Influence Of The Activities Of Informal Financial Groups On The Growth Of Women Owned Businesses In Embu North District, Embu County, Kenya.
Access to financial services that include savings, access to credit, insurance services and remittance is critical for economic empowerment of any population, and it varies across gender. Women in particular have been involved in informal financial groups’ activities and have relied on these groups as sources of funds for their business enterprises for decades. However, many of their businesses have remained small and informal in nature as compared to men owned businesses. The purpose of this study was therefore to establish why most of these women owned businesses tend to remain micro and informal despite being there for many years with most of them failing to pick up. The objectives of this study were; to establish how lending policies by the informal financial groups influence the growth of women owned businesses; to determine how the loan sizes offered by the informal financial groups influence the growth of women owned businesses; to establish the extent to which membership to an informal financial group influence growth of women owned businesses and to examine how literacy level of personnel in the informal financial groups influence the growth of women owned businesses in Embu North District . A descriptive survey research design was used as it is the most appropriate for collecting data about characteristics of a large population. The respondents were purposively sampled from two locations of the District under study; and only community groups that offer financial assistance and related services, and which have women as members were involved in the study. Data collection tools used in the study was questionnaires for youth groups, and interview schedules for women groups and self help groups. The researcher maintained confidentiality on the part of the respondents throughout the whole exercise. Data collected was analysed descriptively and inferentially by the use of the Statistical Package for Social Sciences, and presented using frequency tables and percentages. The findings of the study were that; lending policies that included screening and collateral or security were present in most of the informal financial groups and their interest rates were higher than those of local financial institutions. Most of the groups use both accumulated savings and loaning; and the rotational saving and loaning simultaneously. On loan sizes, it was found that members’ deposit, which was mainly done on weekly basis, was the main determinant of the amount a potential borrower could be loaned as opposed to availability of funds. It was also found out that, informal financial groups seek for outside funding to boost their financial lending base with Government agencies as the main source of outside funding. Informal financial groups also maintain a controlled membership ranging between 10-29 members, with most of them operating unlicensed businesses and with no employee. Age of members in informal financial groups also varied across the categories of the groups with women and self help groups preferring members above the age of 34 years while youth groups preferred members below the age of 36 years. It was also found out that youth groups had a tendency of forming groups made of married couples which affected negatively growth of women owned businesses. On the literacy level of personnel in the informal financial groups, it was found out that there were no degree holders with only a few representations at diploma level among women and youth groups. Government agencies and local financial institutions were identified as the main provider of support training especially on entrepreneurship and financial management, but failed to impart leadership skills to the personnel. All informal financial groups indicated that they wholly managed their groups and supported availability of subsidized loans and market linkages as the two main ways of improving the sizes of their businesses. The study recommends provision of subsidized, collateral free loans, issuance of saving and credit passbooks to group members prior to groups’ registration to encourage the culture of saving, compulsory training of informal groups on leadership, financial management and entrepreneurship as well as encouraging men to form or join informal financial groups to be included in the informal financial sector. The study recommends further studies on; opportunities available for young graduates in the informal sector, men’ s participation in informal financial groups and their inclusion or exclusion in the informal financial sector; and the informal financial sector and market linkages.