The study was guided by the following objectives; to examine the effect of risk free rate on micro enterprises in Makutano Township in West Pokot County. The study employed a survey research design to select micro enterprises in West Pokot County. The study targeted 5 micro enterprises in West Pokot County which comprised of 10 micro enterprise managers and 108 employees. Hence, the target population of the study comprised of a total of 118 respondents.The study used census sampling as the study population thus the sample size of the study was 102 of the respondents. The study used questionnaires and interview schedule to gather the relevant information under the area of the study and data was analysed using both qualitative and quantitative techniques. The study results revealed that there was a significant relationship between risk free rate and financial performance (p=0.000). The study recommended that government should empower the SMEs to access and get credits from the commercial banks through formal and informal entrepreneurship education for SMEs to develop their managerial capabilities, accounting skills and overall, be more credit worthy.