Strategic Factors Influencing the Growth of the Local Fashion Industry in Nairobi County

STRATEGIC FACTORS INFLUENCING THE GROWTH OF THE LOCAL FASHION INDUSTRY IN NAIROBI COUNTY

PAULA MUMBI KARIUKI

UNITED STATES INTERNATIONAL UNIVERSITY- AFRICA

SUMMER 2020 STRATEGIC FACTORS INFLUENCING THE GROWTH OF THE LOCAL FASHION INDUSTRY IN NAIROBI COUNTY

PAULA MUMBI KARIUKI

A Research Project Report Submitted to the Chandaria School of Business in Partial Fulfillment of the Requirements for the Degree of Masters in Business Administration (MBA)

UNITED STATES INTERNATIONAL UNIVERSITY- AFRICA

SUMMER 2020 STUDENT’S DECLARATION

I, the undersigned, declare that this is my original work and has not been submitted to any other college, institution, or university other than the United States International University- Africa for academic credit.

Signed______Date______

Kariuki, M. Paula (ID 657302)

This project has been presented for examination with my approval as the appointed supervisor

Signed______Date______

Dr. Mary Mutisya.

Signed______Date______

Dean, Chandaria School of Business

COPYRIGHT All rights reserved. Compliance with copyright restrictions necessitate that no part of this project may be stored or reproduced in a retrieval system, or transmitted in any form without prior written permission of the copyright owner. However, the project may be used for brief quotations and citation in further researches and critical review of articles.

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ABSTRACT This is a study of the fast-paced fashion industry in Nairobi County which has grown tremendously but the following strategic factors namely government policy, financial access and competition influence its growth hence the study. The general objective of this research was to assess the main strategic factors that are crucial in the growth of the Kenyan fashion industry and to find out if the said strategic factors truly influence the growth of the fashion industry in Nairobi County. The study was addressed through the following specific objectives; assessing the role of government policy in the local fashion industry, to determine the role of the level of access to microfinance for entrepreneurs’ in the local fashion industry and establishing the level of competition in the local fashion industry.

A descriptive research design was applied to this study which helped in finding out if the strategic factors influence the growth of the local fashion industry in Nairobi County through Judgmental sampling procedure of a sample size of 36 fashion houses selected from a target population of 50. Excel and Statistical Package for Social Sciences (SPSS) were used for data analysis in the study to analyze descriptive and inferential statistics data. These included mean, median, mode, linear of Regression and Pearson coefficient to help in determining the relationship of the variables. Data was represented through pie charts, tables and graphs.

The study results indicated the influence of government policy, Access of finance from Micro-financial institutions and competition have on the growth of the fashion industry. The correlation test between Government policies and Growth indicated that there was no significant relationship between the variables since the result was above the standard of 0.05 at 0.81, hence no influence of government policy on the growth of the fashion industry. The study established that the role of government has no significant influence on the growth of the fashion industry.

The study findings were a majority of the fashion houses had not accessed financial assistance despite the benefits it accrues to their businesses because of the challenges faced in accessing funds from micro-financial institutions. The correlation test between access to finance and the growth of the fashion industry showed that there was no significant relationship in this study. The significance value (p) 0.175 was greater than the

iv standard (0.05) hence the level of access of finance to the SMEs in the fashion industry does not influence on the growth of the fashion industry in this study.

Finally, the study established that the correlation analysis between competition and the growth of the fashion industry had a weak positive significant relationship between the two variables where the significance value (p) was 0.046 which is less than 0.05. This indicated that there was a significant relationship between competition and the growth of the fashion industry. The regression test indicated that competition influences 15.2% on the growth of the fashion industry, which means a unit of competition increases the growth of the fashion industry by 15.2%.

The study concluded that the majority of the respondents felt that the policies put in place do not favor the fashion industry even though they seemed not to be fully equipped with enough information on government policies since they never participate in policymaking forums as stakeholders; while for the Cluster policy through the professional association was associated with hindrances that are rooted within them and therefore most fashion businesses do not join them. The study also concluded that SMEs in the fashion industry are aware of the financial funding benefits but the requirements of accessing it are the major challenges hindering them to access funding from Micro financial institutions, the biggest challenge been the high interests charged; the others were loan securities and credit constraints. The conclusion on competition in the study is that fashion businesses are fully aware of the looming competition in the industry as well as their causes and they have resorted to boost their brand visibility by attending seminars and promoting their brands on social media.

On the government policies on the growth of the fashion industry, the study recommended for coming up with a professional association with non-partisan representatives with affordable membership fees for easier joining of the fashion businesses. The professional association will help all fashion businesses/houses in coming together and advocating for policies that favor the industry, that way they participate as stakeholders. The study also recommended for non-conventional funding like Sacco’s and also applications to Non-Governmental Organizations that give grants or financial aids to Small and Medium-size Enterprises, when it comes to access of funding in the Micro financial institutions.

The study recommended an increase in creativity for the fashion businesses/houses to stand out as a brand by creating unique apparel and to patenting their ideas to avoid stealing of their ideas. As for fair competition it recommended for government restrictions on imports to avoid counterfeit smuggled apparel in the country.

ACKNOWLEDGEMENT I would like to thank God for giving me this opportunity to be able to learn and to push myself to the limit and to believe in myself.

I’m grateful to my supervisor Dr. Mary Mutisya for guiding me through the process and for challenging me to bring out the best results possible.

My family for the support and guidance they have always given me and my friends who advised and gave me guidance through the entire process.

The USIU fraternity for their support and willingness to help when in need.

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DEDICATION This research project is dedicated to my late mum Jenifer Ndinda, my dearest siblings Duke Waireri and Agnes Wanjiru and my best friend William Mbotela for the tender kindness, advice, and moral support that they offered during this study period.

To my dad and partner for their moral support and financial assistance.

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TABLE OF CONTENTS

STUDENT’S DECLARATION ...... ii COPYRIGHT ...... iii ABSTRACT ...... iv ACKNOWLEDGEMENT ...... vii DEDICATION...... viii LIST OF TABLES ...... xii TABLE OF FIGURES ...... xiii LIST OF ACRONYMS AND ABBREVIATIONS ...... xiv

CHAPTER ONE ...... 1 1.0 INTRODUCTION...... 1 1.1 Background of the Study ...... 1 1.2 Statement of the Problem ...... 6 1.3 General Objective ...... 7 1.4 Specific Objectives ...... 7 1.5 Hypothesis...... 7 1.6 Rationale of the Study ...... 8 1.7 Scope of the Study ...... 8 1.8 Definition of Terms...... 8 1.9 Chapter Summary ...... 9

CHAPTER TWO ...... 10 2.0 LITERATURE REVIEW ...... 10 2.1 Introduction ...... 10 2.2 Government Policy in the Local Fashion Industry ...... 10 2.3 Access to Microfinance Institutions for Entrepreneurs...... 14 2.4 Competition in the Local Fashion Industry ...... 18 2.5 Chapter Summary ...... 22

CHAPTER THREE ...... 24 3.0 RESEARCH METHODOLOGY ...... 24 3.1 Introduction ...... 24 3.2 Research Design...... 24 3.3 Population and Sampling Design ...... 24 3.4 Data Collection Methods ...... 26 3.5 Research Procedures ...... 27 3.6 Data Analysis Methods ...... 27 3.7 Chapter Summary ...... 28

CHAPTER FOUR ...... 29 4.0 RESULTS AND FINDINGS ...... 29 4.1 Introduction ...... 29 4.2 Response Rate ...... 29 4.3 Demographic Information ...... 29 4.4 Influence of Government Policy on the Growth of Local Fashion Industry ...... 35 4.5 Influence of Level of Access of Micro Financial Institutions Assistance to Entrepreneurs on the Growth of Local Fashion Industry...... 40 4.6 Influence of Level of Competition in the Growth of the Fashion Industry ...... 42 4.7 Inferential Statistics ...... 48 4.8 Chapter Summary ...... 51

CHAPTER FIVE ...... 52 5.0 DISCUSSION, CONCLUSION AND RECOMMENDATIONS ...... 52 5.1 Introduction ...... 52 5.2 Summary of Findings ...... 52 5.3 Discussion ...... 54 5.4 Conclusion ...... 60 5.5 Recommendations ...... 62

REFERENCES ...... 64 APPENDIX I: QUESTIONNAIRE ...... 75 APPENDIX II: COVER LETTER ...... 79 APPENDIX III: NACOSTI RESEARCH LICENCE ...... 80

LIST OF TABLES Table 3.1: Sample Size Distribution ...... 26 Table 4.1: Age and gender Cross tabulation ……………………………………………33 Table 4.2: Age and Duration in the Fashion Industry ...... 34 Table 4.3: Education and Role in Fashion Business Tabulation...... 35 Table 4.4: Government Policies Influence on Fashion Businesses ...... 38 Table 4.5: Reasons Affecting Joining a Professional Association ...... 39 Table 4.6: Classification of Respondents on Potential impacts of Micro Financial Funding ...... 42 Table 4.7: Classification of Respondents on Causes of Competition in the Fashion Industry ...... 45 Table 4.8: Correlation between Government Policy and Growth ...... 48 Table 4.9: Correlation between Access to Finance and Growth ...... 49 Table 4.10: Correlation between Competition and Growth ...... 49 Table 4.11: Regression Analysis Model Summary...... 50 Table 4.12: The Coefficient Table for Competition and Growth ...... 50

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TABLE OF FIGURES Figure 4.1: Classification of Respondents by Gender ...... 29 Figure 4.2: Classification of Respondents by Level of Education...... 30 Figure 4.3: Classification of Respondents by Role in Fashion Business ...... 31 Figure 4.4: Classification of Respondents by Number of Employees’ ...... 32 Figure 4.5: Classification of Respondents on Duration in the Fashion Industry ...... 32 Figure 4.6: Classification by Whether Fashion Business is Licensed ...... 36 Figure 4.7: Government Policies Effect on Fashion Industry...... 36 Figure 4.8: Fashion Businesses Participation in Policy making ...... 39 Figure 4.9: Classification of Respondents on Awareness of Micro Finance Institutions ..40 Figure 4.10:Classification of Respondents on Access funding from Micro Finance Institutions...... 41 Figure 4.11: Classification of Respondents on the Challenges in Accessing Funding ...... 41 Figure 4.12: Classification of Respondents on Awareness of Competitors...... 43 Figure 4.13: Classification of Respondents on their Biggest Competitor ...... 44 Figure 4.14: Classification of Respondents on the Usage of ONLY Raw Local Materials in the Fashion business ...... 45 Figure 4.15: Classification of Respondents on Attendance Fashion Seminars or Events .46 Figure 4.16: Classification of Respondents Delivery Services ...... 46 Figure 4.17: Classification of Respondents on the Usage of Social Media Platforms for Visibility ...... 47 Figure 4.18: Classifications of Respondents Experience on Social Media Platforms ...... 47

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LIST OF ACRONYMS AND ABBREVIATIONS ACTIF: African Cotton & Textile Industries Federation

BBC: British Broadcasting Corporation

CRB: Credit Reference Bureau

GDP: Gross Domestic Product

IEA: Institute of Economic Affairs

KAMEA: Kenya Apparels Manufacturers Exporters Association

MFI: Micro Financial Institution

MIED: Ministry of Industrialization and Enterprise Development

NGO: Non-Governmental Organization

SME: Small and Medium Enterprises

SPSS: Statistical Package for the Social Sciences

UNDP: United Nations Development Program

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CHAPTER ONE

1.0 INTRODUCTION 1.1 Background of the Study

The concept of fashion has existed for as long as man has lived, with implications ever- changing to cater to his evolution and the society in general. Overall, the concept of fashion has always meant to serve a practical need of humanity, that is, protection against the elements. However, over the centuries fashion evolved beyond just practical uses towards the need to serve more aesthetic values. According to Rael and Beatrice, (2012), while fashion is adornment and can be beautiful to look and give an erotic appeal, it is primarily functional. Fashion through clothing protects us from the elements. Rael and Beatrice also puts forward that fashion also has value in research and practicality. Like art, fashion expressed through clothing can provide a historical reference, and like architecture, fashion fulfils a primarily functional dimension. Fashion gives us a creative outlet (Rael et. al, 2012).

To design, market, manufacture, and sell clothes, footwear, and accessories, the fashion industry was created. Before the creation of the fashion industry, the creation of clothes was done by the people themselves. As the world evolved, the industry was formulated to manage the process for consumers. In the mid-nineteenth century, mass production of clothing was quite common, garments produced had no uniqueness to them and there was no requirement for customers to get their measurements taken beforehand. (Christopher, Lowson & Peck 2004). Ultimately in the twentieth century, fashion became established as an industry this is when networks of neighborhood tailors casually evolved into manufacturing businesses. A lot changed in this century whereby Factories grew from necessity during world-war 1 &2 and the ensuing social and cultural changes of the period time signified the dawn of less restrictive and unilateral codes of dress. According to Christopher et.al, (2004), earlier in the century, European fashion houses led to the changes in how the business of fashion was done, and it further led to the establishment of designers as arbiters of taste.

In the 1950s and 1960s, this was the period where a growing number of entrepreneurial designers began to make their way out of behind the scenes by featuring their names on their labels, a development facilitated in part by the curiosity of the press and also by the ambitions of manufacturers to capitalize on designer personalities (Berg, Hedrich, Lange, 1

Magnus & Mathews, 2017). In the 1980s Fashion Designers licensed their brands into other categories became a common practice also during this period, the celebrity title was used on several fashion designers by becoming celebrities in their own right since fashion had become so elite. This is quite evident in the familiarity with many of the designer brands that were led by ambitious and charismatic personalities (Berg et. al., 2017).

As the 20th century commenced Paris and London were the leading fashion centers while America was disregarded as a mere Centre for dressmakers. As tables turn America now boasts as the biggest host for all fashion events worldwide; this is so because of private financiers that promote emerging young fashion designers in the country (Tierney, 2014) Colombia leads in the fashion industry growth in Latin America. In the early 2000s fashion industry was comprised of global and luxury conglomerates which took stakes in American businesses and increased its constant production by moving to countries that provided cheap labor. The world of fashion is intertwined into most countries on earth. Garments are conceived, illustrated, and laser-cut by computers, and replenished automatically by a store's information system alerts. Technology and various non-tech inventions have played a big role within the effort to enhance efficiencies. Such efficiency improvement takes place in the areas of design, manufacturing, logistics, and retail (Seymour, 2009).

Asia is one of the leading continents when it comes to the modern fashion world and it is evident on how Japanese fashion designers often compete directly with their biggest customers by opening flagships stores around the world and selling their product online. This in return leads to competition amongst them and the retail stores by sourcing and producing to come up with their own private label collections. Prevailing runway looks are always used by the retail stores to come up with a collection for their private labels. As usual, the fashion industry progresses in search of profitability. As many small and multinational conglomerates rise to stardom, many others fail along the way an example is Forever 21 in the US and Canada. Forever 21 was one of the pioneers in the retail industry running 400 retail stores. (Plunkett, 2007) With competitive technology and the most efficient delivery of timely merchandise, we as an industry continue to find the next trends and meet consumer needs and desires.

Growth of fashion business in Milan has been largely attributed to the investment of the Italian government. The Italian government announced its plan of offering financial aid to fashion businesses. This incorporated a tax credit on the production of clothing materials and direct government funding for small and medium-sized fashion businesses (Grail, 2009). Fashion companies in Europe have been at the very center of mass-production dynamics, transforming and reacting to impacts that technological innovation combined with globalization processes have produced. In the mass-production model, there was over-exploitation that had no considerations on future long term effects of its internationalized operations which had effects on the environment and led to social marginalization. (Biggs, 1996). But today, fashion being such a relevant global business, its transition towards smart factory models can produce remarkable impacts in terms of more efficient and sustainable production modes (Berg et. al., 2017).

The textile industry, the apparel industry, and the accessories industry, or the fashion world, have based their businesses on the ability to predict what people wanted. Marketing departments, as well as style and creative directors acting in the main fashion companies, are characterized as a huge tool for choosing what is going to be popular and trending in the coming future. On the basis of expectations, they are a creation of new collections available within the market. Nonetheless, the democratization process and no entry barriers that worldwide affect every industry have recently hit the fashion system, where possibly anyone might be a designer, a creator, or a manufacturer. Moreover, the symbolic value attributed to fashion products calls for a more active role of the customer, which becomes part of the key success factors on which the brand equity has to be built (Nasta, Pirolo and Wikström, 2016).

Seizing this trend, some companies, Nike and Levi’s among the first in America, decided to involve customers in their creative activities on their initiative, allowing them to customize standard articles through a platform on the company website. This first step taken by organizations toward the possibility of voluntarily involving consumers in production cycles is described as “mass customization” and consists of the attempt to combine mass production with customization, maintaining cost efficiency and developing greater flexibility and ability to meet the specific needs of individuals (Nasta et. al., 2016). Fashion through this lens has no inner value, giving in to the folly of trying to compete against others in society (Miller, 2009). Fashion also fuels this vice of consumerism while creating anxiety over what one possesses (Mwangi, 2013). This

3 causes concern over whether these things are “up-to-date” or “new” enough and how this compares to what others have (Mwangi, 2013). Fashion pressures us to buy not for style but for a pulsing desire to conform to what others view as fashionable (Mwangi, 2013).

A feminist argument against fashion stems from how personal appearance defines a woman’s social position and influences how she views herself (Kinyanjui, Lugulu & McCormic, 2004). The belief is that personal adornment through fashionable dress is construed as oppressing women because the desire to be beautiful was created by men in a male-dominated society (Kinyanjui et. al., 2004). The counterargument to this claim is that fashion denaturalizes the body; removing all essentialism and therefore transgressing gender boundaries, inverting stereotypes, and acknowledging the masque of femininity (Kawamura, 2005). Fashion, therefore, is a tool in which women shift from nature to culture as a source of power controlled by women (Bhardwaj and Fairhurst, 2010).

Fashion insiders have been taking nontraditional steps to make a lasting impact in Africa (Chemengich, Varun, Hesbon & Fred 2013). Fashion is inherently part of the culture in Africa and vital for development by creating jobs and providing resources (Ashby, 2016). Some countries in Africa do not necessarily want to become “modern” in the Western sense, but other countries do wish to progress and grow in their terms, and African modernity exists in fashion (Ashby, 2016). Embellishing African design is one way to embrace the culture and heritage of Africa (Kamau& McCormick, 2013).

In the past, clothing has stereotyped this vision of an African ‘other’, yet African designers have used clothing to offer a counterclaim to this racist undertone, emphasizing the cultural aspect (Mwangi, 2013). This shows how fashion can affect the cultural aspect of traditional African societies. Depending on how the implementation of fashion would impact these differing cultural aspects from region to region, this will determine using my values whether or not fashion is feasible to be used towards development. Any negative impact on cultural values would be a case where fashion would not be applicable for development. As far as production goes, Sub-Saharan African; Algeria, Morocco, Libya and the rest of the countries in that region have great potential to be competitive in producing cotton textiles and inputs for apparel, deriving implications for how this could affect Africa and explored more in detail in a subsequent section (Mwenda, 2018).

Kenya has a long and rich history in the Fiber to Fashion industry. The sector grew nicely with accelerated downstream developments, and garment making facilities both for the local and export markets. The Government played a catalytic role through direct investments in establishing large-scale integrated textile mills and through policy which were followed by investments from the private sector (ACTIF Report, 2016). By the 1980s Textile and Clothing became the most important manufacturing activity in Kenya accounting for nearly 30% of total employment in the manufacturing sector. At that point, the fiber to fashion value chain was mostly dominated by cotton cultivation, with over 200,000 household farms, and substantial Government investments in integrated textile mills, some of which had state-of-the art imported technology (ACTIF Report, 2016). It produced excellent quality cotton and blended yarns and a wide range of fabrics, both woven and knitted, for the domestic as well as export markets, mostly to the neighboring countries. Cotton production peaked in 1984/85 with production of 39,300 tons of lint. Unfortunately, The Kenyan Textile and Clothing sector started to suffer in the late 1980s, mainly due to: Introduction of second-hand clothing in the late 1980s and early 1990s mainly from the US and Europe (Mwenda, 2018).

According to Kamau et.al (2013), the decline in government investments in the sector, weak private sector appetite for investing in the sector, import of cheaper products due to the liberalization of the Textile and Clothing sector in the 1990s, resulted in breakdown in the entire fashion sector in the country. The following liberalization was due to the structural adjustments that were adopted by Kenya as part of the conditions given by the World Bank for advancing loans to the Country (Alberti & Pizzurno, 2013).However, the resultant disruption in the established value-chain, obsolescence of technology, machinery and equipment, rising costs of production due to high cost of energy, and absence of a proactive strategy for the development of the Textile and Clothing sector, was meant to counter the negative outcomes of the liberalization of the fashion industry (ACTIF Report, 2016).

According to the Cotton-Textile and Apparel Value Chain Report (2015), cotton production dropped from its historical peak of 39,300 tons to just over 7,000 tons. The number of farmers has come down from 200,000 to just over 45,000 and the acreage under cotton has contracted. The number of ginneries has shrunk from 20 to 8, most of them using imported cotton from Uganda. Cotton production dropped from its historical peak of 39,300 tons to just over 7,000 tons. The number of farmers has lessened from

200,000 to just over 45,000 and the acreage under cotton has as well decreased (Institute of Economic Affairs (IEA), 2013). The number of ginneries has reduced from 20 to 8, majority of them using imported cotton from Uganda.

1.2 Statement of the Problem In the growth of a country’s economy industries play a vital role in it, fashion and luxury industries is one of those that contributes immensely despite their value been underestimated. (Godart, 2012). In order for growth to take place there are strategic factors that need to be considered especially in the macro environment which makes or breaks the industry. Fashion industry has immensely grown in the developed countries, unfortunately the same can’t be replicated to the developing countries where there is so much potential and yet the state of the countries are not readily accommodating the industry through some of the strategic factors rooted in the macro environment (Ryder, Henninger & Cano, 2018). Undoubtedly there has been an improvement in the developing countries but with the potential the African continent has, there is a long way to go considering the strategic factors that are affecting the growth of the fashion industry which are subsequently rooted from the local fashion designers.

In the East African Community, there are lots of imported clothes which tend to be less dear in comparison with the locally manufactured ones, this definitely has an effect to the local fashion houses and independent fashion designers since locals will prefer to go for what’s affordable to them. (BBC, 2016). Kitonga (2017) states that the main objective of local fashion houses is to be acquitted with information of the consumer trends, gaining brand recognition as well as maintaining profits since studies have pointed out that the reason to slow growth in the fashion industry is due to imports and competition by Second hand-clothes imports, also failure of Kenya’s design abilities, high costs of manufacturing, un ready markets above all the difficulty in accessing credit and finance facilities.

According to Njoroge (2016) for growth to prevail in the fashion industry, improvements in the manufacturing industry has to be made in order to have Kenya to be at the same par as their competitors like China which has a low manufacturing cost. The fashion industry in Kenya is dominated by the imports from textiles to second hand imports. Since the government of Kenya was liberalized so as to receive money from the World Bank, there has been an influx of textile imports from China and Uganda due to the closure of the

6 cotton ginneries in the country and more so the decline of cotton farmers in the country which trickles down to the Nairobi County (Bosibori, 2000). The above reasons are affecting the industry in the county since unlike the developed countries there is heavy reliance of imports which definitely impacts to its growth. It’s also noteworthy to mention that second hand imports are also a competitor to the local fashion houses with the increment of the imports and the high demand consumer’s preferences as they are a bit cheaper as compared to Made in Kenya brands.

This study sought to examine the growth of the fashion industry in Nairobi County particularly through the fashion businesses / houses in determining the role of the strategic factors that hinder or promote their growth. A comprehensive study was exigent as there are many macro environment factors that could affect the growth of the fashion industry, therefore the study restricted itself to the influence of the Government policies, financial access; how easy or hard it is for the fashion businesses /houses to access financial support and the influence of competition and its effects to the fashion industry.

1.3 General Objective The general objective was to explore the strategic factors that are influencing growth in the local fashion industry specifically Nairobi county stemming from the local fashion businesses /fashion houses.

1.4 Specific Objectives 1.4.1 To determine the role of government policy direction in the growth of the local fashion industry.

1.4.2 To establish the role of the level of access to microfinance for entrepreneurs in the growth of the local fashion industry. 1.4.3 To assess the level of competition to the growth of local fashion industry.

1.5 Hypothesis

H0 There is a significant relationship between the strategic factors and the growth of the fashion industry in Kenya.

1.6 Rationale of the Study 1.6.1 Customers

The study will hopefully give customers a greater understanding of the industry and process that goes into production of a basic need that they probably rarely pay attention to, that is the very article of clothing on their back.

1.6.2 Government

The findings of the study will guide the policy makers in formulating relevant policies that support growth of the fashion industry.

1.6.3 Fashion Houses and Designers

The study will benefit fashion houses and the fashion designers in Nairobi by giving appropriate strategies to increase competitiveness and enhance exports rather than imports

1.6.4 Researchers

To students pursuing studies in Fashion as a business, it will serve as a benchmark for further studies and help identify areas which need more concentration. Also, the findings could also be replicated elsewhere in the country.

1.7 Scope of the Study The study focused on fashion businesses/house in the locale of Nairobi County. 50 fashion houses totaled to make up a population of all the ones located in different wards of the Nairobi County. The research was done in May, 2020.The limitation of the study was solely focusing on the clothes section of the fashion industry, and therefore it wasn’t encompassing shoes, bags and other accessories

1.8 Definition of Terms

1.8.1 Fast Fashion

According to Muthu, (2018) fast fashion is a term used to describe inexpensive clothes that are mass produced from the fashion designs on catwalks during the fashion weeks and are sold to the mainstream customers.

1.8.2 Fashion Designer

According to Volpintesta (2014) a fashion Designer is an individual who studies trends and sketch the initial clothing or accessory design. A designer then attends trade shows or visits manufacturers to select fabrics and trims. Designers do Sizing and fittings on models of their designs, and eventually the end product is then marketed to clothing retailers.

1.8.3 Fashion Houses

Fashion houses are defined companies that specialize in the design and sale of high- fashion clothing and accessories. They are characterized by their high-end clientele and the fact that product pricing is high. (Crowley & Reid, 2010)

1.8.4 Secondhand Clothes

Brooks (2015) refers to a piece of personal clothing or fashion accessory that is being purchased by or otherwise transferred to a later end user.

1.9 Chapter Summary Chapter one presented a background of the study and highlighted the growth rate of the fashion industry highlighting the differences in the fashion industry between Nairobi and the elite fashion city of United States, New York; which has a higher upper hand and has boosted the growth of their industry. The statement of the problem portraying the rationale of the study was provided in the chapter, as well as the general objective and the specific research objectives of the study. Key terms definitions used in the study were also provided.

Chapter two presents the literature review. The discussion tackled all the specific objectives posed and provides a firm theoretical background for the study. Chapter three presents the research methodology that was used in the study. It details the research design, population and sampling, data collection methods, research procedures and how the data collected was analyzed. Chapter four covers the results and findings of the study. A summary of findings, discussion, conclusion, and recommendations for action and further research are covered in chapter five.

CHAPTER TWO

2.0 LITERATURE REVIEW 2.1 Introduction In this chapter, literature related to the study on the strategic factors influencing the growth of local fashion industry in Nairobi County was critically reviewed. The related literature was categorized in three parts that went along with the research objectives; first, government policy in the local fashion industry, Second, the level of access to microfinance for entrepreneurs’ in the local fashion industry and the third one, the level of competition in the fashion industry. In every objective there were subsections that helped analyze the literature relation, then later the chapter summary as the conclusion.

2.2 Government Policy in the Local Fashion Industry According to Althaus, Bridgman, Davis (2007) a government policy refers to a system that guides in decision making to get outcomes that are rational which can either be objective or subjective hence a directive that cannot be compromised but subject to reviews. Government policy as a strategic factor is in the political environment of the PESTLE, which is a vital consideration to a business for it has a lot of influence on it. (Perera, 2017)

2.2.1 Import and Exports

Craik (2014) attests that most Australian Consumers leaned to buying local apparel due to policies that were put in place for industry protection whereby higher levies were imposed as imports duties and imported apparels had luxury taxes. Lebanon has high demand for fashion which the local production capacity is unable to meet, which has led to lots of imports particularly from Europe (Hassen & Tremblay, 2019). The Gulf fashion market is very vital and it attracts both the domestic market and tourism which is a booster for the fashion industry in Beirut, hence makes tourists the main consumers; it’s the key market of the Lebanese haute couture at 40 percent of the exports. It provides a variety of magnificent opportunities for the local fashion designers. (DDFC, 2016). Rahhal (2017) describes the Unfortunate decrease in oil prices and political instability that has led to the gulf’s purchasing power has drastically gone down. Itami (2001) stated that “United States and Japan entered into a Textiles Agreement, the Japanese Government decided to exercise control on textiles and apparel exports to the USA in exchange for regaining the US-occupied Okinawa Island”

According to Brand South Africa (2018) states that the Africa Growth and Opportunity Act has no issue with duty free imports and it allows free imports of apparel in South Africa hence an increment of exports to the US. In the current turbulent business environment with various emerging markets and trends, the manufacturing sector in South Africa has had to assert by doing away with protective tariffs, and inundation of cheap imports from Asia (Wood & Bischoff, 2019).Kenya‘s exports in the apparel industry has immensely grown, despite its major competitors, the firms in the industry have created jobs hence a source of employment. Kenya Apparel exports all go to United States which increased from 16 percent in 2004 to 37 percent in 2014 (Ministry of Industrialization and Enterprise Development., 2015). In the study it examined the role of the import and export policies in the fashion industry to fashion businesses.

2.2.2 Fashion Specific Policy

The Australian government treated the apparel sector as a manufacturing industry and due to this policy that was put in place to shape the lucrative fashion industry and emerging trends were fairing badly. Australia’s local apparel industries required a low skilled labor force and there were numerous outsourcing contractors outside the country; therefore, investigations and inquiries were done to find out on the impact of the industry policy and the challenges identified in the employees working conditions through their trade unions (Craik, 2014). Government’s de-regulatory economic policies address the absence of economic policies that create industries that are more competitive and internationally positioned industries (Weller, 2007).

The fashion industry in Japan had the status of being the largest export industry in country’ national economy; in the last three decades it lost its reputation because of environmental changes and government policies. Brydges and Pugh (2017) describes the Canadian fashion industry as an orphan since the policies of the creative industry in the country fail to recognize the industry as well as independent fashion designers. The fashion industry was excluded from funding by the government, it left the fashion designers unable to access funding and support from the industry arts department, with organizations like the Canada council for the arts, Ontario arts council and Alberta Foundation for the art hardly included fashion in their mandate. This is because fashion was not viewed as a professional career.

Wood and Bischoff (2019) found that in South Africa the ending of the apartheid led to the trade policy liberalization, which resulted to the flourishing of some industries like the automotive industry unfortunately other industries suffered and led to rapid decline especially in the clothing and textiles infrastructure. The fashion sector in South Africa was later targeted as an important sector by the department of Trade and Industry which focused on the fashion sector by focusing on implementation of new strategies (Rogerson, 2006).

Ndemo (2015) establishes that the Kenyan fashion industry sector would benefit from policy interventions but also apart from seeking the Governments Support, Ndemo Insights are that African Growth Opportunities Act remains unexploited which could help facilitate trade Between United Sates and the Africa continent as it alleviates poverty. Are there enough fashion specific policies in the fashion industry is the question to ask and also how is the turnout for policy making amongst the fashion businesses for government interventions.

2.2.3 Cluster Policy

Clusters are smaller operational organizations that are divided to sectors of industries which can also be considered as regional ecosystems for featuring interdependence between different industries. Government has a way of intervening in different sectors of the known industries and strengthening clusters by facilitating creation of new ones. Cluster policy is increasingly common to developed countries unlike developed countries (Raines, 2000).Cluster policy brings together different programs and fulfils political needs by channeling government support to industries (Benneworth& Charles, 2001). Rosenfelt (2005) argues that most authors are in tandem that cluster policy development should not be entirely government driven but preferably business-driven. It’s a framework policy which leads the way for different dynamics seen in clusters.

Canadian fashion industry had various challenges, nationally and they had to analyze as to identify how the system worked in order to find its failures and maintain its successes. According to Baptista, (1998) they had previously used approaches that were theoretical and had to change their point of view and after a thorough research they tried to use the cluster theory and come up with cluster policy for the industry. Buciuni and Finotto (2016) demonstrated that Fashion industry is one of the industries with the support of the government and it transitions well to the clusters, Clerici Tessuto came up with a business

12 model which relied on the flexibility connections and networks of stakeholders for better interaction through faster response to the turbulent changes in the garment industry.

The presence of fashion clusters in South Africa through is evident through factors that distinguish it due to the various different races in the country which entirely make up the South African fashion designers (Rogerson, 2006). There are substantial opportunities present for entrepreneurs’ in the fashion industry from local designers to independent tailors in the local market, regional as well as globally. In Malawi several organizations had started sewing schools for helping women acquire the skills for them to start their own businesses but there was a problem since after acquiring the skills they all created their own businesses which therefore led to no diversity and definitely higher competition for them. Clustering for the women would have helped them to work as one and even create associations for governmental aids (Musso, 2012).

As HIVOS East Africa , Equity Bank Kenya, (2016) found that local designers can move out of the tailor-made segment and channel their efforts to Kenyan exports through joining the mainstream industrial manufacturing. Also, clusters in the fashion industry can be formed by the small tailors to avoid its competition to be solely limited at the market low-end. As Altenburg and StamerJörn, (1999) states that most medium-sized and small companies or entrepreneurs are able to do better through growth as a result of clustering rather than divided solo basis. In this study clustering was investigated on how it boosts fashion businesses/houses and what hinders businesses in the same industry from clustering.

2.2.4 Regulations

In America local governments adopted various laws and regulations so as to protect the local fashion market by limiting foreign firms’ developments. These regulations have had direct impacts on the Foreign Domestic Investment which always affect the choice of entry modes. The Japanese government relaxed on international regulations set on the textiles and apparel trades which have enabled global firms to keep on shifting from their manufacturing operations to offshore markets which are low cost (Azuma and Fernie, 2003).

In L.A fashion district most fashion brands are violating trade policies through defying their trade policies which extend to poor employee working conditions making them sweatshops hence the government has taken actions to overturn them by setting higher

13 standards through over-riding corporate policy that are set to all stakeholders in the city’s apparel industry (Garrels, 2007).According to Wood and Bischoff (2019) establishes that the regulatory system in South Africa is unfavorable to the smaller players in the fashion industry as compared to larger ones in which the small ones may choose to remain in that position or steer away from regulations which seem unbearable.

In Kenya there are various regulations that govern the apparel industry through the exports and imports in the sector, licenses are offered to firms operating in the industry. Export and Import licenses are renewed every year through the Ministry of Trade and Industry. Kenya Apparel Manufacturers Exporters Association (KAMEA) with the other stakeholders in the local fashion industry bring different proposition for the regulations to be set by the Ministry of Trade and Industry (United Nations Development Programme, 2006).

2.3 Access to Microfinance Institutions for Entrepreneurs. The economic state of a country has a lot of influence on the growth of a business thriving and as Perera (2017) states that favorable economic factors make sure that the risk of the business survival is ensured and when they are unfavorable well then the industry is unattractive for growth, new investments and even survival. Access to finance is a strategic factor through the economic conditions of the external environment which affects the business.

Microfinance institutions were formed as a result of failure of banks to reach out to Small, medium Enterprises (SME) who were in need of capital (Armendariz and Morduch, 2005). The Turbulent business environment in Kenya is not as easy to operate in due to the limited access to finance especially for SMEs. Inadequate funding is a major challenge to the entrepreneurial process despite the type of economy activity or size Westhead and Wright (2000) finds that in order to curb the financing challenge, small to middle enterprises may choose to borrow from banks through loans or from their family or friends.

2.3.1 Interest Rates

According to Roberts (2013) profit orientation is not the guarantee to lots of profits or a better financial standing in Micro finance institutions, but higher interest rates is the ultimate motive for higher profits; Hence entrepreneurs’ end up been charged higher interest rates to fulfill the profit motive. “Increasing interest rates above the market

14 clearing rate increases the likelihoods that borrowers cannot repay their loans.” (Williamson, 1987).Small to medium enterprises owners always compare the returns that they will gain from loans into their projects to the costs that they will incur which include interest rates on the loans and the application and opportunity cost (Domeher, Musah, & Poku, 2016).

Abe, Troilo, and Batsaikhan (2015) found that in Asia and Pacific area have tried to bridge the financial gap between commercial debt financing and Microfinance institutions, these institutions are growing so fast hence policymakers have considered expanding their operations so as to target Small and Medium enterprises by offering discounted interest rates to large loans. Stiglitz and Weiss (1981) found that there is a lot of risk associated with small to medium enterprises due to the interest rates that they are charged by the institutions since there is a relationship between the choice and the right practice to the micro financial institutions.

In Kenya what make it challenging to small entrepreneurs’ in financing is the high interest rates, which varies between 15 to 21 percent. Recently there was an interest capping in the country but unfortunately it seems short lived with president trying to overturn it, which will make it even harder for the Kenyan firms or entrepreneurs’ in accessing financial support from the banks. (United Nations Development Programme, 2006). In this research we were able to figure out if this a hindrance for the fashion business to acquire financial assistance and their biggest hindrance in getting assistance.

2.3.2 Loan Security

Atanasova and Wilson, (2004) did a study in the UK where they found collateral as a major determinant for supplying of loans since it reduces credit rationing. Bauchet and Morduch, (2013) establishes that financing from Microfinance institutions are meager to cater and sustain the capital needs to Entrepreneurs’. Berger and Udell (1995) establishes that Long-term relationships between banks and a firm has a great impact on the borrowing terms which could be in form of less interest rates or no requirement n for a collateral .this makes it difficult to SMEs to get favorable conditions for ease access of loans due to their newness Therefore once an SME is listed, it means the chances of accessing long term debts are higher and also the lesser need of collateral Chittenden, Bell and Hutchinson (1996) finds that this is one of the benefits of having an SME listed as it enhances their access to credit facilities as compare to the unlisted ones.

In Asian and Pacific countries most SMEs have poor accounting system and there is always a requirement for collateral which doesn’t make it easy for the firms hence Kyaw (2008) who focuses on Myanmar recommended that the bankruptcy law should be strengthened since uncertainty in the issue causes inefficient allocation of credit by financial institutions that insist on collateral from SMEs. Kyaw also recommends that there should be promotion of education among entrepreneurs on financial management, establishment of a national fund for supporting SME activities as China did. The Chinese Government created pilot sites for Small to medium enterprises with a credit guarantee system an raised a guarantee fund, this measures led to improvement and expansion of the credit environment for Small to medium growth and development (Hussain, Millman, & Matlay, 2006)

In Nigeria Entrepreneurs struggled in accessing finances/ funds especially from the formal sources of Finance due to the lack of collateral security demands (Azende, 2012). New and young firms often do not meet collateral requirements of financial institutions which normally locks the out from accessing credit facilities (Pandula, 2011).In addition to this Makoni and Ngcobo (2014) insists that older firm in Zimbabwe they have easy access to financial institutions than young or uprising firms since they have collateral, capacity which support their applications unlike the SMEs which lack that. In South Africa experienced owners are preferred candidates as compared to Small to medium enterprise owners with little or no experience when it comes to issuing of loans (Domeher et al., 2016).

In Kenya there has been an influx of mobile credit apps where one can ccess credit facilities from the comfort of their homes plus there are no many requirements to access the loan, despite all this pros of the mobile loan platforms, the biggest con is that their interest rates are higher than the microfinancal institutions but still most entrepreneurs prefer them. As a result the microfinancial institution have been reported to make loss due to their would be customers opting for the mobile app loans(Omondi, 2019). The mobile lending platforms have disrupted the market to the extent which the Central Bank of Kenya terms it as Fintech and reported that Microfinancial institutions were making a loss at a very high rate at 450 percent as of June 2017 to June 2018.

2.3.4 Credit Constraint

Credit scoring aids financiers to evaluate and determine the potential risk and assessment of new clients as well as existing ones through the use of statistical models to transform relevant data into numerical measures that guide through credit decision (Abdou & Pointon, 2011). The financial history of clients is used to determine and generate a credit score. Micro financial institutions need a way to assess whether a creditor is worth to get their loans and they do this through the credit numeric score. The higher the credit score, the easier it is to get debt financing, working capital, this also gives the financiers confidence in the Small to medium enterprises (Murphy & Tocher, 2011).

Small and Medium Enterprises have challenges starting up and financial help stands out, Murphy and Tocher (2011) establishes that the presence of a corporate parent positively aids in the access of financial support unlike independent ones, SMEs with corporate parents tend to have a higher standing credit score. Credit score standing highly influences the Small to medium enterprises ease of access of getting the loans or financial assistance from Micro financial institutions and its highly dependent on the entrepreneurs’ credit scores (Brewer, 2007).

UK introduced computer aided scoring as a reaction to earlier criticism whereby the bank managers used their experiences and views which lacked objectivity. Wang (2004) described that China lacked systematic, long term, strategy and policy system for the small to medium entrepreneurs’ development, which now it therefore needed. In India interest rates are not the only option used in the criterion, information transparency is also used, as well as the use of credit score which makes SMEs miss out on the financial assistance, Kumar and Rao, (2016) also found out that large firms were less dependent on financial institutions as compared to the Micro Financing institutions. A survey done in Libya, where 600 Small to Medium enterprises were involved Zarook, Rahman and Khanam, (2013) established that the owners’ level of education and ease of access to credit is intertwined. Zarook et al (2013) also concludes that level of education has positive effects on easy access to finance. According to Pandula (2011) suggests and provides evidence that there is a correlation between education of small to medium enterprises owners and access to bank financing.

In 2010 Credit Reference Bureau Africa (CRB) entered Rwanda for the credit valuation process which was a tough one for the country. Rwanda started a program “Kountable” that went live in April 2015 where they tried to incorporate the use of social media activity as a measure of creditworthiness, they did this a way to try to do away with the traditional way used by the financial institutions. Money from investors globally was raised through the program for short term funding too small to medium enterprises. The entrepreneurs who benefited from the program, their information were collected through their social media platforms Klyton and Ngoga, (2017) found that they were given a “k score” which lending decisions were based on.

The Central Bank of Kenya has been working with three Credit Reference Bureau Africa together with Financial institutions so as to set up a platform to clean data used to rank ability to pay loans Guguyu, (2019) which will be able to aid the micro financial institutions in assessing on candidates that are liable to get financing and are able to repay back. Omondi, (2019) states that Micro financial institutions lent money without verifying on their repaying back plan. In the study it was able to determine if Credit constraints are a hindrance to the SMEs in accessing finance for their fashion businesses/houses.

2.4 Competition in the Local Fashion Industry.

Competition is the opportunity a performer tries to better than another in a formal context (Sommer, 1995). Competitiveness is the ability and performance of a firm, sector or country when it comes to the economic aspect so as to face competition without failure (lanoizelee, 2016). Competition is an economic factor which is part of the PESTLE analysis according to Perera (2017); as an economic factor it determines the consumer trends from the economic conditions a business in

2.4.1 Fast Fashion

Fast fashion is a business model that provides the latest and most trending fashion along with consumers demand at reasonable prices. The business idea fueling fast fashion is based on trends, fashion, and quality and affordable pricing (Choi, 2014). According to Gabrielli, Baghi and Codeluppi, (2014) fast fashion has become popular due to the change in consumers lifestyles and perceptions which has led to fashion industry trying to respond to the consumers’ needs and rapidly changing in order to offer a wide variety of options.

Fast fashion is still an under-researched area since its consumer driven, and the consumer behavior toward is still not well covered. One of the reasons of fast fashion is as a result of competition in the fashion industry, all fashion companies and brands are all trying to jump into the bandwagon of responding by trying to keep up with the trends and translating them to their merchandizing stores at affordable prices (Su & Chang, 2018). Fashion brands that have adopted the fast fashion business model are doing way better than the ones not using the model; hence this kind of model is associated with success. Interbrand states that H&M from Sweden and Zara from Spain are great examples that have adopted the fast fashion model and have grown to be the largest fashion companies globally. Fast fashion is used as a competitive advantage in fashion companies (Toktali, 2008). The fast fashion model is considered as a disruptive idea that mass market producers are cashing in on; it’s as a result of technology whereby there is real time information exchange and this has influenced conflicting with the traditional model of ready to wear and the fashion luxury industry.

Cachon and Swinney (2011) further suggests that real time information exchange has led to fast fashion brands to executing different trends in a couple of weeks and merchandising them in their retail outlets for consumers to keep up and purchase the latest trends in time. This comes as a challenge to original brands that debuted the apparels on the catwalks and take almost half a year to merchandise their original work in their shops. Bertola and Colombi (2014) this led to Burberry, one the first fashion global brands to stream their catwalks through social media whereby consumers would purchase the apparel pieces on the catwalks either online or offline, this was to beat the fast fashion model brands before could merchandise it in their stores, Burberry wanted to be the pioneers of selling their apparel designs in the market. Young consumers are the target consumers of the fast fashion since it offers the evolving phase of fashion where new things are introduced at a higher rate Barnes and Lea-Greenwood (2006) this is the target market since most university students have limited finances and wearing trendy apparels helps them to keep up with their social lives without feeling out of place. In America, L.A’s fashion district has been swept by the fast fashion model hence it’s an opportunity for the fashion industry market growth in the city (Garrels, 2007).

In South Africa fast fashion model has led to various challenge in the industry especially the local organizations through organizational change .TFG an apparel company in the country has adapted to the model whereby they realized that it would boost their sales hence increasing their revenues; this move was to compete with the international low cost manufacturers that were operating in the country. (IFashion, 2012).

Locally made products in Kenya suffer an issue of time-to-market, this whereby a lot of time is invested to make apparels hence making it longer for apparels to reach the market this can be as a result of general costs in running a business in Kenya from textile costs, Power costs. Amounting to higher operating cost in comparison to other competitor countries like Ethiopia. There is also lack of use of new technology equipment in the fashion industry which is as a result of the firms in the industry been wary of the survival and competitiveness of the future of Kenya’ textile apparel sector (Ministry of Industrialization and Enterprise Development., 2015) the improvements in real time information has also led to Wholesalers been bypassed by retailers and consumers who tend to procure directly from the manufacturer which is a bit cheaper. From the literature on fast fashion it’s quite evident that it’s dominant in both international and regional fashion industry. In this study fast fashion’ role in the fashion industry was determined, to find out at what level it affects the local fashion businesses compared to the rest of the competition in the local fashion industry.

2.4.2 Second-Hand Clothes

Developed countries donate clothes that are used and cannot be sold in their countries, to countries in Africa through charities and just like food aid where it helps the consumers in times of need in the long run this one later harms the consumer(Frazer,2011). African Leaders have stated the harm of used clothing donations through the local domestic apparel industry Frazer continues to state that the second hand clothing has led to 40 percent decline in the apparel industry and 50 percent increment of unemployment and making the matters worse there has been an increase in the second hand clothing imports in Africa from the United States which definitely worsens the apparel industry in the African countries. Second hand clothes have been banned in various African countries which stemmed from textile factories closing and over 30000 industry jobs been lost Zambia (Rivoli, 2009);other big importers of second hand apparel include; Pakistan, Russia and China(Mwenda, 2018).

Ross and Eicher (2010) states that secondhand clothing is a common preference as a mode of dressing in various African countries since its affordable as compared to locally made apparels. It meets the need of poor Africans but also meets the desire of being fashionable and engaging in western modernity by a process of selecting the used apparels and combining them in creation of anew and stylish ensemble. Second hand clothing harms the local apparel industry and inhibits the economic development since it makes African countries to be dependent on aids from the developed countries; it also does not promote the African culture in the fashion aspect (Musso, 2012).

By 2005, 80 percent of the Kenyan population was reliant to buying second hand apparels (Mwenda, 2018). This led to the Kenyan textile experiencing a great shift with the highest population of Kenyans having a preference for second hand apparels since they were cheaper, there was decreased capacity utilization in the textile plant to almost half. Importation of second hand apparels has been blamed for the poor performance of local textile industries. In the study second hand clothes were examined on the role that they have in fashion industry and whether they can be attributed to the level of competition been experienced, if it’s a threat to local fashion businesses/houses.

2.4.3 Creativity

“Creativity is the ability to produce work that is both novel and appropriate” (Lubart, 1999) Creativity is currently widely accepted as a social progress where new ideas come up through observations and social interactions. (Rantisi & Leslie, 2015). Creative economy it refers to a set of creative and cultural activities which include fashion, filming, music, advertising, arts, architecture and publishing (Chaston& Smith, 2012).Fashion is a creative industry and it requires for the stakeholders in it to be creative so as to gain a competitive advantage over the others Jeacle and Carter (2012) The competitive advantage that a fashion company gains from creativity, is essential in that it should maintain it by creating commercial awareness and also for the designer maintaining its consistency when it comes to producing fashionable and creative apparels. Jeacle and carter also state that both the designer and the buyer have a role to play in the creativity part whereby the designer’s role is to come up with a creative impulse that drives the focus of the fashion chain while the buyer’s role is to convert the designer’s creativity into a product worth sold.

According to TengFatt (2001) Fashion nurtures creativity in that whoever chooses to venture in that industry has to bring out the culture of the People. Hassen and Tremblay (2019) associates’ success of Beirut’s local fashion industry to creativity, which they related it to the local culture and lifestyle in shaping local designers’ careers in the city. In Singapore fashion industry in order to gain experience, young entrepreneurs are given chances by their lead designers or bosses to express their creativity so that they can learn and polish their designing skills (TengFatt, 2019). Also, as one expresses their creativity in designing there must be a balance between its commercial viability of the apparels designed.

Consumers need to understand the apparel for them to buy it. Islamic fashion tend to be very modest Sari and Asad (2019) did a study on how designers viewed Islamic fashion, who claimed that it was not easy generating ideas for creation of Islamic apparel that went in line with the Quran’s word but through creativity they had to come up with creative ways of creating apparels that were trendy and at the same time respectful according to the Islamic rules on women covering up from head to toe. The use of transparent fabrics which would not be worn by Muslims, they would use other materials by mixing and matching to create certain acceptable modifications yet stylish. Dissanayake and Sinh (2015) associate success with high level Thinking and creativity in fashion firms that use them. Firms that are creative tend to curate products that are better and an even better array of designs which consumers have an option of choosing from in sync with different themes for different seasons. In this study, creativity was determined if it played a role in the competition of the fashion industry and whether it can be attributed to many fashion businesses/houses as a cause of competition in the fashion industry

2.5 Chapter Summary

Chapter two presented the literature review. The discussion tackled all the specific objectives posed and provided a firm theoretical background for the factors attributing to the growth of local fashion industry. It discussed the existing research literature by assessing how the government policies impact on the fashion industry through; imports and exports, fashion specific policies, government regulations and Cluster policies. The literature review also determined the level of access to microfinance for entrepreneurs’ in the local fashion industry which extended to Loan securities, Credit constraints and

22 interest rates that affect Small to Medium enterprises through the founder entrepreneurs. It also further discussed the Level of competition in the fashion industry and its impacts in it; the creative industry which is turbulent hence competition is rampant and keeps the stake holders in it on toes through Fast fashion, secondhand clothes and creativity. The next chapter presents the research methodology that was used in the study. It details the research design, population and sampling, data collection methods, research procedures and data analysis.

CHAPTER THREE

3.0 RESEARCH METHODOLOGY 3.1 Introduction Chapter three of the study provides the research design and methodology that was required and used as the research was carried out. This chapter illustrated the design, the study population, sample and sampling techniques, methods of data collection, analysis of data and data presentation methods that were used in the study.

3.2 Research Design Research Design is an overall strategy that is used in carrying out research; it helps to obtain important information that’s essential to addressing the research problem (Kombo and Tromp, 2006). Hair (2015) states that data collection incorporates different various types of a structures or organized process through interviews with structure questions or data observation. The reason for using the descriptive research design in the study is because it was insightful in the research problem through setting out the variable which is growth of the local fashion industry. According to Andrew, Pedersen and McEvoy (2011) descriptive research design mainly focuses on the occurrences of what is happening rather than the reasons of the occurrences happening, hence questions are well defined, well surveyed population and the specific data analysis method is well chosen. The study adopted the descriptive survey research design which was used to obtain data that explained and described the variables of the topic of the research. This survey research design is usually organized in a specific manner to measure the features described in the specific objectives of the study. The design helped to figure out factors influencing the growth of the local fashion industry in Nairobi county since it answered the question what, why, when, who and how.

3.3 Population and Sampling Design 3.3.1 Population

The aggregation of elements in which a sample is selected from is referred to as a study population according to (Banerjee & Chaudhury, 2010), where an element is the unit in which partakes in the information collection through surveys or questionnaires. Banerjee and Chaudhury also refer to population as target that shares the same unique characteristics that are useful to the research study. The target population for this study consisted of 50 fashion houses in Nairobi County. The population comprised of known

24 fashion houses as per Kenyan Fashion Awards, where the sampling frame was drawn from.

3.3.2 Sampling Design

3.3.2.1 Sampling Frame

It’s the process of selecting a sample from a population that shares unique characteristics of interest, which give results that fairly generalize the entire population in which they are chosen from (Babbie, 2007). In order to do sampling, it requires a sampling frame whereby Cooper and Schindler (2014) defined it as a list of the entire target population elements, where the sample for this study was taken from. In this study, the sampling frame was acquired from the Kenya Fashion Awards, a prestigious trademark award event in Nairobi County.

3.3.2.2 Sampling Technique

Sampling is a method of selection of the representatives of a population hence makes it the sampling method which enhances the generalization of the research Findings.(Dattalo, 2013).According to Showkat and Parveen (2017)Non-Probability Sampling Technique utilizes non-randomized ways and methods to instant the sample which involves Judgement hence the sampling technique that was used. Purposive/Judgmental sampling is known as the best sampling strategy for readily available group, which also refers to consideration of experience and knowledge on the subject matter been researched (Barratt, Ferris, & Lenton, 2015). Judgmental sampling was chosen for this research due to the specific group of the fashion houses that dealt with apparel only, hence it was vital to use it for this study.

3.3.2.3 Sample Size

A sample is the number of sampling elements that are analyzed from having been selected from the population. Dessler (2013) states that a sample size matters and if big then the lower chances of error in taking a comprehensive view of the population. According to Dattalo, (2013) the sample size is essential in trying to figure out the statistical accuracy of population values estimations. The sample size does not go hand in hand hence if the population is large then the sample should be small but for better accuracy then a large sample size will suffice (Cooper & Schindler, 2014). Dattalo, (2013) also states that as the sample size increases then the higher the sample error decreases further stating that a

25 homogenous population sampling error is small. The sample size of the study was 36 respondents of fashion businesses/houses which were selected for the study. The sample for this study was derived from the Yamane, (1967) formula, which is shown in the formula below.

Yamane Formula;

=Where: n=Sample size, N= Population, e=Margin error of 9%

Using Yamane formula in calculating the sample size with a level of significance of 9% as the margin error and a 91% confidence level the target population of 50 local fashion houses resulted to a sample size of 36 as illustrated in the Table below.

Table 3.1: Sample Size Distribution

Category Population Sample % Sampled Fashion Houses 50 36 70%

3.4 Data Collection Methods In this study primary sources were highly preferred for obtaining the data. Structured questionnaires were used for collection of primary data in the study. The questionnaires were administered to fashion houses in Nairobi County; which were sent through E-mail and social media platforms. A Likert type scale was used to measure adherence to the specific research objectives through the structured questionnaires. The questionnaires were divided into four sections which made it easier for the respondents to understand and answer. Section A comprised of demographic information of the respondents, section 26

B dealt with assessment of role of the government policy in the local fashion industry, section C dealt with assessment of the role of the level of access to microfinance institutions for entrepreneurs, section D dealt with assessing the level of competition in the local fashion industry. Convenience for both the researcher and the respondent were considered in this method hence the questionnaires were distributed through Google forms in order to save time and money and in adherence Covid-19 pandemic measures for social distancing. Questionnaires were shared after acquiring a research permit from the United States International University-Africa (USIU-A), Chandaria School of Business and National Commission for Science, Technology and Innovation (NACOSTI).

3.5 Research Procedures The research procedure began by first acquiring permission from United States International University-Africa, Chandaria School of Business together with National Commission for Science, Technology and Innovation (NACOSTI) by the researcher which was sought in order to carry out the study. Pilot test was held next after permission was granted by issuing 6 questionnaires to randomly selected respondents for validity and reliability. After the questionnaire was adjusted based on the feedback from the pilot test, questionnaires were issued to the fashion businesses/houses through Google forms in consideration of the pandemic that advocated for social distancing where respondents were required to mark where appropriate. High level of confidentiality was maintained during this process and all data collected was used for academic purpose only.

3.6 Data Analysis Methods According to Cooper and Schindler (2014) they state that the data analysis process involves quantitative analysis which is used to analyze the statistical data. The study used descriptive statistics and inferential statistics for its data analysis. Lee. F, Lee. J and Lee. A (2000) stated that descriptive statistics comprises of data organization and presentations through measures of central tendency which include the mean and median; it summarizes numerical information. Descriptive statistics is also seen in forms like charts through line charts, bar charts and pie charts (Mendenhall, Beaver. R& Beaver. B, 2012). Inferential statistics uses probabilistic styles to analyze information from a target population so as to alleviate the knowledge about the entire unknown population. (Assadoorian & Kantarelis, 2005). It also refers to drawing of conclusions from the data collected from the sample in the population. In this study to determine the relationship, strength and nature of variables, regression and correlation analysis were used.

Regression method was used to probe the relationship between strategic factors (independent variable) and the growth of local fashion industry (dependent variable) which assisted in discovering a relative standard that served as the basis for accepting or rejecting hypothesis. The following was the general formula of the regression model used.

Y=β0 + β1X1 + ε

Whereby,

Y= Dependent Variable (Growth); β0 =Constant; β1X1 =Independent variable (Strategic Factors); and ε = Error term

According to Wallnau and Gravetter, (2007) the degree of linear relationship between two variables is measured by Pearson correlation, when the data X and Y values which consists of numerical values through an interval of ratio scale of measurement. Correlation was used to prove the relationship between the influencing strategic factors and growth of fashion in the local industry, which is the variable of the study. Statistical Package for Social Sciences (SPSS) was used as an analysis tool to infer these relationships inform of tables and figures.

3.7 Chapter Summary This chapter described the methodology that was used in the study of factors influencing the growth of local fashion industry in Nairobi County. It described the research design, population, sampling frame, sampling technique and sampling design. The data collection method was also mentioned together with the research procedure that were adhered to, with the data analysis methods that were used. Next chapter presents on the results and findings of the study.

CHAPTER FOUR

4.0 RESULTS AND FINDINGS 4.1 Introduction This chapter clearly provides an analysis, interpretation and discussions of the findings of the strategic factors influencing the growth of the fashion industry in Nairobi County through the fashion businesses’ in it. The analysis of the research objectives bore the results and findings which were also used in their presentation. Demographic findings are represented first then later followed by the research objectives which are; determining the role of the government policy directions in the local fashion industry, establishing the role of the level of access to microfinance for entrepreneurs in the local fashion industry and assessing the level of competition in the local fashion industry. Data collected was analyzed through descriptive and inferential statistics.

4.2 Response Rate The sample size was 36 respondents hence the same number of questionnaires that was distributed and all of them were filled and submitted through the Google forms, which accounted for a response rate of 100%. The reason for the small sample size was drawn from a population of 50, sourced from Kenya fashion Awards, a trademark event in Nairobi.

4.3 Demographic Information Demographic information of the respondents was analyzed and presented.

4.3.1 Classification of Respondents by Gender

The gender distribution from the study is as shown in Figure 4.1 below, 69.4% female and 30.4% male. The majority of the respondents in the study were female.

30.60%

69.40% Female Male

Figure 4.1: Classification of Respondents by Gender

4.3.2 Classification of Respondents by Education.

The respondents level of education are shown in Figure 4.2 below, where Undergraduate made up the majority at 41.7% followed by Diploma holders at 27.8%, Respondents at Masters level at 22.2%. Certificate, High school and Primary all tied at 2.8%, making up the least. Majority of the respondents from the fashion houses/ businesses are undergraduates.

Figure 4.2: Classification of Respondents by Level of Education

4.3.3 Classification of Respondents by their Role in the Fashion Industry

The results in Figure 4.3 below shows the roles of the respondents in the fashion businesses/ houses. The majority is made up of fashion designers at 72.2%, followed by proprietors at 19.4%, at 5.6% we have the tailors and lastly at 2.8% the managers in the fashion business.

Fashion designers are the majority of the respondents from the fashion houses, but from the fashion houses setting the roles could be overlapping where a fashion designer could be the proprietor and the manager as well as the tailor and vice versa.

Figure 4.3: Classification of Respondents by Role in Fashion Business

4.3.4 Classification of Respondents by the Number of Employees’ Engaged The Figure below illustrates the number of employees that have been engaged in the Respondent’s fashion business; majority of the fashion houses have engaged less than 10 employers at 83.3% which is an indication that most of the fashion businesses are Small Medium sized Enterprises, followed by fashion businesses that have engaged 10-20 employees at 11.1% with the ones having engaged 21-31 employees at 5.6%.The findings above depict that most of the respondents are small sized since the majority of them at 83.3% have only engaged less than 10 employees .

From these results it’s an indication that the fashion industry is still growing and it’s not a source of income for many because of the small number of employees one fashion business can employ and also the production of clothes it’s still in small scale in majority of the fashion businesses in Nairobi.

Figure 4.4: Classification of Respondents by Number of Employees’

4.3.5 Classification of Respondents on the Duration in the Fashion Industry

Respondents duration in the fashion industry has been provided in the Figure below with the majority of them having debuted into the fashion industry scene in the last five years at 47.2%, followed by respondents who have been in the fashion industry between 6-10 years at 30.6%, it would be safe to say that there is an increment of fashion businesses in Nairobi County in the last ten years from the results stated above. 6.8% of the respondents have been in the fashion industry for 16-20 years, followed by respondents who have been in the industry for less than a year and 11-15 years both at 5.6% respectively; lastly with respondents who have been in the industry for more than 20 years at 2.8%.

Figure 4.5: Classification of Respondents on Duration in the Fashion Industry

Majority of the Respondents have been in the fashion industry for the last 10 years with most of them joining in the last five years, which means that the fashion industry has had an increase in upcoming fashion business in the last ten years hence a growth in the industry as well as competition due to the many players in the industry since it has no strict entry barriers.

4.3.6 Cross Tabulation between Respondent’s Age and Gender

Table 4.1 well illustrates that the majority of the respondents are female between the ages of 27-37years at 13 followed by 7 Male respondents in the same age bracket which goes to show that this is the prime age of being in the fashion industry. The other category of respondents are 6 female respondents between the ages 16-26 years followed by 3 male respondents in the same age bracket; 3 female respondents at 38-48 years and other 3 female respondents at ages 49-59 years. Middle aged female respondents seem to be the majority in fashion houses compared to male respondents but the one thing that stands out is the age bracket of 27-37 years where the majority are in which makes it the prime age in the fashion industry in Nairobi County from the results.

Table 4.1: Age and gender Cross tabulation

Gender

Female Male Total Age 16-26 6 3 9 27-37 13 7 20 38-48 3 1 4 49-59 3 0 3 Total Responses 25 11 36 No response 0 Total 36

4.3.7 Cross tabulation between Respondents’ Age and Duration in the Fashion Industry.

The results in Table 4.2 depict that the majority of the respondents in the fashion industry are aged 16-26 years and 27-37 years and they also happen to have been in the fashion industry scene in the last 1-5 years and 6-10 years respectively, which also goes to show that there is been an increment of fashion business in Nairobi County in the last ten years;

33 with a major increase of the fashion business in the last five years where most of the respondents actually joined the industry. This could be an indication of increase in demand for local apparel, hence the reason for increase in the many fashion houses to meet the demand and above all showcase creativity.

Table 4.2: Age and Duration in the Fashion Industry

Length of Time in the Fashion Industry Total More Less than a 1-5 6-10 11-15 16-20 than 20 year years years years years years

16-26 years 1 8 0 0 0 0 9 27-37 years 1 8 8 2 1 0 20

38-48 years 0 1 1 0 1 1 4

Age 49-59 years 0 0 2 0 1 0 3

Total Response 2 17 11 2 3 1 36

No Response 0 Total 36

4.3.8 Cross Tabulation between the Level of Education and Role in Fashion Business

Results in Table 4.3 shows the relationship between the level of education and the role in the fashion business, it’s evident that the majority of the respondents are undergraduates at 12 and their role is Fashion designer in the business followed by 8 Diploma holders, 4 Masters Graduate 1 certificate holder and 1 high school certificate holder also bear the same role in the fashion businesses. The role of fashion designer in the research findings despite the level of education totals to 72.2% hence makes up the majority of the respondents. 3 masters’ holders, 2 undergraduate and Diploma holders respectively are proprietors in the fashion business, this makes up the Second majority in the findings. 1 primary certificate holder and 1 Masters Graduate are tailors in the fashion businesses.

What can be depicted from this is that it’s more about the skill and that the roles in the fashion business do not necessarily go with the level of education.

Table 4.3: Education and Role in Fashion Business Tabulation.

Role in fashion business

Fashion Total Proprietor Manager Designer Tailor

Primary 0 0 0 1 1 High School 0 0 1 0 1

Certificate 0 0 1 0 1

Diploma 2 0 8 0 10

Education Undergraduate 2 1 12 0 15

Masters 3 0 4 1 8 Total Responses 7 1 26 2 36 No Response 0 Total 36

4.4 Influence of Government Policy on the Growth of Local Fashion Industry Government policy is one of the strategic factors in the macro environment through the political aspect of it. In this section analysis was done to determine the effect of government policies in the fashion industry on how they impact the growth of the industry and what kind of government policies in the fashion industry impact the most to fashion businesses in the County.

4.4.1 Classification by Fashion Business Licensing

Licensing in business is part of complying with the government policies in order to run a business from the Figure below majority of the fashion businesses at 86.1% are licensed as per the government policies and 13.9 % of the respondents businesses are not licensed.

13.9% Licensed Unlicensed

86.1%

Figure 4.6: Classification by Whether Fashion Business is Licensed

4.4.2 Government Policies in the Fashion Industry that Affects Fashion Businesses

Government policies influence vary from one respondent to the other and from the results shown in the Figure below majority of the respondents in the industry at 66.7% are affected by imports and exports regulations, followed by 25% of the respondents that are affected mostly by the fashion specific policies. At 5.6% respondents are affected by other policies in the fashion industry while at 2.8% respondents are affected most by cluster policy.

Figure 4.7: Government Policies Effect on Fashion Industry

Imports and exports policies affect majority of the respondents since the policies serve a big role in their fashion businesses through sourcing for raw materials and doing international business with clients globally.

4.4.3 Government Policies Influence in the Fashion Industry on Fashion Business

The Table below shows results on certain statements that are connected to the government policies and whether the respondents agree to disagree with them based on the varying influence that they have on their fashion businesses. Majority of respondents at 47.2% are impartial on whether the licensing and trade policies favor the fashion industry also 41.7% of the respondents are impartial on whether businesses under professional association platforms have or enjoy more benefits than those not registered in any platforms. At 30.6 % the respondents are also impartial on whether import and export policies are helpful to their fashion business. 16.7% respondents strongly disagree and disagree respectively that the licensing and trade policies favor the fashion industry which makes the second majority on that issue; 13.9 % agree that the licensing and trade policies favor the fashion industry as 5.6 % strongly agree on that statement. In the statement that businesses in professional associations enjoy more benefits than those without 25 % of the respondents agree with that, with 19.4% who strongly agree, 11.1% disagree and 2.8% strongly disagree on that. The statement; Import and export policies are helpful to fashion industry, 19.4% respondents strongly agree and agree respectively, 16.7 % respondents disagree and 13.9% strongly disagree.

From the results there is a lot impartiality on the government policies which could be an indication of lack of substantial information about the policies in the fashion industry or unwillingness to answer the question.

Table 4.4: Government Policies Influence on Fashion Businesses

Strongly Agree Neutral Disagree Strongly Total Statement Agree Disagree Licensing and trade 5.6% 13.9% 47.2% 16.7% 16.7% 100% policies favor the fashion industry Businesses under 19.4% 25% 41.7% 11.1% 2.8% 100% professional association platforms (Cluster Policy) enjoy more benefit than those not in any Import and export 19.4% 19.4% 30.6% 16.7% 13.9% 100% policies are helpful to your fashion business

4.4.4 Reasons deterring Fashion Businesses from Joining Professional Associations (Cluster policy)

According to the research findings as shown in the Table below on the reasons that affect a fashion business from joining a Professional association, majority of the respondents at 41.7% strongly agree that leadership issue in fashion association affect their decision of joining one, 22.2% of the respondents on the same matter are impartial about it,19.4% agree,13.9% disagree and 2.8% strongly disagree on it been a reason in joining a professional association or not.33% of the respondents strongly agree that high membership fees charged in the professional association as a reason, 25% agree on that as well, 22.2 % of the respondents are impartial on it been a reason affecting joining an association,13.9% disagree to it been a reason and 5.6% also strongly disagree on the statement. On the reason of unawareness of fashion associations 30.6% majority of the respondents agree that it’s a reason, 27.8% strongly agree, 22.2% of the respondents are impartial on the reason,16.7% disagree and 2.8% strongly disagree on it been a reason

38 affecting them to join a professional association or not. Most of the reasons were internal issues of the professional association that hinder fashion business from joining and clustering.

Table 4.5: Reasons Affecting Joining a Professional Association

Strongly Agree Neutral Disagree Strongly Total Statement Agree Disagree Unaware of any 27.8% 30.6% 22.2% 16.7% 2.8% 100% Fashion Association Leadership issues in 41.7% 19.4% 22.2% 13.9% 2.8% 100% the Fashion Associations High Membership 33.3% 25% 22.2% 13.9% 5.6% 100% fees

4.4.5 Fashion Business/Organization Participation in Policy Making

Fashion businesses are stake holders in the fashion industry and as shown in the Figure below is on whether they participate in policy making through public participation engagements; where majority of the respondents at 66.7% do not participate while 33.3% engage in public participations.

Figure 4.8: Fashion Businesses Participation in Policy making

Majority of the respondents do not participate in policy making which might be an indication of the impartiality on the influence that government policies have on fashion businesses/houses.

4.5 Influence of Level of Access of Micro Financial Institutions Assistance to Entrepreneurs on the Growth of Local Fashion Industry In this section, analysis was done to establish how many fashion businesses are aware of micro financial institutions, if they have had financial assistance from them, what hinders the fashion houses from accessing financial assistance and what benefits they achieve when they get financial assistance from the micro finance institutions.

4.5.1 Classification of Respondents on the Awareness of Micro Finance Institutions

According to the results below as shown in the Figure, 86.1% of the respondents are aware of Micro finance institutions while at 13.9% respondents are not aware of micro finance institutions.

Majority of the respondents are aware of the existence of microfinance institutions.

Figure 4.9: Classification of Respondents on Awareness of Micro Finance Institutions

4.5.2 Access to Micro Finance Institutions Services

In Figure 4.10, shows that majority of the respondents at 77.8% have not accessed funding from micro financial institution while 22.2% of the respondents have accessed funding from micro financial institutions’. Majority of the respondents have not accessed financial assistance for their fashion businesses/ houses despite the fact that a majority of them know of their existence.

Figure 4.10: Classification of Respondents on Access funding from Micro Finance Institutions

4.5.3 Challenges hindering Fashion Business from Accessing Micro Financial Institutions Assistance

According to the findings as shown in Table 4.11, 55.6% of the respondents feel that interest rates is one of the challenges hindering their accesses to micro financial institutions, 25% of the respondents agree that loan securities are a challenge and the rest of the respondents at 19.4% agree that the challenge hindering them from accessing funding is Credit Constraints in reference to been listed in the Credit Reference Bureaus.

From these findings it’s safe to say that a majority of the respondents aren’t accessing funding from Micro Financial Institutions due to high interests that come with paying of the loans.

Figure 4.11: Classification of Respondents on the Challenges in Accessing Funding

4.5.4 Potential Impact to Fashion Business on Accessing Funding from Micro Finance Institutions

In the Table shown below majority of the respondents at 52.8% agree that increase of cash flow to the business is a potential impact, 22.2% also agree on that, 19.4% are impartial about it and at 5.6% respondents disagree on that. Another potential impact of funding to the fashion business is improving growth in the fashion business where 47.2% strongly agree on it, 13.9% are neutral about it and 2.8% disagree.44.4% of the respondents strongly agree that expansion of fashion business is a potential impact, 38.9% also agree, 5.6 % are impartial, 8.3% disagree and 2.8% disagree on the statement. In better performance on fashion business, 27.8% of the respondents strongly agree as well as 33.3% agree on it, 33.3% are neutral and 5.6% strongly disagree on the statement.

Increased cash flow to the fashion businesses is the biggest potential impact as from the respondents’ view, which could mean most fashion businesses are struggling with cash flow circulation in their fashion businesses/ houses.

Table 4.6: Classification of Respondents on Potential impacts of Micro Financial Funding

Strongly Agree Neutral Disagree Strongly Total Statement Agree Disagree Improve growth on 47.2% 36.1% 13.9% 2.8% 0% 100% Fashion business Increase cash flow 22.2% 52.8% 19.4% 5.6% 0% 100%

Better performance 27.8% 33.3% 33.3% 5.6% 0% 100% on fashion business Expand Fashion 44.4% 38.9% 5.6% 8.3% 2.8% 100% business

4.6 Influence of Level of Competition in the Growth of the Fashion Industry In this section analysis was done to determine fashion businesses awareness on the competition in the industry, the causes of competition, what is their biggest competitor that threatens the local fashion industry, what the fashion businesses do to remain relevant and visible in the industry

4.6.1 Awareness of Competitors

According to the results as shown below, 88.9% of the respondents are aware of their competitors in the fashion industry while 11.1 % are unaware of their competitors.

Figure 4.12: Classification of Respondents on Awareness of Competitors

It’s quite evident from the Figure above that majority of the respondents are aware of their fashion businesses/ houses competitors which sums up to the competition in the fashion industry in Nairobi County.

4.6.2 Biggest Competition in the Fashion Industry

On the results shown in Figure 4.13 below, majority of the respondents at 52.8% their biggest competitor in the fashion industry is Fast fashion which comes as cheap imports, 38.9% of the respondents biggest competitor is other local fashion business like their own and at 8.3% second hand popularly known as Mtumba is the biggest competitor for their fashion businesses. New imports in terms of fast fashion is the biggest threat to the fashion industry in, the competition could be because of quota restrictions that were lifted.

Figure 4.13: Classification of Respondents on their Biggest Competitor

4.6.3 Causes of Competition in the Fashion Industry Affecting Fashion Business Illustrated in the Table below 52.8% of the respondents strongly agree that cheap imports or readymade clothes are a cause of competition in their fashion businesses, 25% also agree, 13.9% are impartial, 5.6% disagree and 2.8% strongly disagree that cheap imports are a cause of competition. Expensive local textiles affecting local fashion businesses merchandise pricing as a cause of competition, 50% of the respondents strongly agree, an addition 16.7% agree on it as well, 25% are neutral, 5.6% disagree and 2.8% strongly disagree on it as a cause of competition. Majority of the respondents 25% are impartial on whether better apparel from other fashion business like theirs is a cause of competition, 25% disagree on that, 22.2% agree on it been a cause of competition, 19.4% strongly agree on it as well and 8.3% of the respondents disagree on it.

Majority of the respondents felt that cheap imports are the biggest cause of competition in their fashion businesses/houses followed by expensive local textiles which affects the fashion businesses prices on their merchandise and lastly better apparel from other fashion businesses which was not so much of a cause of competition which shows that the respondents have much confidence in their products through their creativity.

Table 4.7: Classification of Respondents on Causes of Competition in the Fashion Industry

Strongly Agree Neutral Disagree Strongly Total Agree Disagree Cheap 52.8% 25% 13.9% 5.6% 2.8% 100% import(readymade clothes) Expensive local 50% 16.7% 25% 5.6% 2.8% 100% textiles affecting merchandise pricing Better quality 19.4% 22.2% 25% 25% 8.3% 100% apparel from other local fashion businesses

4.6.4 Usage of Local materials in Fashion Business

Majority of the respondents, 80.6% do not entirely use local materials in their daily production while 19.4% only use local materials in their fashion businesses. From this findings majority of the respondents incorporate imported raw materials in the fashion business. Which can be attributed to the reason why the majority of the respondents agreed that local textile are expensive.

Figure 4.14: Classification of Respondents on the Usage of ONLY Raw Local Materials in the Fashion business

4.6.5 Participation in Fashion Seminars and Events.

80.6%, majority of the respondents participate and attend fashion seminars and events while 19.4% do not attend. It can be deduced that majority of the fashion businesses participate in fashion seminars and events to increase their visibility and also to keep up with what’s trending in the fashion industry to update their fashion businesses.

Figure 4.15: Classification of Respondents on Attendance Fashion Seminars or Events

4.6.6 Delivery Services

Majority of the respondents, 91.7% offer delivery services to their clientele while 8.3% do not offer delivery services in their fashion business. Delivering services is a way of keeping up with competition in order to provide the best of the services to the clientele at their own comfort which makes it easier to access clients from all over the county, country and globally.

Figure 4.16: Classification of Respondents Delivery Services

4.6.7 Usage of Social Media for Visibility

All the respondents use the available social media platforms for their fashion businesses visibility as shown in the Figure below and to keep up with the competition in the county and globally.

Figure 4.17: Classification of Respondents on the Usage of Social Media Platforms for Visibility

4.6.8 Experience on Usage of Social Media Platforms for Fashion Business Visibility

As shown in the Figure below, majority of the respondents have had a good experience using the social media platforms for their fashion business visibility at 69.4% while 30.6% have had a little bit of both good and bad experiences while using social media.

Figure 4.18: Classifications of Respondents Experience on Social Media Platforms

4.7 Inferential Statistics Correlation and regression analysis ate represented in this section.

4.7.1 Correlation between Government Policies and Growth

Correlation analysis between the governments polices and growth results are displayed in the table below. The Pearson correlation shows the relationship of a dependent and independent variable on whether it’s negative or positive and also how strong or weak. In the Table below it shows -0.41 is the R value which represents the correlation and from this it can interpreted that there is a weak negative relationship between the Government policies and Growth. The significance value (p) is 0.813 which is above 0.05 as the standard, so the relationship is not significant hence no regression analysis.

Table 4.8: Correlation between Government Policy and Growth

Government Policy Growth Government policy Pearson Correlation 1 -0.41 Sig.(2-tailed) .813 N 36 36 Growth Pearson Correlation -0.41 1 Sig.(2-tailed) .813 N 36 36

4.7.2 Access to Finance and Growth The Table below illustrates the correlation analysis between access to funding from microfinance institutions and growth, the R value representing the correlation between the two is 0.231, hence an indication of a weak positive relationship, the significance value (p) is 0.175 which is higher than 0.05 therefore no significant relationship between access to finance and growth. No regression analysis was done since there was no significant relationship between access to finance and Growth.

Table 4.9: Correlation between Access to Finance and Growth

Access to Finance Growth Access to Finance Pearson Correlation 1 .213 Sig.(2-tailed) .175 N 36 36 Growth Pearson Correlation .213 1 Sig.(2-tailed) .175 N 36 36

4.7.3 Competition and Growth Table 4.10 presents the correlation analysis between competition and growth in the fashion industry; as shown the r value is 0.335 which is an indication of a weak positive relationship between the two and the significance value (p) is 0.046 which is lesser than 0.05 hence in conclusion there is a significant relationship between Competition and growth . Regression analysis is not necessary due to no significant relationship. Table 4.10: Correlation between Competition and Growth

Competition Growth Competition Pearson Correlation 1 .335* Sig.(2-tailed) .046 N 36 36 Growth Pearson Correlation .335* 1 Sig.(2-tailed) .046 N 36 36 *. Correlation is significant at the 0.05 level (2-tailed)

4.7.4 Regression Analysis between Competition and Growth The results in the Table below show that competition accounts for 0.152 which is 15.2% of the variation in the growth of the fashion industry. This means, 0.848 of the influence of growth in the fashion industry is accounted for other factors other than competition.

Table 4.11: Regression Analysis Model Summary

Model R R Square Adjusted R Std. Error of the Square Estimate 1 .389a .152 .127 .978 Predictors: (Constant), Competition

4.7.4.1 Hypothesis Testing

To determine whether Strategic Factors have an influence on the growth of the fashion industry, a hypothesis that is a significant relationship between Government policy, Access to finance and Competition against growth of the fashion industry was tested.

Decision rule: Reject Hypothesis if the p value calculated is less than the critical p value of 0.05.

H0: b = 0 There is significant relationship between the strategic factors and the growth of the fashion industry

H1: b ≠ 0 there is no significant relationship between competition and the growth of the fashion industry.

Regression results in the Table below show that the p value is 0.019 which is less than the standard 0.05.Therefore we reject the alternative hypothesis that there is no significant relationship between competition and the growth of the fashion industry and accept the null hypothesis that there is a significant relationship between competition and the growth of the fashion industry. Entirely meaning that that competition affects the growth of the fashion industry.

Table 4.12: The Coefficient Table for Competition and Growth

Coefficientsª Unstandardized Standardized Coefficients Coefficients Model B Std. Error Beta t Sig. 1 Constant 2.767 .402 5.674 .000 Competition -.323 .131 -.389 -2.464 .019 a. Dependent Variable: Growth Growth=2.767+ (-0.323) Competition + ε

4.7.4.2 Coefficients on Competition and Growth of Fashion Industry

The form of the regression model used was;

Y=β0 +β1x1 + ε

Where,

Y= Dependent Variable (Growth); β0 = Constant; β1x1 = Independent variable (Competition); and ε =Error term

Table 4.12 shows Competition influences the growth of the fashion industry with the equation below:

Y= 2.767 + (-0.323) (competition) + 0.131

From the results of this study it has established that there is significant relationship between competition and the growth of the fashion industry, hence the null hypothesis H0 accepted and rejected the alternative hypothesis H1: There is a supported significant relationship between competition and the growth of fashion industry meaning that competition influences the growth of the fashion industry and for every decrease in competition by one unit the growth of the fashion decreases by 0.323.

4.8 Chapter Summary The results of the study were presented in the chapter. Data collected was based on the specific research objectives and the findings were analyzed and presented. The presented results indicated on whether there were relationships between the dependent and independent variables; there was no relationship between government policy and the growth of the local fashion industry, as well as access to finance and the growth of the local fashion industry respectively. As for competition it was found to have an influence in the growth of the fashion industry as it had a significant relationship. Chapter five presents the summary, discussion, conclusions and recommendations based on the study findings.

CHAPTER FIVE

5.0 DISCUSSION, CONCLUSION AND RECOMMENDATIONS 5.1 Introduction This chapter discusses the research findings on the strategic factors influencing the growth of the fashion industry in Nairobi County. Summary of the research, discussion of research findings, conclusions and recommendation made based on the findings of the study are what was covered in this chapter

5.2 Summary of Findings The rationale of the study was to determine whether the strategic factors influence the growth of the fashion industry in Nairobi County and the specific research objectives were: Influence of the role of the government policy on the growth of the fashion industry, Influence of the role of Access of Micro Financial Institutions Assistance to Entrepreneurs on the Growth of Local Fashion Industry and influence of the level of Competition in the growth of the local fashion industry.

The population of the study was made up of fashion designers (72.2%), proprietors (19.4%), Tailors (5.6%) and (2.8%) who are in fashion houses. Questionnaires was the data collection instrument used in the study and data was analyzed through descriptive statistics which included percentages and frequencies and inferential statistics which was also used to analyze data in the study used Pearson correlation. Ms. Excel and statistical Package for Social Sciences (SPSS) aided in the analysis of the study.

The first specific research objective was to assess the role of the government policy involvement on the growth of the fashion industry. The study found that 86.1% of the fashion businesses are licensed, which makes them compliant to government regulations and well recognized institutions. The study also finds out that imports and exports policies are the ones that affects most of the fashion businesses/houses at a majority of 66.7%.Majority of the respondents in the study where impartial on whether the licensing and trade policies favor the fashion industry or that business under professional associations enjoy more benefits than those that are not in any and also whether the import and export policies are helpful in their fashion businesses.in the cluster policy , majority of the fashion businesses/ houses at 41.7% felt that what prevented them or hindered them to join a professional association was because of the leadership issues in the fashion professional associations, followed by high membership fees charged in the

52 professional associations and the other reason was unawareness of professional associations in the fashion industry. Participation in policy making as stakeholders is paramount in every industry and majority of the fashion businesses/ houses at 66.7% do not take part policy making as stakeholders of the fashion industry.

The second specific research objective was the influence of level of access of micro financial institutions assistance to entrepreneurs on the growth of the local fashion industry. Majority of the fashion respondents at 86.1% are aware of micro finance institutions but only 22.2% of the fashion businesses / houses have accessed funding from the institutions. With the majority of the respondents not accessed funding’s, interest rates was the most popular amongst them as one of the challenges that hindered them to access the funding followed by loan securities and lastly credit constraints due to been listed in the credit reference bureaus. Potential impacts of Micro finance funding to the fashion businesses, majority of the fashion businesses agree that funding from micro finance institutions improves growth on the fashion businesses, increases cash flow and leads to expansion of their fashion businesses.

The final specific research objective is the influence of the level of competition in the growth of the fashion industry where majority of the fashion respondents were aware of their existing competitors with their biggest competitor been fast fashion through cheap imports, followed by other local fashion businesses like theirs and lastly second hand clothes. The fashion businesses also felt that the causes of their competition in the fashion industry was led by cheap imports of readymade clothes as part of fast fashion followed by expensive local textiles which affected the local fashion businesses pricing of their merchandise but not so much on better quality apparel from other local fashion business like theirs. Usage of local material indicates on how fashion industry is independent on its own and how local fashion houses/designers co-exist or are dependent on textile business or other businesses that provide raw materials; in the results its evident that most of the fashion businesses/ houses do not entirely use local raw materials which suggests that they mostly have their raw products imported. Competition in the fashion industry calls for coming up with ways to remain relevant and this can be seen through majority of the fashion businesses attending fashion seminars and events to showcase their creations as part of marketing and attending master classes to learn from their far ahead colleagues. Also another way for businesses to remain relevant is through providing effective efficient services to their clientele wherever they are located through delivery services

53 which majority of the fashion businesses provide. Social media visibility to fashion businesses is vital for relevance and for marketing purposes on creating awareness on fashion businesses brand, all fashion businesses from the results use social media for visibility and so far the majority have had a good experience on social media platforms for visibility.

5.3 Discussion 5.3.1 The Influence of Government Policy on Growth

The findings depict that the majority of the respondents are fully aware of the government policies set on the fashion industry hence why they are registered with the government as fully compliant companies. Imports and exports policy in the fashion industry is the one that affects most of the fashion businesses and this could be through high charges on import and export duty that help with the running of their businesses. Fashion specific policy is significant to a quarter of the respondents where they feel that the specific policies aren’t well integrated with industry and that more specific policies should be implemented for it to be easier for the fashion businesses to run in the industry with policies that specifically target the industry; without specific policy in the fashion industry there is inhibition of potential of growth of the industry. From the results also respondent were affected by cluster policy and this is through professional associations where it’s quite evident in the fashion industry that professional association have not been stable which has prompted most fashion business not to join them, further in the research, the findings show what reasons hinder the business from joining professional associations in the industry.

The majority of the respondents from the study were impartial on whether the licensing and trade policies favored the fashion industry, which goes to show the current licensing and trade policies are not so supportive to the fashion businesses from the government implementing them. (Maiyo & Imo, 2012) .The respondents impartiality on imports and exports policies and whether it’s helpful to their business from the results is an indication that it’s a taste of the two sides of the world which is both good and bad and that as fashion businesses they have to import and export materials for the continuity of the establishments but still they have to face the unfortunate side of the policies of high duties and in addition to value added tax. The neutrality of the findings from the respondents is it is helpful to get their raw materials and to ship their products to their clientele out of the

54 country but yet the conditions and what is spent is not so favorable to the fashion businesses.

According to Wood and Bischoff (2019) cluster policy in the fashion industry is very important as it enables all the players in the industry to come together and have one voice which advocates for their own interests especially to the government to understand and embrace it. Majority of the respondents were neutral on whether the businesses under professional associations enjoyed more benefits than those not in any and as the study goes on; the findings for the reason that affect a fashion business from joining a professional association. They seem to be rooted in internal issues about the fashion professional association where the majority of the respondents feel that leadership issues in the fashion association is the main reason why they haven’t joined any followed by high membership fees in the association. The impartiality on whether businesses in a professional fashion association has more advantage can be linked to the reasons that deter fashion businesses from been in a professional association; because it would be beneficial for them to be in one but at what cost? High membership fee? Then after joining the professional association there are leadership issues that mount to no benefits in the long run. In Singapore Clustering was highly encouraged for fashion designers as it creates a better and stronger visibility as opposed to individualizing and setting up each owns shop. (Teng Fatt, 2001)

As majority of the respondents from the findings are fully compliant to the government policies of running a company in the country and as part of the stakeholders in the fashion industry they should then participate in the policy making in the industry but that’s not the case with the majority of respondents having never participated in policy making which is not surprising at all with developed countries like Australia that experienced the same issue of little or no recognition at all from their government a decade ago.( Craik 1997)

The correlation of analysis of the study results on the influence of government policy to the growth of the fashion industry showed that there is no significant relationship between the two variables. The results coincides with Pickernell, Senyard, Jones, Packham and Ramsey (2013) who accord that it’s not the change of government policies or additional policies that will help with the growth of an industry but actually the support of the government on resources that are fundamental to the businesses in the industry.

5.3.2 Influence of Finance Access from Micro Financial Institutions on the Growth of the Fashion Industry.

The findings of the study have the majority of the respondents aware of the existence of micro financial institution but the number of the respondents that have accessed their services is significantly lower with majority of the respondents never accessed micro finance assistance for their fashion businesses. The reasons that hinder access to micro financial assistance to the fashion designers are Interest rates, Loan Security and Credit constraints. Majority of the respondents from the findings struggle with the interest rates in the market which makes it uneasy for them to access funding from the facilities and Ikiara and Ndirangu (2004) agree that high interest rates leads to lack of finance. Prevailing high interest rates hinders fashion business which from the results are small to medium entrepreneurs to access finance help fir they are too high that it generally weakens the business’ ability to be a potential borrower. (Sambajee & Dhomun, 2015) once a business is weakened from all those excessive measure their growth becomes stunted because they are doing the business to pay up and stabilize the business rather than grow to expand it and entirely from one business to another this eventually becomes a cancer to the fashion industry hence no overall growth. MIED, (2015) attests to the difficulty that Kenyan businesses have when it comes to accessing finances funding due to the high interest rates.

The study findings indicate that a fair number of the respondents felt that loan securities was their major constraint in accessing funds from micro financial institution, Domeher.Et.al (2016)admits to this and adds that most young firms are the ones that mostly feel constrained because of this due to lack of reputation. In our study most of the fashion businesses/houses joined the fashion industry on the last five years which makes them young businesses that are vulnerable and lack reputation hence the challenge of accessing fund. The fashion industry as seen from the results has a majority of young businesses that are thriving to grow and for a business to grow it opts for credit to boost its growth unfortunately with the high interest and loan security then the fashion business has to deal with debt financing for a very long time as it is the predicament of most small and medium sized enterprises. (Pandula, 2011)

Credit Reference Bureaus are formed in order to hold the defaulters of loans accountable, with the small enterprises in the fashion industry struggling to get the loans and as earlier

56 stated by Pandula that the predicament for most small sized enterprises is debt financing then it becomes a challenge to the fashion businesses to pay up the funding accessed from a micro financial institution which leads to the fashion business under the mercies of Credit reference bureau since their credit rating has lowered and proves hard for any kind of assistance from other financiers until once cleared. This is where the lack of reputation comes in, financiers are unaware if the fashion business is able to meet its end of bargain with the funding granted to them.

Funding from micro financial institution definitely has potential impacts to the fashion business and from the results in the study majority of the respondents agree that on the impacts is growth improvement on their fashion business. Abor and Quartey (2010) accord that financial access is a vital block that’s necessary for a business improved performance, growth and survival. Lack or insufficient funds in the fashion business/ house then chances it might struggle and not grow at a fast pace as if it had access to finance. (Domeher et al, 2016) increase of cash flow in the fashion business is also a potential impact to a business with access to funds, which motivates and helps in planning for the future of the business and as a result lead expansion of business which is also a potential impact fashion business with access to funds. In Iraq the lack of access to finance led to the small medium enterprises close down due to lack of funds to expand their businesses ( Harash, Al-Timimi & Alsaadi, 2014) in Kenya Onyiego, Namusonge and Waiganjo 2017 agree that access to funding through credit helps a business to grow and expand.

It’s quite evident that the above challenges that hinder access of fund are all intertwined together and they definitely affect the growth of the fashion businesses in the fashion industry although in the correlation analysis between the two variables there is no significant relationship which means that the level of access to finance has no influence on growth. This result contradicts Harash et.al (2014) through the Iraqi’s case where businesses closed down due to lack of funds to improve their performance and to expand them. Wang (2016) highlights that Small and Medium sized enterprises in developing countries always experience the biggest obstacle to growth through lack of financing yet they are the ones that mostly need funding

5.3.3 Influence of Competition on the Growth of Fashion Industry

The results from the study show that a majority of the fashion businesses/ houses are aware of the existence of competitors in the industry at 88.9%, competition is inevitable in a growing industry and as D’Aveni, (2010) argues that in business there is no antidote for dynamic competition but rather promote continuous change and reconfiguring it with the use of existence resources in the industry. Also majority of the respondents biggest competitor is fast fashion which can also be classified as cheap import as for most readymade new clothes are mostly imported from Asia, especially China which have higher levels of competition that the small sized fashion business/ houses lack. (Totskaya, 2015). According to Craik, (1997) Australian also had the same issue of the changing fashion trends with the rise of new trends every now and then and the customers wanting to keep it trendy.

Second hand clothes was also among the biggest competitors by the majority of the respondents did not consider it a major threat to the business as Nyang’or (1994) indicated that there was an increase of secondhand popularly known as Mtumba as most Kenyan local preferred it to locally produced clothes because of how low priced they were and their good quality. MIED, (2015) accords that the local market is always supplied by second hand goods or even smuggled goods while hundred percent of products made in the export processing Zones are exported to the United States. Also they classified it as one of the constraints faced by textile manufactures due to its prevalence in the local market.

Competition is bound to be experienced among fashion businesses that do the same service or product and a number of respondents felt that this was their biggest threat and this could be related with creativity. Depending on a fashion business creativity it sets them apart from other like mined fashion businesses/houses. Other fashion businesses are threat of competition because mostly of lack of creativity where they all produce the same kind of product or service without any core competence and as Eloranta and Turunen, (2015) states that a business will never gain its competitive advantage until it develops its core capabilities. Creativity is one of the main core capabilities in the fashion industry as it helps to set apart and stand out fashion businesses in the industry; as Lubart(1999) asserts that “ creativity is the ability to produce work that is both novel (i.e. original; unexpected) and appropriate (i.e. useful; adaptive concerning task constraints)”

Majority of the respondents at 52.8% agree that the cause of competition in the fashion industry is cheap imports and as earlier mentioned this include fast fashion readymade clothes and as the word self explains it, the competitive edge here is through pricing where by the cheap imports are cheaper compared to the locally made products Ikiara and Ndirangu, (2004) state that there’s unfair competition because of the uncontrolled imports that some are actually counterfeit for they evade tax. As a result of all this there has been a great competition that has really affected the industry and local producers that depended on local market of fashion business/ houses led to a great decline in performance that trickled down to the textile industry. (Maiyo and Imo, 2012)

Half of the respondents also strongly agree that expensive local textiles affecting their merchandise pricing is a cause of competition in the fashion industry which definitely trickles down to their fashion businesses/ houses. The textile industry is directly intertwined with the fashion industry so if one of the industries has challenges it’s a ripple effect to the other. Mugambi, (2005), accords that in 2005 the World Trade Organization removed the quota restrictions on the 30-year old Multi Fiber Agreement that saw to a surge of imports to African Countries and this therefore led to the decline of most textile manufacturing firms and with that it meant struggles to keep them running and led to high costs of production and this ripple effect trickled down to fashion businesses/ houses where they either have to spend much to buy their local textiles for their products to be fully made in Kenya or run to the cheap imports and have fair competitive prices. Better quality apparel from other local fashion businesses from the results had the respondents with different stands on it been a cause of competition in the fashion industry , this can be associated with creativity which varies from one fashion business to the other and above all the consumers preferences. Also creativity goes beyond that in a competitive market place and has to go through cost control and manufacturing simplicity. (Carter and Jeacle, 2012)

Textiles industry predicament as narrated above befell on the fashion industry and from the results of the study 80.6% of the respondents do not entirely use local raw ,material I the running of their businesses. As Mugambi (2005) narrated how the textile industry was affected by the lifting of the quota restrictions and there an increase of imports, most local fashion businesses an houses have opted for this as it helps with competitive pricing in the industry. Majority the respondents attend fashion seminars and events and this is to showcase their work for marketing purposes an also as a way of benchmarking program

59 on what is going on in the fashion industry with persons of like minds; such events help with competitiveness of improvements that are integrated to market development through processes and products.( Wood & Bischoff, 2019). Remaining relevant in the fashion industry is quite vital especially in this era of a global village as a fashion business/house been up to date and been able to engage with their target markets as MIED, (2015) concurs that there’s a need to engage media as part of marketing to target consumers. This is why all respondents have used social media to engage with their clients and for visibility to their target market. In Singapore the Economic Development Board (EDE) as the fashion show organizers made sure the fashion houses participating get all the media coverage needed to create awareness about them and to have a stronger visibility. (Teng Fatt, 2001). From the results all the respondents have used social media platforms with a majority of their experience been good so far, which it shows that it serves the purpose of not only making them visible but it’s their main point of contact with most of their old and prospective clients.

The correlation analysis of the study results on the influence of Competition on the growth of the local fashion industry indicated that there is a significant relationship between the two variables. The finding agrees with a study by Wood and Bischoff, (2019) on the challenges that are faced in South Africa in clothing and textile industry, the study highlighted that the intense competition on the industry has had a number on them causing most of the fashion businesses to restructure and reorganize their ways of doing business to keep up with the competition. Maiyo and Imo, (2015) also in their study further put emphasis on how competition in the fashion industry after quota restrictions were removed has faced adverse effects that has led to high cost of production, poor quality of clothes at very dear prices.

5.4 Conclusion 5.4.1 The Influence of Government Policy on Growth

The study results indicated that the respondents are somewhat aware of the government policies that are in the fashion industry considering that a majority were licensed. There was a lot of impartiality on whether the policies affecting their fashion businesses/ houses were beneficial to them. The study also indicated that reasons that deter fashion businesses from clustering in professional associations they are all based on internal

60 running of the professional association. It’s safe to say that from the study that a majority of the fashion businesses/ houses have not participated in policy making as stakeholders.

The correlation test between government policy and Growth showed there was no significant relationship and this would be probably because most of the fashion houses have never participated in policy making hence not fully aware of information that would have been useful in answering some of the questions differently; also the impartiality in most of the questions it’s an indication of lack of information or unwillingness to answer the questions. To conclude, the sample size was not large enough which could have had an effect on the results.

5.4.2 The Influence of Access to Finance on Growth

The results of the study findings indicate that fashion houses are aware of micro finance institutions despite most of them never receiving any assistance to fashion houses because of the requirements that come with acquiring funding from financial institutions that translate to challenges that hinder the fashion businesses. From these challenges of accessing funds it hinders the potential impacts to the fashion houses like; expansion, better performance and growth improvement.

Similarly to Government policy, there was no significance relationship between access to finance and Growth from the correlation test. This would be probably majority of the respondents have not received funding for their business hence a bit difficult to answer the question because of lack of proper information, this could also be associated with number of questions that had neutral answers. The sample size been small, not large enough may have affected the results.

5.4.3 The Influence of Competition on Growth

The study findings indicated a significant relationship between competition and growth. The study also indicated that the fashion houses were quite aware of the competitors by knowing their biggest threats in the fashion industry. It also revealed that as a result of the awareness of competition in the industry, they have had to look for ways to increase their bran visibility through social media where all of them are active on social media platforms and participating in seminars and events. The Brand visibility does not stop there, they also try to offer their clienteles efficient services through delivery of services at their own comfort and convenience.

5.5 Recommendations 5.5.1 Recommendations for Improvement

5.5.1.1 The Influence of Government Policy on Growth

The recommendations made from the study are that fashion houses should furnish themselves on knowledge about all the policies that affect them as it helps with making the right decisions when well informed, the fashion houses should also address the cluster policy by forming a professional association that is devoid of the current issues as it helps like minds been together when trying to fight for the other policies that are in the fashion industry’s favor and finally fashion houses should try and involve themselves as stakeholders in participating in policy making as it helps with been part of the process and eventually implementing it to their businesses.

5.5.1.2 The Influence of Access to Performance.

Fashion businesses/ houses in the study should try and borrow funding from the non- conventional finance institutions like Sacco’s since they are a bit more lenient as compared to financial institutions like banks. Fashion businesses Credit constraints by been listed in the credit Reference Bureaus should work on their credit rating for clearance to access financial assistance. Also with the current economic strains in the country and the global pandemic there are Non-Governmental Organizations like Heva Fund that offer grants to the creative industry, which fashion happens to be one of them; fashion houses can apply for such.

5.5.1.3 The Influence of Competition on Growth

Fashion businesses/ houses should look for all ways possible to remain visible by trying to match up to their competitors or even doing better, Creativity in the fashion industry is vital as it enables a brand to stand out and curating unique pieces which can be patented to avoid copying of ideas from one fashion house to another. Great continual use of social media paired with creativity will attract all kind of customers. As for the government a bit of import restrictions to avoid smuggled counterfeit apparel should be explored. The textile industry which affects the fashion industry, with the increase of fashion houses in Kenya then it would be safe to recommend that they are revived for they may help boost growth in the fashion industry as it will be local brands supporting local brands, making it a win-win situation.

5.5.2 Recommendation for Further Study

This study investigated the growth of the fashion industry in Nairobi, from the fashion houses in apparel perspective. This study identifies that perspectives could be explored from other fashion businesses in the accessories side of bags, jewelry and shoes; also the customers’ perspective. This study could also be done in Kenya entirely in other counties for it will comprise of a bigger sample as to know if the same results will be obtained. From the study some of the factors were not significant to the growth of the fashion industry, hence would recommend on other strategic factors that influence the growth of the fashion industry in Nairobi.

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APPENDICES APPENDIX I: QUESTIONNAIRE SECTION A: DEMOGRAPHIC INFORMATION

Kindly tick (✔) the answer that best represents your views

1. What is your gender?

Male Female

2. What is your age bracket?

16-26 27-37 38-48 49-59 60-70

3. What is your level of education

Primary High School Certificate  Diploma  Undergraduate  Masters

 Doctorate

4. What is your role in the fashion business?

Proprietor  Manager Fashion Designer Tailor

5. How many employees has your business engaged?

Less than 10 employees’ 10-20 employees’ 21-31 employees’ 32-42

employees’ More than 43 employees

6. How long have you been in the fashion industry?

 Less than a year 1-5 years 6-10 years 11-15 years 16-20 years

More than 20 years

7. Is your business located within the CBD?

Yes No

8. Which of the following payment platforms is often utilized by your business?

Cash payments Mobile Money payments Credit Card payments

SECTION B: EFFECTS OF GOVERNMENT POLICY ON THE GROWTH OF LOCAL FASHION INDUSTRY

Kindly tick (✔) the answer that best represents your views

1. Is your fashion business/organization licensed?

Yes No

2. Which of the three listed government policies affect you the most?

Imports and Exports  Fashion Specific Policy  Cluster Policy (Professional

Associations platforms)

3. Respond to the following statements based on a scale of 1 to 5 where; Strongly Agree (SA) = 5, Agree (A) = 4, Neutral (N) = 3, Disagree (DA) = 2, Strongly Disagree (SDA) = 1 SA A N DA SDA Licensing and trade policies favor the fashion industry Import and export policies are helpful to your fashion business Businesses under professional association platforms (Cluster Policy) enjoy more benefits than those without 4. Respond to the following listed reasons that may hinder one from joining a Professional association based on a scale of 1 to 5 where; Strongly Agree (SA) = 5, Agree (A) = 4, Neutral (N) = 3, Disagree (DA) = 2, Strongly Disagree (SDA) = 1 SA A N DA SDA Unaware of any fashion Association Leadership Issues In The fashion associations High Membership fees 5. Does your business/organization participate in government policy making

processes? (through public participation engagements)

Yes No

SECTION C: EFFECTS OF LEVEL OFACCESS OF MICROFINANCIAL INSTUTIONS ASSISTANCE TO ENTREPRENUERS ON THE GROWTH OF LOCAL FASHION INDUSTRY Kindly tick (✔) the answer that best represents your views 1. 1. Are you aware of Micro Finance institutions?

Yes  No

2. Has your fashion business accessed any funding from a Micro financial

Institution?

Yes No

3. Which of the below listed challenges greatly hinders access of funds from a Micro

financial Institution?

Interest Rates Loan Security Credit Constraints

4. Respond to the following with regards to the potential impact of accessing credit

from a Micro financial Institution on business based on a scale of 1 to 5 where;

Strongly Agree (SA) = 5, Agree (A) = 4, Neutral (N) = 3, Disagree (DA) = 2,

Strongly Disagree (SDA) = 1

SA A N DA SDA Improve growth on your Fashion business Increase Cash flow Better performance on your Fashion business Expansion your fashion business

SECTION D: EFFECTS OF LEVEL OF COMPETITION ON THE GROWTH OF LOCAL FASHION INDUSTRY Kindly tick (✔) the answer that best represents your views 1. Do you have known competitors in your business?

Yes No

2. What is the biggest threat to your business?

Fast Fashion Second-hand clothes other businesses, same as yours

3. Respond to the following with regards to the causes of competition in your fashion business that affects the growth of the local fashion industry? On a scale of 1 to 5 where; Strongly Agree (SA) = 5, Agree (A) = 4, Neutral (N) = 3, Disagree (DA) = 2, Strongly Disagree (SDA) = 1 SA A N DA SDA Cheap Imports Expensive local textiles Better quality apparel from other fashion businesses

4. Do you ONLY use local raw materials in the day to day running of your fashion business? Yes No

5. Does your business participate in any fashion seminars or events? Yes No 6. Does your business provide delivery services to clients? Yes No 7. Does your business utilize the available social media platforms for visibility? Yes No 8. How has your experience been so far in the utilization of social media platforms for your business? Good  Bad  a little bit of both (good and bad) Thank you for participating in filling this questionnaire.

END

APPENDIX II: COVER LETTER

Dear Respondent,

RE: STRATEGIC FACTORS INFLUENCING GROWTH OF THE LOCAL FASHION INDUSTRY IN NAIROBI COUNTY

My name is Paula Kariuki, I’m a graduate student at the United States International University pursuing for a degree in Master of Business Administration (MBA) Strategic Management option. Currently undertaking a research project in fulfillment of my graduate course, conducting a study to determine the Strategic Factors influencing the growth of the local fashion industry in Nairobi County.

Given your professional placing in the fashion industry which is my papers’ area of interest, I hereby request for your assistance in filling the attached questionnaire that will facilitate me to prepare and complete the research project. Your participation is crucial for the fulfilment of this study and it will be highly appreciated. I assure you that all the information provided shall be treated with ultimate confidentiality.

Thank you for your cooperation and time.

Yours sincerely,

Paula Kariuki.

APPENDIX III: NACOSTI RESEARCH LICENCE