether own source revenue, access to government procurement opportunities, county physical infrastructure development and county capacity building, influences the performance of women owned micro enterprise in Kenya. This study was informed by the theory of fiscal federalism and Gibb’s Micro and Small Enterprise Support Theory. This study adopted a positivist paradigm. The primary data consisted of a population of 628 registered women owned micro-enterprises in Kiambu, Kirinyaga, and Makueni Counties. A Sample of 239 respondents was determined using the fisher formula. The study response rate was 173 respondents. Stratified random sampling technique was used. To ascertain the reliability and validity of the research instrument, a pilot test was conducted on 10% of the sample size. The statistics generated were analysed using descriptive statistics, trend analysis, diagnostic tests and inferential statistics. The findings of the study revealed a positive relationship between the fiscal asymmetric decentralization on performance of women‐owned micro‐enterprises in Kenya. The findings showed a positive relationship between County own-source revenue and performance (R = 0.91 and p=0.012), Access to county government procurement opportunities and performance (R= 0.289 and p=0.000), county physical infrastructure and performance (R =0.171 and p=0.024) and county capacity building and performance (R = 0.216 and p=0.004). An analysis of the fiscal perspectives revealed that there were positive and significant relationships between county own source revenues, access to government opportunities, county fiscal infrastructure, county government procurement opportunities and performance. Given that the P values for all the variables were p < 0.05, the four null hypotheses were rejected. Performance of women owned micro enterprises was mostly average and most respondents indicated that the sales turnover, number of employees, and customers, amount of revenue per employee had not increased. The study concluded that the theory of Fiscal Federalism by Oates and the Gibb’s Micro and Small Enterprise Support Theory were relevant to the study. The study also concluded that county governments should communicate the opportunities available and dedicated to women entrepreneurs so that they may participate in capacity development programs to increase capacity. The study also concluded that infrastructure development did not influence their businesses. The study also concluded that Counties offer training activities to women entrepreneurs in the areas of management, financing, culture re-orientation, risk-taking, and networking through the acquisition of managerial skills. It was recommended that the government should take a more proactive role in the form of incentives such as tax inducement, to ensure more support is dispensed to micro enterprises. The county governments need to put more effort and allocate more resources in training women owners of micro-enterprises and as such they can partner with the private sector to fulfill this agenda.