Determinants of Loan Repayment of Government Funding to Vulnerable Groups; A Case of Biashara Fund in Kiambu County, Kenya
Mbugua, Keziah Njoki
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In an attempt to alleviate poverty and empower the vulnerable population, many nongovernmental organizations and government line agencies have provided revolving funds to its citizens. The County Government of Kiambu introduced Biashara Fund to empower its youth. The major challenge has been identifying the most deserving beneficiary and minimizing the risk of loan non-repayment. Such, has however not been possible as at times, the rate of defaulters has been reported to be substantially high, leading to writing off such debts at the expense of the revolving funds. The role of the government in providing start-up funds and ensuring sustainability is crucial. Ideally when such funds are borrowed, it is expected that they are repaid in order to empower another beneficiary thus creating a revolving fund and ensuring sustainability of the fund. However, this is often not the case as change of the government of the day at times leads to higher default rate of such funds. This study focused on determinants affecting loan repayment of government funding to venerable groups, a case study of Biashara Fund in Kiambu County, Kenya. The study specifically evaluated the influence of amount of credit borrowed, legislation put in place on loan repayment, borrowing process set and group leadership on loan repayment of government funding to venerable groups accessing Biashara Fund in Kiambu County. Descriptive survey was adopted for this study. The study targeted youth, women and persons with disability with emphasis on 60 groups and 865 individuals drawn across the 10 sub-counties in Kiambu County. The target category had advanced loans by the Biashara Fund from 2014 to 2017. A sample of 274 participants was used and was selected using stratified and simple random sampling. The study used a questionnaire as the sole primary data collection instrument. Data was analyzed using the Statistical Package for Social Sciences where both descriptive and inferential statistics were employ yed. A univariate analysis was done to get standard deviation, means frequency tables, histogram pie chart, graphs and percentages. Further inferential statistics were applied using regression analysis. The study established a relationship between group leadership and loan repayment of government funding by venerable groups accessing Biashara Fund in Kiambu County. The study findings show that there is a significant negative relationship between the amount of credit borrowed and loan repayment of government funding by venerable groups accessing Biashara Fund in Kiambu County. The study concludes that there is a relationship between loan size and capacity to repay. The study also concludes that most of the youth, women and persons with disability were partially conversant with the Biashara loan rules. Policy makers need to come up with viable interventions to stimulate and create an enabling economic environment for innovation and business competitiveness, hence inducing performance of youth, women and disabled business projects. The youth, women and disabled problem thus requires properly planned well-structured and broad based programs. The study recommends that adequate liquidity should be ensured as depositors and borrowers should be able to access funds without subjecting the institutions to solvency and attainment of acceptable rates of return. Research and academicians with an interest in entrepreneurship and startup funding as they will understand the issues raised for future research.