EFFECT OF POLITICAL ENVIRONMENT ON SUSTAINABLE GROWTH OF MICRO AND SMALL ENTERPRISES IN NAKURU TOWN, KENYA
Abstract
Micro and Small Enterprises (MSEs) account for roughly 24% of Kenya’s gross domestic product and 85% of non-farm employment, yet they face severe political challenges, including revenue declines during election periods, exposure to bribe demands that increase operational costs, and burdens from unpredictable taxes that erode their revenues. Few MSEs actively engage in policy-making, adopt green practices, or participate in community activities, which hinders their contribution to social and environmental sustainability. This study was conducted to assess the effect of the political environment on the sustainable growth of MSEs in Nakuru town. Anchored in Political Business Cycle Theory and Real Business Cycle Theory, the study examines how government policies and economic fluctuations affect MSE sustainability. A descriptive research design was utilized, with data gathered from 102 MSEs sampled from a population of 1,338 using probability stratified random sampling and a sample size formula. Structured questionnaires, validated through a pilot study in Eldoret CBD and expert review, achieved reliable results. Policy implementation amplified the positive effects of political stability (β = 0.143-0.166, p < 0.05, r = 0.704), political system (β = 0.289, p = 0.001, r = 0.718), and government policies and regulations (β = 0.265, p = 0.002, r = 0.689) on sustainable growth, according to data analysis using descriptive statistics, Pearson's correlation, and multiple linear regression. Descriptive results show strong consensus on political instability barriers (Mean = 3.89), moderate regulatory concerns (Mean = 3.32), and low confidence in political system inclusivity (Mean = 2.44) and policy implementation effectiveness (Mean = 2.41). The regression model accounts for 69.7% of variance in sustainable growth (R² = 0.697). The study concludes that governance reforms, inclusive political systems, streamlined regulations, and transparent policy implementation are vital for MSE sustainability. Recommendations include anti-corruption measures, stakeholder engagement platforms, regulatory simplification, and improved policy execution systems, with suggestions for further research to address governance and sustainability challenges.
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DOI: http://dx.doi.org/10.46827/ejmms.v10i1.1983
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