Factors influencing access to credit by youths in Kitutu Chache constituency, Kisii County; Kenya
Onchonga, Wilfred O
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The starting and expansion of micro and small enterprises is a key strategy in alleviating the problem of youth unemployment in Kenya. This is because many youths are idle in rural and urban areas, and could rather invest their time in useful income generating activities and keep off drugs and crime. Many youths in Kitutu Chache Constituency depend on their parents for their upkeep, yet a large number of these parents depend on farming from the already fragmented and poorly producing farms. However, existing studies indicate that it is not easy for youths to access loans for these enterprises, however much they would want to. The loans available could be bank loans, loans from the Youth Enterprise Development Fund, Savings and Credit Cooperative Societies (SACCOs) and those from various micro finance institutions. This study therefore set out to find out why they could not be provided with these loans to start or expand their enterprises, since studies showed that many of the micro and small enterprises fell because they lacked capital. The assumption was that certain factors influenced access to credit by these youths. The study was guided by the following objectives: To start with, it investigated the extent to which the cost of the loans (interest rates and administrative costs among others) influenced access to loans by youths in Kitutu Chache Constituency.Next,the study examined how collateral influenced access to credit by youths in Kitutu Chache Constituency.Then,it explored the extent to which education and entrepreneurial training of youths influenced access to loans by them in Kitutu Chache Constituency.Further,it determined the level at which application procedures for credit influenced access to loans in Kitutu Chache Constituency. Finally,the researcher examined how access to information influenced access to loans in Kitutu Chache Constituency. The background discussed credit to youths in United States of America, Canada, Sweden, France, Japan, Germany, India, South Africa, Morocco, Zimbabwe, Rwanda, Tanzania and Kenya. The literature review highlighted the credit policies in and outside Kenya, and how they influenced access to credit by youth. The study was conducted in Kitutu Chache Constituency which is located in Kisii County, Kenya. This is a constituency with two divisions namely Marani and Mosocho Division, with a total of 13 locations and a population of 232,090, with 65% of whom live below the poverty line. The unemployment rate of the youth was 61 %. The research was conducted through survey research design on a target population of 47,000 using questionnaire.381 respondents arrived at using the table of Krejcie and D.W.Morgan (1970) was selected and distributed among the respondents who were the District Youth Officer- Marani District, the Loans Officers of three commercial banks, and the youths in Kitutu Chache. The validity of the instruments was ensured through advice from the research supervisors and peer review. To ensure reliability pretesting was done through piloting in Mwagichana Location in Marani District. The data was analyzed and reported using frequency tables, and percentages. The findings showed that cost of loan, lack of collateral, education and entrepreneurial training, application procedures and access to credit information all influenced access to credit. The findings of this study would provide the public with knowledge and information about youth entrepreneurship and in so doing assist the government in its effort to promote youth 'enterprises in rural and urban areas. The study would also provide a basis for explaining the disparities that exist among different constituencies in youth entrepreneurship. Further, the Ministry of Youth Affairs and Sports could be challenged to step up education of young entrepreneurs and disburse of credit to them for micro and small enterprises as a way of empowering them.