Influence of Investment Groups on Creation of Small and Medium Size Enterprises in Nairobi County

This research project sought to establish the influence of investment groups on creation of small and medium size enterprises in Nairobi County. Investment groups are started by like-minded persons with a common vision geared towards investments. In Kenya investment groups are powerful resources mobilizer and are seen as a solution to providing SME-s start-ups, with capital and human resources capacity. Large businesses have emerged from this investment groups enabling the membership acquire large assets, undertake large projects that would not have been possible individually. The study sought to determine the influence of resources mobilization, ideas generation, risk spreading and social capital on creation of small and medium size enterprises. The study adopted a descriptive study design looking at all investment groups registered by Kenya Association of Investment groups (KAIG) as at December, 2014 in Nairobi County to determine if investment groups that are involved in enterprise creation. The investment group had to be involved in business outside agricultural production. Value addition, manufacturing and service industry enterprises were considered. A sample of 96 investment groups statistically determined was stratified and randomly selected from a study population of 1500 investment groups domiciled in Nairobi County. Data was collected by administering a questionnaire to respondents. The researcher administered a total of 96 questionnaires and managed to obtain 70 filled questionnaires constituting a response rate of 72.92 %. This rate was adequate to enable the researcher to carry out the analysis and draw adequate conclusions. The collected questionnaires were edited and cleaned for completeness and consistency. After the questionnaires were coded, they were keyed into the Statistical Package for Social Sciences (SPSS version 21) for analysis. From the study findings, this study concluded that investment groups highly influences the formation of small and medium enterprises in Nairobi County. This is achieved through resource mobilization, sharing of business ideas, spreading risks and taking advantage of social networks of the group members.