Effect Of Micro-finance Services In Poverty Alleviation In Slum Areas In Nairobi County

Abstract

Microfinance having been identified as an important pillar for economic development, it has likewise been branded as an instrument for enabling the poor in managing their risks, asset building , improving capacity earnings on income, enabling them establish small enterprises to generate income, hence ensuring improved livelihood . Though, we have several merits relating to microfinance, poverty level is still high with over 40% leaving below a dollar, in the world, even in Kenya. Hence, the question, if microfinance can eradicate poverty, why is it that we still have poverty? In order to ascertain this, it was necessary to have this study with the main objective of determining the effect of slums in the county of Nairobi. The population size of 250 was targeted with employment of descriptive research method involving data collection from Nairobi slum household members who have benefited from microfinance services with the main view of determining microfinance service contribution on poverty eradication by improving their livelihood. The study used purposive sampling to select households for data collection. This study noted that microfinance services have a positive significant effect on the livelihood of poor people through expansion of businesses, better shelter, access to health care and opening up of opportunities for the poor to access education and improve their living standards such as improved sanitation. The study concludes that microfinance services help in poverty reduction by making financial services accessible by those of low income, less educated and in the informal sector which assists in business expansion, better housing, access to education, health and improved living standard. From findings, strategies designed by microfinance institutions to reduce poverty include ; offering financial management skills, offering loans at reduced interest rates and collateral free credit facilities have contributed positively to poverty alleviation, though managerial, and entrepreneurial skills should be included in education programmes for the poor.