Micro-credit and Poverty Reduction Among Self Help Groups Within Kisumu County, Kenya
Abstract
Micro-credit is an informal source of revenue that was established to bridge the gap
between Commercial banks and Formal Micro-finance institutions with an objective of
providing small loans to the poor who were discriminated against due to their economic
conditions. The research was mainly anchored on Grameen model which focused on
funding the poor without collateral and vicious cycle of poverty theory which view poor
people as vulnerable hence need to be supported to come out of poverty that is heavily
grounded. The aim of this study was to evaluate the relationship between micro-credit
and poverty reduction among self-help groups in Kisumu County. The study relied on
primary data collected using semi-structured questionnaire and observation check with
the help of research assistants drawn from Organization staff and group officials. The
data collected was analyzed by both quantitative and qualitative methods with the help of
SPSS version 20 and excel package. The findings portray mixed results since microcredit
reduces poverty to a certain level beyond which it starts raising again as measured
by changes in the annual income before and after loan acquisition. The impact of loan
was moderate on both the living standard and business expansion despite of the majority
attending trainings related to micro-credit and poverty reduction. Main challenges
experienced related to loan include inadequate capital and training, high interest rate on
loans and lack of information on the cost of loans thus limiting the potential of many. The
researcher recommends more training to enhance their intellectual capacity since most
have only attained basic education. Training is perceived to be essential for them to
enhance their earning potential by minimizing risks related to book keeping, business
management and financial management. In addition the government should develop
business friendly policies for businesses to prosper both locally and at global range
through networking. Financial institutions should develop friendly operation terms to
attract more clients who are unable to meet their credit access condition. The study at
hand used cross-sectional method and also focused only on credit recipients attached to a
specific organization thus the findings may lead to subjective biasness The researcher
therefore recommends further study on the topic using Longitudinal method to achieve
significant results over a period of time especially in Kisumu County where few literature
exist on the topic. Other studies should be carried out on micro-credit and market linkage
and also on micro-credit and capacity building programs on the economic performance of
SHG members as far as poverty reduction is concerned.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
The following license files are associated with this item: