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FACTORS CONTRIBUTING TO LOAN DELINQUENCY IN AGRIBASED SMALL AND MEDIUM ENTERPRISES IN KENYA: A CASE OF THE AGRICULTURAL FINANCE CORPORATION

Jedidah Wangechi Wambugu
Msc Enterprenuership, Jomo Kenyatta University of Agriculture and Technology

Dr. Karanja Ngugi
Lecturer, Jomo Kenyatta University of Agriculture and Technology

ABSTRACT

A default on a loan occurs when the borrower does not make required payments on in some other way does not comply with the terms of a loan . SMEs all over the world play important roles in the process of industrialization and economic growth. There are indications that the SMEs account for about 70 percent of industrial employment and well over 50 percent of the gross domestic product . The purpose of this study was to examine the determinants of loan default among agribased SMEs in Kenya. The study fits into the quest to find a more objective and efficient way of accessing the default risk associated with abased SME lending in order to reduce the rate of non-performing loans in the Agricultural Finance Corporation. Research design refers to the way the study is designed, that is, the method used to carry out a research. Researcher examined a sample of 84 respondents drawn from the population of 168 staff and the micro-enterprises in Nairobi. The study used both secondary data from other sources and primary data collected using questionnaires to carry out the study. The descriptive statistical tools helped the researcher to describe the data and determine the extent used. Analysis was done quantitatively and qualitatively by use of descriptive statistics. This included frequency distribution, tables, percentages, mean mode, median etc.The study also found that type of business contributes to loan default among Agribased SMEs financed by Agricultural Finance Corporation to great extent. The study further revealed that type of business contribute to loan default among Agribased SMEs financed by Agricultural Finance to great extent .  The study established that project supervision contribute to loan default among Agribased SMEs financed by Agricultural Finance Corporation. It was revealed that managerial skills contribute to loan default among agribased SMEs financed by Agricultural Finance Corporation to a great extent.


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