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| Technological Leverage and Financial Deepening Amongst Small Hold Enterprises in the Northern Kenya: A Review of Literature.
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Dr. Caleb Orenge Nyarikini, PhD
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Abstract:
Central Bank of Kenya financial inclusion report 2022 indicates that financial access rate in Kenya increased from 26.7% in 2006 to 83.7% in 2021, as a result of use of mobile technology to break physical barriers in the financial system. However, other statistics show that the contribution of each of the 10 counties in the northern Kenya, to the country's GDP is less than 2%. This points towards slow pace of entrepreneurship activities in the region since young and innovative firms are curtailed in terms of growth and there are no new start-ups due to poor access to financing. Low levels of financial deepening in the Northern Kenya, is the major impediment to entrepreneurship and economic development in the region. It is important to understand whether and how the financial system can leverage on technological to improve financial deepening in the region in order to break up the small autarkic enterprises created due to lack of sufficient capital for expansion. In this regard, a desk top review of literature has been undertaken to assess the effect of technological leverage on financial deepening amongst small and medium enterprises in the 10 counties forming the northern Kenya. By synthesizing existing literature, it was found that technological leverage positively affects financial deepening and improves risk management practices by firms. The study concludes that through the use of technology, limiting barriers to financial accessibility by individuals and firms in Northern Kenya can be eliminated. The study recommends that counties in the northern Kenya should partner with the national government to provide the necessary technological infrastructure, such as the laying of the fiber optic cables, to facilitate use of technology in provision of financial services to firms and individual entrepreneurs in the region. There is also need to set up business incubation centers in the region where ideas can be natured into actionable plans which can be funded into fully developed enterprises providing employment opportunities to the locals. Finally, counties and national government need to develop policy eliminating regulatory hurdles for start-ups to gain access to a variety of sources of finance. This is in line with the conference theme and the sub-them of use of technological innovations to improve efficiency, leading to sustainable economic development.
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