FINANCING CONSTRAINTS AND INSTITUTIONAL COORDINATION IN KENYA'S ENTREPRENEURSHIP ECOSYSTEM: A SYSTEMATIC REVIEW OF THE EVIDENCE
Abstract
Purpose of the study: This paper examines how financing constraints and institutional coordination jointly shape outcomes in Kenya's entrepreneurship ecosystem, treating the two as interacting problems rather than as separate literatures.
Short introduction of problem statement: Kenyan micro, small and medium enterprises have named access to finance as their most binding constraint for well over a decade, despite sustained government, donor and private investment in support programmes. Most existing studies examine financing constraints at the level of the individual firm or lender, leaving underexplored how the fragmented set of institutions that supply and mediate finance in Kenya, commercial banks, government revolving funds, county governments, development partners, innovation hubs and universities, interact to produce or relieve those constraints.
Method/methodology: The paper adopts a systematic, desk-based narrative synthesis of peer-reviewed and grey literature published or substantially updated between approximately 2010 and 2026, drawing on academic databases, institutional reports and reputable Kenyan business press, and organizing retained sources into four financing-constraint themes and three institutional-coordination themes using Isenberg's entrepreneurial ecosystem framework and institutional-void theory.
Results of the study: Financing constraints in Kenya are compounded, not caused, by weak coordination among the institutions meant to close the financing gap. Collateral dependence and information asymmetry continue to ration credit; this rationing fall disproportionately on women-owned enterprises; digital credit has relaxed but not resolved these constraints; and the proliferation of overlapping government funds has produced duplication and, historically, low loan-recovery rates.
Conclusion and policy recommendation: The review recommends linking behavioral lending data into a shared credit-information infrastructure, consolidating beneficiary registries across government funds, and extending the coordination model demonstrated by the Women Entrepreneurs Finance Code to youth- and county-level lending.
Keywords: Entrepreneurship Ecosystem, Financing Constraints, Institutional Coordination, SME Finance, Kenya, Systematic Review
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