Determinants of the sustainability of the village micro-finance project: The case of Kalama division of Machakos county, Kenya
The invention of Village microfinance; Village Savings and Loans Associations methodology of microfinance by CARE International changed the financial industry at a time when many people had no access to affordable financial services. The village microfinance has had massive impact on the livelihoods of its beneficiaries. It has given the rural poor and the marginalized financial power to save and loan using their own pool of income. This has had a lot of impact in the household level by improving their livelihoods, education access. However, the village microfinance is faced with various sustainability challenges, which if not addressed could affect the operations of the VSLAs in the long-term. The study examined the determinants of the sustainability of village microfinance by looking into various components such as the financial literacy of the members, member selection, training content by the TOTs and the leadership aspects. Descriptive research design was used to collect quantitative data from a target population of 1,200 village microfinance members and 6 T.o.Ts using a sample size of 120 women, and 3 TOTs within Kalama Division. Data collection was done through the use of questionnaires which were administered to the respondents who are members of the village microfinance. In order to ensure authenticity, data collected was cross examined, coded and then analyzed using the SPSS so as to give recommendations to either scale up the village microfinance project or develop viable sustainability strategies. The research study established that in as much as the village microfinance project had greatly benefitted the members; there were several factors influencing its sustainability. These included member selection, financial literacy, training content by the ToTs and the leadership aspects. The research established that 96% of Member selection criteria greatly influenced the sustainability of the village microfinance since most members formed the groups based on trust, which disintegrated when numerous cases of mistrust occurred. Financial literacy affected the sustainability of the village microfinance to a significant extent of 81% but did not threaten its sustainability since it was knowledge that the members could acquire and ensure the sustainability, unless any cases of misappropriation occurred. 54% of the respondents were of the opinion that the training content by the ToTs was influential in the sustainability of the village microfinance, since the operations of the village microfinance were mainly savings and loans. However, the members required sustainable income generating activities from which they could boost their savings ability for viable and long-term village microfinance operations. 94% of the respondents agreed that leadership was another factor that greatly influenced the sustainability of the village microfinance projects in Kalama division of Machakos County. The research established that most of the village microfinance members were keen to elect leaders that were trustworthy and had essential leadership and conflict management skills to enhance their microfinance operations, lack of which most of the village microfinance groups disintegrated after their savings were misappropriated by their leaders. The research study recommended further research on the sustainable recruitment of the village microfinance ToTs and viable income activities for the village microfinance members, as well as effective measures of mitigating against and dealing with loan delinquencies.