GOVERNMENT POLICIES AND PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN KENYA: A CASE STUDY OF EMBU TOWN

The general objective of this study was examine government policies and performance of small and medium enterprise in Kenya by focusing on Embu town. This study was guided by the following specific objectives:to establish the influence of taxation on the performance of Small and medium enterprises in Kenya, to examine the effect of licensing on the performance of Small and medium enterprises in Kenya, to identify the effect of training on the performance of Small and medium enterprises in Kenya and to determine the effect of capital financing on the performance of Small and medium enterprises in Kenya. The research will enable the policy makers to come up with a viable and focused entrepreneurship strategy that can help SME‟s access to credit facilities. The study will also generate empirical data and information beneficial to the Government and the University level. The research was conducted using descriptive research design. The accessible population was 150 where the researcher obtained the sample size. The sample size of the study was 45 respondents which was 30% of the target population as recommended by Mugenda and Mugenda (2013).Stratified random sampling was employed in the study.The researcher used questionnaires to collect data because they are simpler to formulate and permits greater depth of response when a respondent is allowed to give a personal response in case of unstructured (open ended) and structured (close ended) questions. Computer excel software program is used to enable analysis. The researcher assigned codes to the items in the questionnaires which were used to enter data into computer, distribution tables, pie charts and graphs were used to present data while frequencies and percentages obtained were used to answer the research questions. Percentages, tables and figures were emphasized because they analyzed, interpreted and conclusion and recommendations were made from the tables.Majority, 79% of the respondents indicated that there were tax incentives for consumers. The researcher found out that, majority of the employees indicated that the tax incentives on consumers was there hence the consumers paid taxes for the purchases they made in every business apart from pharmaceuticals which are tax free.Majority,53% of the respondents indicated that licensing was very efficient for the business. This was a clear indication that licensing was appropriate for the running of the business since businesses without licenses were closed down. Majority, 74% of the respondents indicated that the level of performance was moderate. This was a clear indication that training had a positive impact on the business since it improved performance. Majority of the respondents 66% indicated that they discussed exhaustively with the proprietors/supervisors on financial performance .This was an indication that the financial performance of the SMESs was crucial since the respondents followed up their financial performance so as to identify if they are making profits or losses. The study concluded that the role of MSEs is critical in pushing the socio-economic development agenda of the country further. Therefore, alignment of the tax system to the environment specific MSE growth needs can be considered an important agenda for the policy makers.The study recommends thatthe for SMEs key considerations are to minimize administrative burden while ensuring compliance, including considering the drivers and impacts of operating in the informal economy. Without the active attitudes of the main recipients of the regulations it is impossible to increase the quality of law- -making in Kenya