Factors influencing effective utilization of microcredit in youth entrepreneurship: a case of Timau Division, Buuri District, Kenya
Wakiria, Wakson M.
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This research project is an endeavor to alleviate youth unemployment problem through enterprise creation and efficient use of microcredit. To engage in entrepreneurship, availability of capital or credit is essential. Since most of the youth lack starting capital, they have to source for it from various institutions. In tum, the lenders expect this credit to be repaid. The study attempted to establish factors that influence effective utilization of the micro credit in the youth entrepreneurship. The study was carried out in Timau Division, Buuri District, Kenya. Four major objectives form the basis of this study namely; To establish if procedure of acquiring a micro credit and the timing of a micro credit has effect on the utilization of micro credit; To determine if grace period and training in business skills have effect on the utilization of a micro credit. This being a quantitative survey, data was collected by way of questionnaires. The target population was all the youth who had previously acquired micro credit or were currently servicing some micro credit at that time. Youth who may have acquired some credit but went out of business also formed part of the target population. This study was prompted by the fact that, despite the much effort by the government and other concerned parties like Non governmental Organizations (NGOs) and private sector to provide funds to youth for enterprise development, business failures were still rampant and Loan repayment continued to be a problem. Understanding these factors would therefore assist a lot in improving the environment through which the many forms of micro credit are disbursed. This in tum would also contribute towards entrepreneurship success and poverty alleviation generally. The data was edited, analyzed and organized according to the four research questions. Correlation coefficient was used to determine the relationship between each dependent and independent variable. The study revealed that the modalities on loan acquisition by the youth were limiting to the youth and conditions attached thereof had potential to constrict effective utilization of the loans. Recommendations were made both to the government and the micro finance institutions on how best to improve the loaning system.