Determinants of Financing Constraints in East African Countries’ SMEs

Alex Reuben Kira


Small and Medium-sized Enterprises (SMEs) are the main player in developing and strengthening zonal
integration. This study used a sample of 1933 firms located within 5 East African countries with economic
integration known as East Africa Community (EAC). Data was extracted from World Bank Business Enterprises
Survey to evaluate determinants of financing obstacles of firms. Analysis of data was conducted by running
ordered probit model and multivariate regression model to determine which firms’ industry or country’s
characteristics explain and experienced financial constraints in their operations. The study found out that
financing constraints in East African firms broadly based across firms but SMEs are mostly affected.

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