Role of micro financing in the development of micro enterprises aimed at poverty reduction in Kibera informal settlement Nairobi, Kenya
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Date
2012-06-28
Authors
Onguka, David
Journal Title
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Abstract
Micro - enterprises have become one of the critical areas of development in developing
economies like Kenya. To enhance their development, the Government has made some
efforts in putting in place structural and legal framework like enactment of micro finance
laws. Despite this effort, the development of micro-enterprises is still slow. Today one of
the most compelling challenges facing Kenya is the problem of poverty. Poverty is not
only on a steady increase but also wide spread in urban and rural areas. In the quest for
solutions to the country's development challenge and poverty alleviation, microfinance
is becoming one of the most popular options as credit has been identified as a barrier
facing the poor. However, effort by the poor to move out of poverty through micro -
enterprises has not been a success as the enterprises have not been able to access
MFI finances due to lack of collateral and uncertainty surrounding its effectiveness in
poverty reduction. The objectives of the study were:
1. To examine the impact of micro finance on household welfare indicating poverty
reduction
2. To find out whether microfinance programmes savings reduce vulnerability and
risks of clients
3. To find out whether micro finance promotes women empowerment
4. To find out the role of markets, infrastructures and other factors in development
of micro enterprises.
The study design used descriptive survey method, questionnaires and interviewing.
Purposive sampling technique was used. The study was conducted in Nairobi's Kibera
area. The population consisted of 143 enterprises drawn from the slum area of Kibera
who have benefited from microfinance. Sample size was 45 enterprises out of the
population of 143. The study was facilitated by use of both primary and secondary data.
The collected data was analyzed statistically using mean, Standard deviation and
Range with the help of Statistical Package for Social Sciences (SPSS) and graphs were
made on MS Excel. The result was tabulated in the form of frequencies and
percentages. Study results are useful for policy formulation and decision making in
respect of government micro credit. It contributes to Government departments
implementing micro credit programs. Contribute to existing body of literature and form a
basis for further research. The findings confirmed that microfinance plays a key role in
the development of micro - enterprises. But to maximize its effectiveness in enterprise
development and poverty reduction, there should be more state intervention to
strengthen itself and have the dynamism to create the necessary infrastructure in areas
where majority of the poor struggles with poverty. The dependent variable taken in the
study was micro - enterprise development where as independent variables were poverty
reduction, women empowerment, savings and markets and Intervening variables were
government policies, political factors, social factors, economic factors and legal factors.
Description
Department of Business Administration,104p.HG 4027.7 .O5 2010
Keywords
Microfinance --Kenya --Nairobi --Kibera, Small business --Kenya --Finance