Impact of Micro-finance Services on Poverty Alleviation at the Household Level

Abstract

Microfinance programs are increasingly publicized as one of the most successful tools for development with the ability to positively affect its participant’s economic and social status. Measuring this impact can be difficult, and the programs have been criticized for not reaching the poorest of the poor. Various approaches to advance credit for micro and small enterprises have been tried in Kenya by different institutions with varying degrees of success or failure. Major approaches include: minimalist versus integrated approaches; group-based lending versus lending to individuals; village banking and linkage programs. Microfinance is becoming one of the most popular tools for development. It is important to understand the effects of microfinance programs are participants, but also its possible effects at reducing poverty and leading development. The objective of this study was to evaluate the effects of microfinance programmes on poverty alleviation at the household level. This research study employed a survey research method to achieve the set objectives. The population of the study consisted of beneficiary households of microfinance programmes in Kisumu. This research study used purposive sampling to select households to be studied. A sample of 50 households who have benefited from microfinance programmes was selected and another 50 households who have not benefited from microfinance programmes were picked for comparison. The primary data was collected using structured questions and unstructured questions. Descriptive statistics such as means, standard deviation and frequency distribution were used to analyze the data. Data presentation was done by the use of pie charts, bar charts and graphs, percentages and frequency tables. From the findings of the study the study recommends that MFIs should ensure speedy processing of loans to customers and increase monitoring of income generating activities to see their progress and challenges. MFIs should ensure that they reach out many rural poor and increase awareness of their products to community level and also provide soft loans for their customers. MFIs should introduce entrepreneurial training in the rural-urban areas to enlighten people on microfinance programmes.