Dissertation on the Impacts of Microfinance in Kenya final report

MICROFINANCE AWARENESS AND IMPACT IN KENYA: A CASE OF
NAIROBI COUNTY

Prepared by Fred M’mbololo

1|Page

Table of Contents
CHAPTER ONE.................................................................................................................................... 4
INTRODUCTION ................................................................................................................................. 4
1.1 Background of the Study ......................................................................................................... 4
1.2Statement of the Problem ....................................................................................................... 8
1.3 General Objective of the Study ............................................................................................. 10
1.4 Specific Objectives of the Study ............................................................................................ 10
1.5 Research Questions ............................................................................................................... 10
1.6 Hypothesis ............................................................................................................................. 11
1.7 Significance of the Study ....................................................................................................... 11
1.8 Scope of the Study ................................................................................................................ 12
1.9 Assumptions of the Study ..................................................................................................... 12
1.10 Limitations of the Study ...................................................................................................... 13
1.11 Delimitations to the Study .................................................................................................. 14
1.12 Definition of terms .............................................................................................................. 15
CHAPTER TWO................................................................................................................................. 16
THE LITERATURE REVIEW AND THEORETICAL FRAMEWORK .......................................................... 16
2.1 Definition of microfinance .................................................................................................... 16
2.2 Characteristics of microfinance ............................................................................................. 16
2.3 Micro finance services........................................................................................................... 17
2.4 Microfinance Services in the World ...................................................................................... 19
2.5 Microfinance Services in Africa ............................................................................................. 20
2.6 Microfinance Services in Kenya............................................................................................. 21
2.7 Impact of Microfinance ......................................................................................................... 22
2.7.1 Economic impacts .............................................................................................................. 23
2.7.2 Social Impacts..................................................................................................................... 26
2.8 Conceptual Framework ......................................................................................................... 27
CHAPTER THREE .............................................................................................................................. 29
METHODOLOGY .............................................................................................................................. 29
3.1Research Design ..................................................................................................................... 29
3.2 Target population, Sample and Sampling Techniques .......................................................... 29
3.3 Data type and Collection Method and Instruments ............................................................. 30

2|Page

3.4 Research Instruments’ Reliability and Validity...................................................................... 30
3.4.1: Pilot Test ....................................................................................................................... 30
3.4.2 Validity........................................................................................................................... 30
3.4.3 Reliability ....................................................................................................................... 31
3.5 Data Analysis and Processing ................................................................................................ 32
CHAPTER FOUR................................................................................................................................ 34
RESULTS AND DISCUSSION .............................................................................................................. 34
4.1 Introduction .......................................................................................................................... 34
4.2 Respondents Profile .............................................................................................................. 34
4.3 Level of development of microfinance institutions .............................................................. 37
4.4 Impacts of microfinance ........................................................................................................ 39
4.5 Strategies employed by the microfinance institutions ......................................................... 43
CHAPTER FIVE .................................................................................................................................. 47
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ................................................................. 47
5.1 Introduction .......................................................................................................................... 47
5.2 Summary of major findings ................................................................................................... 47
5.3 Conclusion ............................................................................................................................. 51
5.4 Recommendations ................................................................................................................ 53
5.5 Areas for further research ..................................................................................................... 54
REFERENCES .................................................................................................................................... 56


3|Page

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The need for development that saw the Kenya develop several strategies and plans such as
the vision 2030 and the millennium development goals has led to development of the
finance sector. The need for financing of the development projects has developed
microfinance institutions in the country. Microfinance has received a lot of attention since
its inception in the early 1970s perhaps, as argued by Okiocredit (2005: 30-32), due to the
ability of microfinance to enable poverty alleviation and economic development through
provision of credit and savings services to those earning low income. The attention has
seen development of different definitions to microfinance.
According to Otero (1999: 8) microfinance is “the provision of financial services to lowincome poor and very poor self-employed people”. On the other hand, Schreiner and
Colombet (2001: 339) define microfinance as “the attempt to improve access to small
deposits and small loans for poor households neglected by banks.” Independent of the
definition provided to microfinance it is a general agreement in the economic field that
micro financing alleviates economic development. The money or funds that are provided
by microfinance institutions in terms of credit and micro loans enables those who are poor
to invest into productive activities that are bound to earn them income helping them boost
their economic level and alleviate poverty in the entire economy.


4|Page

Microfinance institutions therefore are an opportunity for sustainable development. The
extent opportunities available to generate income and the ability of citizens to respond to
the available opportunities are to a large extent determined by the degree or ability to
access financial services that are affordable. Microfinance being able to provide such
financial services is being pursued by every economy worldwide. Initially microfinance
aimed at providing donor finances and financing experimental projects. This has
developed to financial institutions that provide a wide range of services and several routes
to opportunities that are significant for economic development and expansion (Khan,
2005:131-142).
The concept of microfinance in most instances has been used interchangeably with
microcredit imploring that they have the same meaning. However microcredit and
microfinance are two different concepts. In an attempt to describe the difference between
microcredit and microfinance, Sinha (1998: 2) states that, “microcredit refers to small
loans, whereas microfinance is appropriate where non-governmental organizations
(NGOs) and microfinance institutions (MFIs) supplement the loans with other financial
services (savings, insurance, etc)”. This definition indicates that microcredit is part of
microfinance since it involves providing credit to the poor. Microfinance is an overall
concept as it involves both credit and non-credit financial services such as insurance,
savings, pensions and other payment services.
Microfinance institutions, given the nature of their objective of ensuring that the prop are
able to access financial services, operate in several models. The most commonly identified
models of operations of microfinance institutions include the Rotating Savings and Credit
Association (ROSCAs), the Grameen Bank and the Village Banking models. Rotating

5|Page

Savings and Credit Association are formed when a group of individuals come together and
form an agreement to make regular cyclical contributions with an aim of developing to a
common fund. After some period of specified time the lump sum of the contributions is
given to one member of the group in each cycle.As argued by Schreiner (2010: 112-119),
this model is a very common form of savings and credit.
The solidarity group model is based on based on group peer pressure. Loans are made
available to individuals who are in organized groups of four to seven peoples (Berenbach
and Guzman, 1994: 119). The advantage of being in groups is that the members
collectively guarantee loan repayment. They are therefore able to access subsequent loans
depending on successful repayment by all group members. These payments are usually
made after a specific period of time, usually one week (Ledgerwood, 1999: 137). This
model of micro financing is the most commonly used by banks. It has proven to be more
effective in the long run as there are few loan defaulters as each member of the group is a
guarantor of the other. Berenbach and Guzman (1994: 119-139) argues that, solidarity
groups have proved effective in deterring defaults as evidenced by loan repayment rates
attained by organizations.
Village banking model are based on village banks which are normally communitymanaged. The banks are established and managed by credit and savings associations
established by NGOs to provide access to financial services, build community self-help
groups, and help members accumulate savings (Schreiner, 2003: 118–136). This is
perhaps the oldest model of micro financing, considering their formation in the mid1980s. Usually these village banks normally consist of 25 to 50 members who majorly


6|Page

low-income earning individuals are seeking to improve their lives through selfemployment activities.
In Kenya, the need for economic development has seen the development of micro finance
institutions which in normal cases start as Chamas. Chamas are small groups of
individuals, who come together, collect money in a pool through continuous contributions
with an aim of accomplishing an investment objective. According to Onumah (2002), the
development of Chamas has led to the development of banks in Kenya. For example,
equity bank developed from a micro finance institution where its major purpose was to
help customers get mortgage loans for individuals who are low income earners in the
society. It was initiated as equity building society (Coetzee, Kamau and Andrew, 2003).
There has been other current deposit taking microfinance institutions in Kenya such as
Rafiki and Jammii Bora who are also in the same path.
The rapid development of micro finance institutions in Kenya has helped the country
develop economically with the current rate standing at 5% improvement annually(CGAP,
2004). This has shown that there are several impacts of the financial institutions to the
economy. There are also business that were majorly part of the institutions that have
flopped in the economy. Independent of the connection of economic development to these
financial institutions many Kenyans residents are not members of the microfinance
institutions, let alone being aware of their existence (Kodhek, 2003). It is in line with this
background that the study wishes to determine the level of awareness and impact on
microfinance institutions among the residents of Nairobi County.


7|Page

1.2Statement of the Problem

Microfinance institutions have been identified to be the major component to economic
development. In her study on Rural Financial Services in Kenya: What is Working and
Why? Betty (2006) possess that micro financing institutions have in a large extent helped
the development of the Kenyan rural community; “microfinance institutions will continue
serving the rural people and will transform themselves into community based micro-credit
units. This will most likely reduce unemployment in the rural areas”. Development
practitioners and policy makers have as well identified efficient microfinance services as
important for a variety of reasons; helping the poor manage their risks, build their assets,
enhance their income earning capacity, be able to develop small enterprises to generate
income, and these in turn will ensure improved life. Microfinance has also positive
impacts on poverty alleviation and specific economic indicators such as nutrition status,
women empowerment and children schooling.
Despite the several merits attributed to micro financial services, the level of poverty in
Kenya is still high with 40% of Kenyans leaving below a dollar, businesses are performing
poorly and this is indicated by the slow economic development of below 5%, many
Kenyans are still not members of any microfinance institution. This may be attributed to
lack of information on the positive impacts of micro financing and the lack of awareness
by the general public on the existence of microfinance institutions and the services such
institutions offer.
Few studies have been done in Kenya revolving around microfinance. However none of
these studies provide direct information on the impacts of microfinance institutions in


8|Page

Kenya. Mjomba (2011) studied micro-finance in Kenya by specifically considering micro
finance on financial empowerment of women in Kenya. This study though identified the
impact of micro financing as empowering women positively, it majored on Kenya Women
Finance Trust and was also bias to women only. Therefore it lacked evidence on other
impacts of microfinances in Kenya.
A similar study by Joy (2007) majored on the impact of microfinance on rural
development with a setting of Makueni County. Although this study was a great milestone
to the studies on the field of impact of micro financing services, it narrowed down to poor
households, income and poverty eradication. The setting was also rural. This study
therefore lacks enough evidence to ascertain the awareness and impacts of microfinance in
Kenya. Therefore, we remain unable to judge the validity of this tentative explanation.
That is, there remains insufficient empirical evidence to assess this claim.
Several questions therefore remain unanswered. Who largely benefit from micro financing
services? What is the level of awareness of microfinance services in Kenya? What are the
impacts of microfinance in Kenya? What strategies are employed by microfinance
institutions to ensure they meet their objectives? What kinds of policy questions do these
findings raise for microfinance institutions and for national government?
This study proposed to interrogate the data that was collected in residents of Nairobi
County in relation to these broad questions that are emerging around the issue of
awareness and impacts of microfinance in Kenya, and suggests areas of purposeful focus
for policy attention.


9|Page

1.3 General Objective of the Study

The aim of this study was to determine the level of awareness of microfinance services
and the impacts of microfinance services to residents of Nairobi County. The objective
was to come up with findings that may be used to make assertions on the awareness and
impacts of microfinance in Kenya.
1.4 Specific Objectives of the Study

The specific objectives of the study included;
i.

To determine the level of awareness to microfinance among Nairobi County
residents

ii.

To assess the level of development of microfinance institutions within Nairobi
County

iii.

To assess the impacts of microfinance to Nairobi County residents

iv.

To determine the strategies employed by the microfinance institutions in Nairobi
County to meet their objectives

1.5 Research Questions

i.

What is the level of awareness of Nairobi County residents on microfinance
institutions and the services they offer?

ii.

What are the impacts of microfinance to Nairobi County residents?


10 | P a g e

1.6 Hypothesis

i.

Nairobi County residents are unaware of microfinance institutions within the
county and the services such institutions offer

ii.

Microfinance has positive impact to economic and social development of Nairobi
County residents

1.7 Significance of the Study

To the government
In line with the ability of micro financing services to ensure economic development by
providing savings and credit to low income earners, the government has been pushed to
support the development of microfinance institutions. This has seen a lot of investment by
the government in providing financial support to the microfinance institutions. The
information from this study on the impact of microfinance may help the government in
determining the viability of their investments.
Microfinance institution’s management
The microfinance institutions are formed with the objective of ensuring that low income
earners have access to financial services. There are several Kenyans who fall under the
bracket of low income earners. Microfinance institutions aim at ensuring that all these
citizens who are low income earners are catered for in terms of provision of financial
services. It is therefore necessary for the institutions to understand the perceptions of the
citizens on the impact of the microfinance services they are offering and the level of
awareness of the public on the existence of microfinance institutions and their services.

11 | P a g e

This information may be used by the management of the microfinance institutions in
determining areas for improvement so as to ensure their success.
Academicians/ researchers
Little research has been done in sub-Saharan Africa to directly identify the impacts of
microfinance. Considering the benefits attributed to microfinance institutions in economic
development and the rapid development of these institutions, impact of microfinance has
received attention of researchers and academicians. Therefore a study on the awareness
and the impact of microfinance in Kenya, with major focus on Nairobi County, may
therefore attract researchers and academicians who are in need of educating more and
providing solutions to lack of access to financial services in sub-Saharan Africa.
The information from the study will also form basis for literature for other researchers and
academicians who are willing to carry out studies in the same field in Sub Saharan Africa.
Next, the study will be a starting point for further studies on microfinance in Kenya.
1.8 Scope of the Study

The study was carried out in Nairobi County. The respondents included the Nairobi
County residents. Data was collected from the Nairobi residents who formed the
population of the study, with an aim of determining their level of awareness to
microfinance in Kenya and the impacts of microfinance in Kenya.
1.9 Assumptions of the Study

The researcher made the following assumptions regarding this study:


12 | P a g e

i.

Respondents answered the survey questions about the awareness and impacts of
microfinance truthfully.

ii.

Respondents were familiar enough with the microfinance services to answer the
survey questions.

iii.

The researcher expected the entire exercise to move on smoothly relying on the
maximum cooperation of all those who were involved. That the sample properly
represented the population, the data collection instruments had validity and
measured the desired parameters and that the respondents truthfully and correctly
answered the questions.

1.10 Limitations of the Study

Limitations are potential weaknesses or problems with the study identified by the
researcher. The limitations often relate to inadequate measures of variables, loss or lack of
participants, small sample sizes, errors in measurement, and other factors typically related
to data collection and analysis. These limitations are useful to other potential researchers
who may choose to conduct a similar or replication study (Creswell, 2005).
The limitations of this study include;
i.

The study involved the perception of residents on the impacts of microfinance. The
data was collected from individuals who are self-reporting their perceptions.

ii.

Perceptions of those who participated are not factual information and are biased
based on the respondent’s own experiences and attitudes.

iii.

The geographical expanse of the study area, inadequate financial resources and
time constraints also reduced the chances of contacting more respondents.


13 | P a g e

These limitations were mitigated by making sure that, there is purposive sample selection,
piloting and careful scrutiny of the perceived parameters of measurement in the
microfinance institution, population and sample.
1.11 Delimitations to the Study

Delimitation narrows the scope of the study. The follow were delimitations of this study:
i.

Participation in this study was voluntary.

ii.

The population was limited to microfinance institutions in Nairobi County

iii.

Respondents involved in the study were from the same large urban area

iv.

There could be other impacts of microfinance that may not be exclusively
addressed in this study.
The study was bound to have a reasonable degree of success because the population and
the sample are readily available in Nairobi County. The use of the SPSS programme in
analyzing the collected data was helpful in making reasonable deductions. Some of the
respondents’ concerns connected with the impacts of microfinance were quantitatively
measured and appropriate records made. Such parameters included number of people
registered with the microfinance institutions and the number of microfinance institutions
within the county.


14 | P a g e

1.12 Definition of terms

Microfinance
Otero (1999: 23) defined microfinance as the provision of financial services to low income
poor and very poor self-employed people. On the other hand Schreiner and Colombet
(2001:339) argues that microfinance is generally the attempt to improve access to small
deposits and small loans for poor households which have been neglected by banks.
Microfinance in this study is the concept by which financial institutions avail savings and
credit opportunities to the poor or those who cannot access bank services.


15 | P a g e

CHAPTER TWO
THE LITERATURE REVIEW AND THEORETICAL FRAMEWORK
2.1 Definition of microfinance
Microfinance is a form of financial development that has primarily focused on alleviating
poverty through providing financial services to the poor people in the country (Sinha,
2008). Most people view microfinance as being about micro-credit i.e.it is involved in
lending small amounts of money to the poor in order to uplift their living standard.
Microfinance is not only this, but it also has a broader perspective which also includes
insurance, transactional services, and importantly, savings (Brenna, 2008).

According to Schreiner (2010), microfinance is a bit of a catch all-term. In the broad
perspective, it refers to the provision of financial products which are usually targeted at
low-income groups. These financial services include credit, savings and insurance
products. A series of neologisms has emerged from the provision of these services, name
micro-credit,

micro-savings

and

micro-insurance.

The

Canadian

International

Development Agency (CIDA) defines microfinance as, the provision of a broad range of
financial services to poor, low income households and micro-enterprises usually lacking
access to formal financial institutions (Graheen, 2000).

Microcredit, or microfinance, is banking the unbankables, bringing credit, savings and
other essential financial services within the reach of millions of people who are too poor to
be served by regular banks, in most cases because they are unable to offer sufficient
collateral. In general, banks are for people with money, not for people without.”
(Oikocredit, 2004)

2.2 Characteristics of microfinance
Microfinance gives access to financial and non-financial services to low-income people,
who wish to access money for starting or developing an income generation activity. The
individual loans and savings of the poor clients are small (Kodheka, 2003). Microfinance
came into being from the appreciation that micro-entrepreneurs and some poorer clients
can be ‘bankable’, that is, they can repay, both the principal and interest, on time and also

16 | P a g e

make savings, provided financial services are tailored to suit their needs. Microfinance as
a discipline has created financial products and services that together have enabled lowincome people to become clients of a banking intermediary. The characteristics of
microfinance products include:
i.

Little amounts of loans and savings and short- terms loan (usually up to the term of
one year).

ii.

Payment schedules attribute frequent installments (or frequent deposits) and
Installments made up from both principal and interest, which amortized in course
of time.

iii.

Higher interest rates on credit (higher than commercial bank rates but lower than
loan-shark rates), which reflect the labor-intensive work associated with making
small loans and allowing the microfinance intermediary to become sustainable
overtime.

iv.

Easy entrance to the microfinance intermediary saves the time and money of the
client and permits the intermediary to have a better idea about the clients’ financial
and social status.

v.

Application procedures are simple and short processing periods (between the
completion of the application and the disbursement of the loan).

vi.

The clients who pay on time become eligible for repeat loans with higher amounts
and the use of tapered interest rates (decreasing interest rates over several loan
cycles) as a n incentive to repay on time. Large size loans are less costly to the
MFI, so some lenders provide large size loans on relatively lower rates.

vii.

No collateral is required contrary to formal banking practices. Instead of collateral,
microfinance intermediaries use alternative methods, like, the assessments of
clients’ repayment potential by running cash flow analyses, which is based on the
stream of cash flows, generated by the activities for which loans are taken.

2.3 Micro finance services
Micro finance Services refer mainly to small loans; savings mobilization and training in
micro enterprise investment services extended to poor people to enable them undertake
self employment projects that generate income (Onuaman, 2002). Micro finance came into
being from the appreciation that micro entrepreneurs and some poorer clients can be

17 | P a g e

‘bankable’, that is, they can repay both the principal and interest, on time and also make
savings, provided financial services are tailored to suit their needs (Coetze, 2003)). Micro
finance is perceived as the provision of financial and non financial services by micro
finance institutions (MFIs) to low income groups without tangible collateral but whose
activities are linked to income generating ventures (Sinha, 2008). These financial services
include savings, credit, payment facilities, remittances and insurance. The non-financial
services mainly entail training in micro enterprise investment and business skills. There is
also a belief that micro finance encompasses micro credit, micro savings and micro
insurance (CGAP, 2004).

Micro finance is not a new development. Its origin can be traced back to 1976, when
Muhammad Yunus set up the Grameen Bank, as experiment, on the outskirts of
Chittagong University campus in the village of Jobra, Bangladesh. The aim was to provide
collateral free loans to poor people, especially in rural areas, at full-cost interest rates that
are repayable in frequent installments. Borrowers were organized into groups and peer
pressure among them reduced the risk of default (Khan and Rahaman, 2007). In many
cases, basic business skill training should accompany the provision of micro loans to
improve the capacity of the poor to use funds (UN, 20005). Micro financing should
addresses capital investment decisions, general business management and risk
management. In the world over, provision of micro finance services to the youth has been
considered an innovative and sustainable approach to youth financial and micro enterprise
activities empowerment leading to generation of income so as to improve their livelihoods
and contribute to economic growth. Debates on extending the reach of microfinance to the
very poorest people increasingly focus on savings facilities. For many youth, savings
facilities are essential in increasing the amount of income under their control and in
building assets. In remote areas, mobilization and intermediation of member savings may
be crucial first steps before accessing external loan funds. A number of studies have
observed that savings-led groups perform better than credit-led ones (Allen 2005; Murray
and Rosenberg 2006; Ritchie 2007). Access to micro-finance has the potential to assist the
poor in earning income from microenterprises, smooth their income and consumption
(Brennan, 2008), help households diversify their income sources. (Anand et al.,

18 | P a g e

2005).According to Kodheka (2003) microfinance makes a considerable contribution to
the reduction of poverty. It helps increase income earning and asset building opportunities
which make households less reliant on a single asset type and consequently deal with
disasters. (Anand et.al., 2005). According to Hassan (2002), many Grameen Bank
borrowers were actually building larger houses. Sinha (2008) advances that the income of
borrowers has risen and their assets base has widened. Investments made by loans appear
to have been extremely productive and to have contributed significant improvements in
household output, income and consumption (CGAP, 2004). In Tegucigalpa and Cholteca
in Honduras in 2003, effect assessment studies revealed that 60% and 50% of the
recipients had their sales and incomes increase respectively one year after receipt of credit
for working capital. Agricultural Finance Cooperation Limited in 2008 in India, assessed
development effect of microfinance programmes. Clients reported increase in income
from 76% of activities. There is therefore reason to believe microfinance services in its
entirety should report effect on savings, income and investments alongside non financial
effect such as change in skills through training. This study was specific in investigating
these aspects.

2.4 Microfinance Services in the World
The current global youth population is very large. Of the world’s more than 3 billion
people estimated to be under the age of 25, approximately 1.3 billion are between the ages
of 15 and 24. Just under half of these young people live on less than two dollars a day, as
estimated by the UN (Youth Save, 2010). Yet young people the world over are aware of
the inequities of the global system, which leaves them vulnerable in many ways.
Unemployment, especially amongst them, also leads to high risk behaviour – crime, drugs
and spread of HIV/AIDs. Moreover in line with most cultures in developing countries, the
employed have to look after the unemployed extended family members, thereby reducing
their ability to save and opportunities for wealth creation that is needed to spur economic
growth. To this end, microfinance, the provision of a wide range of financial services, has
proved immensely valuable to poor people, especially the youth and women on a
sustainable basis. Access to financial services has allowed many families throughout the


19 | P a g e

developing world to make significant progress in their own efforts to escape poverty
(Onuman, 2005).
The provision of credit has increasingly been regarded as an important tool for raising the
incomes of youths, mainly by mobilizing resources to more productive uses. As
development takes place, one question that arises is the extent to which credit can be
offered to the youths to facilitate their taking advantage of the developing entrepreneurial
activities. The generation of self-employment in non-farm activities for example, requires
investment in working capital. However, at low levels of income, the accumulation of
such capital may be difficult. Under such circumstances, loans, by increasing family
income, can help the youth to accumulate their own capital and invest in employmentgenerating activities (Schreiner, 2010).
2.5 Microfinance Services in Africa
Many diverse institutional models of micro financing are functioning in Africa, but most
clients are served by credit unions and co-operatives members sell (e.g. coffee, tea, cotton
etc.) or the nature of their employment (Onuman, 2005). In West and Central Africa
however, savings and credit cooperatives are generally more community-based. In
contrast to Asia, the lack of population density means that rural and agricultural finance is
particularly challenging, and thus many MFIs are urban-based and focused. Perhaps as a
result the July 2003 Micro Banking Bulletin identified only 8 sustainable institutions and
estimated that only around 25 million clients are being served throughout the continent.
However, these numbers may under-estimate or ignore the large numbers being served by
cooperatives and postal banks. Nonetheless both international and domestic banks are
starting to take an interest in the potential of the low-income market in Africa. The last
twenty years have seen significant improvements in micro financing through advances in
understanding and providing financial services to better advance development and
eradicate poverty. This includes providing the financial means to save, access credit, and
start small businesses, with the potential to enhance community development, as well as
local and national policy making. When properly harnessed and supported, microfinance
can scale-up beyond the micro-level as a sustainable part of the process of financial
empowerment by which the poor can lift themselves from poverty.


20 | P a g e

The micro financing revolution effectively demonstrates that when poor households have
access to financial services, not only do they save, but, they also have high repayment
rates when they borrow. It is noted that, microfinance institutions have made financial
services available to millions of poor households worldwide but this still represents a tiny
fraction of the population in developing countries where the majority lack access to formal
financial services.
2.6 Microfinance Services in Kenya
In Kenya, the youth is defined within the age 15-35 years are about 13 million which is
equivalent to 56% of the population (Ministry of Youth and Sports, 2008). Of the 13
million youth, less than 50% are in gainful economic activities in the formal, informal and
public sectors of the economy while majority are unemployed, (Simeyo et al.2011). They
comprise 61% of the unemployed. This trend is worrying and calls for intervention
measures. Micro finance lending and associated services are one such intervention.
However, lack of collateral and high interest rates are an impediment to access to loans
from Micro finance institutions (MFIs) by the youths (Mushimiyimana, 2008). The youths
who secure funds from such institutions spend the bulk of their returns on investment in
paying the cost of capital, thus leaving them with none or little savings for reinvestment.
As a result, majority of the youths in the youth investments fail to grow into Small and
eventually Medium enterprises. Therefore, to bring the youth on board, the Kenyan
government with the support of development partners in 2006 established a youth
enterprise development fund that is channeled to Micro finance Institutions and other
financial intermediaries for onward lending to the youth without collateral. Such a fund
attracts a greatly reduced cost of capital which stands at 8% per annum as a strategy to
make the fund affordable to the youth who in many cases do not have collateral and
therefore ideal for start-ups.
Given that the vision of micro finance is to promote the growth of micro enterprises, MFIs
and other financial intermediaries have experienced rapid growth to support the youth
financial requirements. Institutions such as the Kenya Rural Enterprise Program (K-REP),
a non-governmental organization that was started in 1984 under the funding of the USAID
are some microfinance institutions. Today, K-REP is fully licensed as a bank and offers a
wide range of banking services in addition to its micro finance specialty (Dondo, 1991).

21 | P a g e

K-REP operates two major loan programs for micro and small entrepreneurs, Jihudi and
Chikola. Each Jihudi group consists of three to eight individuals. The Chikola loan
program works through existing rotating savings and credit self help groups (ROSCAS)
that comprise of individual micro entrepreneurs (Kioko, 1995). A number of MFIs and
financial intermediaries including K-REP, Equity bank, Kenya Women Finance Trust
(KWFT), Fauluetc have since then come up to provide micro finance services to the low
income groups for purposes of starting or developing income generating activities. These
groups include youth and women. Related to this is the indication that MSEs access to
credit has increased greatly from 7.5% in 2006 to 17.9% in 2009. (Simeyo et al. 2009)
In view of the increasing microfinance services in the world targeting the poor with
anticipation of an increase in positive outcomes, particularly in developing countries, as is
evidenced by the efforts above; this research sought to establish the effect of micro finance
lending and related services on financial empowerment of youth in Nairobi County.
2.7 Impact of Microfinance
Microfinance institutions offer several services to their clients who in most cases are the
economically less privileged. According to Bennett (1994) and Ledgerwood (1999)
microfinance clients who are mostly men and women slightly below or above the poverty
line can be able to access variety of products and services which are mostly financial.
Microfinance institutions offer services to the low income earning groups because these
groups are ignored by large financial institutions since they are considered less profitable.
Olaitan (2001) and Akanji (2001) argue that products and services that make microfinance
institutions different from large financial institutions include increased provision of credit,
increased provision of savings, repositories and other financial services to low income
earners or poor households.
The impact of microfinance can be described in a triangle where it has effect on financial
sustainability, outreach to the poor, and institutional performance/impact.


22 | P a g e

2.7.1 Economic impacts
Income is one of the important elements of living standard of the poor people as well as
saving. Mohammed and Mohammed (2007) The Microfinance Banks are to provide loans
to the poor not only the increase their income but also to mobilize their savings CBN,
(2005).
According the report by the United Nations Development Programme, microfinance has
over the years proven to be a major tool which is effective in alleviating poverty (UNDP,
2001). Microfinance therefore empowers those individuals who are financially
disadvantaged. Morduch et al. (2003) and Alegiemo and Attah (2005) also asserts that
microfinance institutions help in financial empowerment of the economically activebut
poor individuals by the providing microcredits and other assets to enhance production.
Micro financing therefore enhances the latent capacity of the poor for entrepreneurship,
enabling them engage in economic activities, be self-reliant and also enhancing the
household income as well as creating wealth.
According to Christabell (2009), when reaching out to those who are poor, there are costs
that every financial institution expects to incur especially when reaching them with small
loans. To every finance institutions it is viable only if these costs are kept to the minimum
as possible. However when the targeted people are in a vast geographical area, the cost of
reaching them increases. The provision of financial services to the poor is expensive and
to make the financial institutions sustainable requires patience and attention to avoid
excessive cost and risks (Adam and Fitchett, 1992).
The economic impact of microfinance originate from the assumption that those who are in
need of economic support (borrower) are sole operators of an income generating activity
and the output of their businesses is constrained by lack of enough capital or the high
marginal cost of credit relative to the marginal returns from the credit. In a bid to increase
their financial capability and ease their capital constraints, the business operators will
work hard to improve on their output, net income, profits, and hence their own welfare
(McKernan, 2002).
The economic impacts of microfinance stretch to the livelihoods of the targeted
individuals. Microfinance institutions target poor individuals whose management of


23 | P a g e

livelihood related to resource allocation, uncertainties and risks cannot be completely
separated from their decisions about their household’s production (Gertler et al.
2009).Moreover since credit is a factor affecting the management of diversified and is
seasonally volatile to household economic portfolios (Sebstad et al. 1995),by a large
extent it has effect on the promotion of enterprise (Morduch1995, Rutherford 2001,
Collins et al. 2009).
According to Shahidur (1998), poverty is regularly the effect of low economic growth,
high population growth, and exceptionally uneven spreading of resources. The
determinants of poverty can be traced to unemployment and low productivity amongst the
poor. This type of poverty requires to be solved by the creation of jobs (Cameron and
Trivedi, 2005). Poverty is as well a result of low productivity and low income which can
only be alleviated by putting more investments on human and physical capital so as to be
able to increase the productivity of the workers’. In many countries, such as Bangladesh,
poverty is caused by lack of both physical and human capital. From the above analysis
solving the problem of poverty therefore demands the increase in productivity by creating
employment and developing human capital as well. Microfinance institutions which in the
past were considered to be informal lenders therefore play an important role in many lowincome countries (Adams and Fitchett 1992; Ghate 1992), by providing the poor with
enough capital to start off and expand their business and improve on their livelihoods.
Microfinance institutions, such as such as Rotating Savings and Credit Associations, can
meet the occasional financial needs of rural households in many societies (Webster and
Fidler, 1995).
Since microcredit programs from microfinance institutions are able to reach the poor at
affordable cost, the programs are in a position to ensure that the poor become selfemployed. Microcredit services are supported by microfinance institutions so as to enable
the poor access institutional credit hence playing an important role in alleviating poverty
(Yunus, 1983). They argue that by virtue of their design such programs can reach the poor
and overcome problems of credit market imperfections. In their view improved access to
credit smoothens consumption and eases constraints in production, raising the incomes
and productivity of the poor.


24 | P a g e

Empirical studies support the view that microfinance institutions provide credit market
interventions that ensure that the consumption and production of the poor is improved and
the lack of credit do not deter them from improving their livelihoods (Foster 1995;
Rosenzweig and Wolpin 1993).Several researches in Bangladesh have shown that
microfinance institutions have positive effects on the economic lives of the poor people.
For example, in his study on participants of Grameen Bank in Bangladesh, Hossain (1988)
found significant impacts of the effect of microcredit programmes on alleviating poverty
in Bangladesh. This was reflected in higher income, capital accumulation and employment
among loan recipients. Khandker (1998) carried out a similar study in Bangladsh. From
his study he found that 5% of those who received the loans were able to get out of poverty.
Another research in Bangladesh was carried out by Mustafa (1996). He found out that
microcredit programmes enabled the loan recipients to enhance their economic wellbeing
which was reflected in indicators such as wealth, revenue earning assets, the level of cash
earned, value of house structure, per capita expenditure on food, and total household
expenditure. Similarly, Zaman (1999) found out that credit from microfinance institutions
aim at enhancing the abilities of the recipients to build assets while reducing their
vulnerability to poverty by ensuring that their consumption is smooth through balancing of
their consumption and spending.
In Thailand, Kaboski and Townsend (2005) found the positive impacts of microcredit
when they evaluated the impacts of microfinance institutions in rural Thailand. They
found out that micro-financing enhances asset growth, consumption smoothing and
occupational mobility. The microfinance services as well help in decreasing borrowers’
vulnerability, especially if women are the main recipients. Another study by Kaboski and
Townsend (2005) found that income, consumption and agricultural investment increased
among recipients as well as overall wages levels in a village in Thailand.
In Mexico a study by Bruhn and Love (2009) identified the positive impacts of havng a
microfinance institution as improving business ownership, income and employment.
Positive impacts of microfinance on the economic wellbeing of the people have been
documented by researchers who determined the effects through randomized experimental
research. Karlan & Zinman (2009) carried out their randomized experimental research in
Manila Philippines and found out that microfinance institutions increased business profits

25 | P a g e

but only for male entrepreneurs not females. Another study by Banerjee (2010) using
similar approach in India also indicated that found that only the expenditure on durable
goods and number of new businesses increased in the treated areas while expenditure per
capita per month did not change.

2.7.2 Social Impacts
Studies indicate that microfinance programs do not have a positive impact on the poor
household income and consumption level only but on their social wellbeing as well. The
improvement in the social well-being is reflected on recipients’ level of education, health
and children nutrition. Furthermore it extends to women feelings of empowerment and
independence. For example a study by Khander (1998) found that there are significantly
higher levels of schooling for children especially that of girls for credit program
participants.
According to Ghalib (2007), all microfinance program targets one thing in general; human
development that is geared towards both the economic and social uplift of the people they
cater for. Ghalib (2007) argued that tackling poverty points to multidimensional concepts
that emphasizes on reducing unemployment, infant mortality, maintaining essential
healthcare, sanitation, food, nutrition basic hygiene, and establishing gender equality.
Microfinance programs have positive impacts on households’ wellbeing which is
indicated in the recipient of the microcredit’s children’s education, health and household
nutrition especially when the recipients are women (Zaman, 1999; Panjaitan-Drioadisuryo
& Cloud, 1999; Pitt et al., 2003).

Health
Health intervention has been an integral part of the MFIs. Different organizations apply
different or similar policy to identify the health problems, undertake rigorous
experimentation and try to explore and then apply suitable, affordable and culturally
acceptable technology. Throughout the work process, they measure and monitor its
implementations

and

recommends


corrective

actions

to

modify

methods

of

26 | P a g e

implementation of program, health message, training and management, where needed
(Annual Report, 2005).
Education program
Another important goal of all MFIs is to spread the light of education throughout the
society. Development through this program, along with the health program, indicates
human development among the people. Their effort and mission is to build up a society
free of poverty, illiteracy and disease. Their goals are to expand education opportunities
for disadvantaged children and provide them with necessary technical and financial
support (Annual Report, 2005).
Generally provision of credit demands a lot of knowledge on credit by the borrower. This
is because the imperfect knowledge from the borrower and their limited capacity to
compute changes when they borrow credit since the forms of credit will have an important
impact on the mental models that guide their business decisions (Nino-Zarazua and
Copestake, 2009).

Food security programe
In the developing countries, achieving household food security remains a critical objective
of rural development. This can be done in principle by escalating agricultural productivity
and off-farm income, thus improving the capability of households to steady their income
and food purchasing power. Food security, at the household level, is defined in its most
basic form as access, by all people at all times, to the food needed for a healthy life (Zeller
M. & Meyer L. (2002).

2.8 Conceptual Framework
The literature review in this study will cover the previous studies that have been done on
microfinance and its effects. However there will be need to have a clear understanding on
microfinance which will call for concise definition to microfinance concepts such as
microfinance itself, microfinance institutions, economic development and SACCOs.

27 | P a g e

Conceptual framework

Levels of impact

Types of Impact

Household

Economic

Community

Impact variable/indicator

Social

Economic variables
Income
Access to food
Household assets
Housing

Human capital
Skills
Education
Health
Empowerment
Confidence

Social capital
Social networks
Social mobility


28 | P a g e

CHAPTER THREE
METHODOLOGY
3.1Research Design
A descriptive survey design was adopted. Both qualitative and quantitative techniques
were applied. Descriptive research design is connected with providing solutions to the
problems. (Mugenda and Mugenda, 2003). This design was appropriate for exploring the
effect of micro-finance services on the people in Nairobi County.
3.2 Target population, Sample and Sampling Techniques
The population of this study comprised of all people accessing micro-finance services and
are beneficiaries within Nairobi County.
The sample size will be derived as follows;
n = Z2pq /d2

Where:
n = the desired sample size (if target population is greater than 10,000)
z = the standard normal deviate at the required confidence level.
P = the proportion in the target population estimated to have characteristic being
measured.
q = 1-p
d = the level of statistical significance set.
Assuming 50% of the population have the characteristics being measured, q=1-0.5
Assuming we desire accuracy at 0.05 level. The Z-statistic is 1.96 at this level
Therefore n= (1.96)2(.5)(.5)/(.05)2 =385
Because the population is less than 1000

The study however adopted a sample size of 384 as shown in the sampling frame above.
Beneficiaries of micro-finance in the County will act as the sampling frame. The study
treated people from on micro-finance as one cluster. It proceeded to pick individual
respondents by simple random sampling from the individual microfinance beneficiaries
and picked the interview groups in a similar way from the list of micro-finance.

29 | P a g e

3.3 Data type and Collection Method and Instruments
Primary and secondary data were used. Structured and Semi structured questionnaire and
interview were used to obtain information from the sample. The researcher gathered
secondary electronic and hard data from several books, research literatures, articles,
journals and micro-finance documents. Internet sources were also be used.
3.4 Research Instruments’ Reliability and Validity
3.4.1: Pilot Test

Pilot test assists in determining if there are flaws, limitations, or other weaknesses within
the interview design and allows for make necessary revisions prior to the implementation
of the study (Lokesh, 2004). Ledgerwood (2009) indicates that, pilot test is necessary for
testing the reliability of the instruments and the validity of the study. The desirability of
piloting research instruments is not solely to ensure that survey questions operate well but
also ensure that the research instruments as a whole functions well (Bryman & Bell,
2011).
3.4.2 Validity

Validity refers to the issue of whether or not an indicator (or set of indicators) that is
devised to gauge a concept really measures that concept (Bryman& Bell, 2011). Betty
(2006) defined validity as the extent to which differences found with a measuring
instrument reflect true differences among those being tested. There are two ways of
establishing the validity of a research instrument, that is, logic and statistical evidence.
Logic evidence implies justification of each question in relation to the objectives of the
study, whereas statistical procedures provide hard evidence by way of calculating the
coefficient of correlations between the questions and the outcome variables (Okio, 2005).


30 | P a g e

This study adopted content validity. Blaikie (2000) assert that, content validity of an
instrument is improved through expert judgment. To evaluate the content validity of a
research instrument, one must first agree on what elements constitute adequate average. If
the data collection instruments adequately covers the topics that have been defined as
relevant dimensions, the instrument is deemed to have good content validity (Cooper and
Schindler, 2011). To ensure content validity, the questionnaire was subjected to a panel of
peers to assess whether each measurement question in the questionnaire is essential, useful
or necessary (Saunders, 2009, Cooper and Schindler, 2011). Essential responses on each
item from each panellist are evaluated by a content validity ratio, and those meeting
statistical significance value are retained (Cooper and Schindler, 2011).
3.4.3 Reliability
Reliability refers to the consistency of the measure of concept (Bryman, 2012). It is
generally understood to be extent to which a measure is stable or constituent and produces
similar result when administered repeatedly (Mjomba, 2011 ). A measuring instrument is
reliable if it provides consistent results ; if the quality of reliability is satisfied by an
instrument, then while using it the researcher can be confident that the transient and
situational factors are not interfering ( Kothari, 2009) .
Cronbach’s alpha (α) was used to ensure that items have reasonably good internal
consistency and measure the same underlying construct consistently. Cronbach’s alpha (α)
is a coefficient (a number between 0 and 1) that is used to rate the internal consistency
(homogeneity) or the correlation of items in a test (Mjomba, 2011). It is used to test
internal reliability, and it essentially calculates the average of all possible split- half
reliability coefficients (Bryman, 2012). A computed alpha coefficient will vary between

31 | P a g e

1(denoting perfect internal reliability) and 0 (denoting NO internal reliability). (Bryman
and Bell, 2011). Reliability of 0.8 is typically employed as the rule of the thumb to denote
an acceptable level of internal reliability (Bryman, 2012).
3.5 Data Analysis and Processing
Data analysis usually involves reducing accumulated data to a manageable size,
developing summaries, looking for patterns and applying statistical techniques. Data
preparations includes editing, coding, and data entry and is activity that ensures the
accuracy of the data and their conversion from raw form to reduced and classified form
that are more appropriate for analysis. Editing detects errors and omissions, corrects them
where possible and satisfies that maximum data quality standards are achieved. Coding
involves assigning numbers or other symbols to answers so that the responses can be
grouped into a limited numbers of categories (Cooper and Schindler, 2011). Data entry
converts information gathered by secondary or primary methods to a medium of viewing
and manipulation. Statistical Package for Social Sciences (SPSS) version 18.0 was used
as a tool to analyse the data. SPSS version 18.0 provides better reporting capabilities
through improvement to the presentations graphics system (Khan, 2002).

The study employed descriptive statistics in the form of percentages, means and measures
of dispersion which allows for presentation of data in a more meaningful way and thus
simpler interpretation of data. Use of percentages is important because data is translated
into standard form with the base of 100 for easier translation and comparison and they
simplify data by reducing all numbers to range between 0 and 100 (Cooper & Schindler,
2003). The analysed data was interpreted and presented in frequency tables, graphs,

32 | P a g e

histograms, frequency polygons and pie charts. Responses from open ended questions
were coded, interpreted and their frequencies determined through cross- tabulations on
differences between respondents and the central tendencies of responses to each factor.
Cross - tabulation was used to determine if association exist between various variables.
Cross- tabulation is a technique for comparing two classification variables using tables
with rows and columns that correspond to the level or values of each variable’s categories
(Coopers and Schindler, 2011).
Analysis was descriptive in nature and normality test will be done for qualitative data to
test for normal distribution for all dependent and independent variables (Khan, 2002).
Normality is important in knowing the shape of distribution as the normality help to
predict dependent variable scores (Onumah, 2002). To test the normality of the data, the
study will use Kolmogorov-Smirnov One- Sample Test. It can be used with ordinal data to
test for the degree of goodness –of –fit between an observed set of ranked scores and some
theoretical distribution. This test checks the nature of a statistical population’s relative
frequency distribution. The theoretical distribution of population is the specified
cumulative frequency distribution which represents the H0 (Creswell, 2003).
Chi-square test of independence was done to establish existence of relationship between
the variables. The Chi-square test is used to test the significance of difference between the
two independent samples, when the data is in discrete frequencies. Usually the agreement
or disagreement about some opinion can be measured more effectively by using such test
(Creswell, 2003).


33 | P a g e

CHAPTER FOUR
RESULTS AND DISCUSSION
4.1 Introduction
The number of respondents who participated in this survey totaled to 94 with a response
rate of 97.92%. Respondents’ demographics characteristics are presented in the first part
of this chapter. The second part involved descriptive statistics to determine microfinance
awareness and impact in Kenya.

4.2 Respondents Profile
Majority of the study respondents (59.3%) were male with female being 40.7%. Most of
the study respondents (46.4%) were aged between 18 and 35 years while the minority
(9.1%) were over 60 years of age. Majority of the respondents were in employment
(33.8%) and business (33.2%). Most of the respondents (32.4%) were reported to earn a
monthly income of less than Ksh.10,000 while minority of the respondents (9.9%) were
earning above Ksh. 40,000.
Table 4. 1: Profile of respondents

Male
Female
18-35
36-45
46-60
Above 60
Employment
Farming
Trading

Frequency
What is your gender?
216
148
Your age
169
89
73
33
Where do you work?
123
72
121


Percent
59.3
40.7
46.4
24.5
20.1
9.1
33.8
19.8
33.2
34 | P a g e

Artisan works

48
13.2
Monthly Level of income (KSHs)
Less than 10,000 118
32.4
10,001-20,000
65
17.9
20, 001-30,000
78
21.4
30,001-40,000
67
18.4
Above 40,000
36
9.9
More than half of the respondents (59.8%) reported to have applied for a loan to finance
their business.
Figure 4. 1: Have you ever applied for a loan “borrowed capital” to finance your
business?

YES,
59.8%

NO,
40.2%

Respondents that reported to have applied for loan to finance their business were asked to
state where they had borrowed the funds and the majority (53%) had borrowed from
microfinance institutions while the remainder 47% had borrowed from banks.


35 | P a g e

Figure 4. 2: If yes where?

47%
53%

Microfinance
institution
Bank

Respondents that banked with MFI were asked to sate whether they received financial
services from any other MFI (more than one MFI) where majority (73%) reported to be
receiving financial services from more than one MFI.

Figure 4. 3: Do you obtain financial services from any other microfinance
institution?

27%
Yes
73%

No

To assess satisfaction of respondents with services provided by MFI, two questions were
asked. The questions were “Overall satisfaction with service provided by your
microfinance institution?” and “Observed service improvement in your microfinance
institution in past 5 months?”. Most of the respondents (46.4%) reported that were very
dissatisfied with services offered by their microfinance institution. Only 6.6% of the
respondents were very satisfied with the services offered by their microfinance institution.
Most of the respondents (33.5%) reported that their MFI had slightly improved its services

36 | P a g e

in the past five months, while 6.6% felt that the services were much worse.
Figure 4. 4: Satisfaction with services provided by MFI
46.4%
33.5%
26.6%
20.1%

19.8%
13.5% 13.5%

13.5%

Overall satisfaction

Much worse

Slightly worse

Almost same

Slightly better

6.6%

Much better

Very satisfied

Satisfied

Neutral

Dissatisfied

6.6%

Very dissatisfied

50.0%
45.0%
40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%

Service improvement

4.3 Level of development of microfinance institutions
To assess the level of development of microfinance institutions, respondents were
presented with statements on 5 point likert scale and asked to rank the statements by
indicating how much they agreed with the statements. The statements were ranked with
ranks ranging from “5- strongly agree” to “1-strongly disagree”. Averages for every
statement were calculated and the general average score evaluated. Scores were also
converted to percentages for easy interpretation. It is observed that the scores were also
distributed across gender of the respondents and level of income to provide comparative
results.

From the results, generally the respondents ranked lowly the statements on development
of their MFI in terms of the way the services were offered with an average score of 62.7%.

37 | P a g e

Howerver, respondents unanimously agreed with the statement that they served on first
come basis (77.2%). Service providers displaying name tags and counter satisfaction were
ranked the least with average scores of 50.6% and 54.6% respectively.

Figure 4. 5: Thinking of the most recent visit to your MFI, please tell me how
satisfied or dissatisfied you were with the following

I was served on a first come basis

77.2%

The service provider made eye contact

70.8%

I was addressed by my name

66.8%

I was greeted by the provider

60.0%

The service provider smiled at me

58.8%

Mean

I am very satisfied with counter
satisfaction

54.6% score=62.7%

The service providers displayed name
tags
0.0%

50.6%
20.0% 40.0% 60.0% 80.0% 100.0%

Great discrepancies in responses across gender and income were not observed.
Table 4. 2: Thinking of the most recent visit to your MFI, please tell me how satisfied
or dissatisfied you were with the following

gender

Monthly Level of income (“000”
KSHs

20,
Total Male Female < 10 10-20 30

30-40 Above 40

I was served on a first come
3.86 4.00 3.66
basis

3.90 3.89 3.79

3.87 3.81

The service providers displayed
2.53 2.67 2.33
name tags

2.55 2.58 2.50

2.48 2.53

I was addressed by my name

3.33 3.34 3.33

3.43 3.22


3.34 3.22 3.51

38 | P a g e

The service provider made eye
3.54 3.89 3.02
contact

3.54 3.49 3.53

3.58 3.53

I was greeted by the provider

3.00 2.89 3.17

3.04 3.11 2.90

2.97 2.97

The service provider smiled at
2.94 2.89 3.01
me

2.93 2.92 2.97

3.00 2.81

I am very satisfied with counter
2.73 2.89 2.50
satisfaction

2.74 2.78 2.74

2.66 2.72

4.4 Impacts of microfinance
To assess satisfaction with loan lending terms of microfinance institutions, respondents
were presented with statements on 5 point likert scale and asked to rank the statements by
indicating how much they agreed with the statements. The statements were ranked with
ranks ranging from “5- strongly agree” to “1-strongly disagree”. Averages for every
results.

From the results, the respondents were observed to rank the statements on MFI impact
quite lowly with the average score of 50%. Respondents unanimously agreed that MFI had
helped them develop their business with a score of 63%. Respondents strongly disagreed
with the statements on “Am happy with loan repayment conditions given-35%”, “Interest
rate offered was fair-37%” and “It was easy to be given loan-40%”.


39 | P a g e

Figure 4. 6: If you have ever applied for a loan for your business from microfinance,
please rate the following statements.
I can conclude that MFI has helped me
in developing my business

63%

The criteria used by MFI is easy to be
met

61%

I Would like to obtain another loan if
need be from MFI

59%

The criteria used by MFI in offering
loans is fair

55%

It was easy to be given loan

40%

Interest rate offered was fair

37%

Am happy with loan repayment
conditions given

35%

Mean
Score=50

0% 10% 20% 30% 40% 50% 60% 70%

Across the gender, male respondents were observed to rank most of the statements higher
than their female counterparts. Great discrepancies were not observed across income level.
Table 4. 3: If you have ever applied for a loan for your business from microfinance,
please rate the following statements

Gender

Monthly Level
(“000”KSHs)

Total Male Female 10
It was easy to be given loan

of

income

10 -20 20-30 30-40 40

2.01 1.67 2.50

2.00 1.97

2.03

2.03

2.00

The criteria used by MFI in offering
2.73 2.89 2.49
loans is fair

2.73 2.68

2.76

2.58

3.03

The criteria used by MFI is easy to
3.07 3.00 3.16
be met

3.06 3.14

3.15

2.94

3.00

I can conclude that MFI has helped
3.13 3.44 2.67
me in developing my business

3.14 3.12

3.12

3.16

3.06

I Would like to obtain another loan
2.93 3.11 2.67
if need be from MFI

2.95 2.94

2.94

2.88

2.94


40 | P a g e

Am happy with loan repayment
1.74 1.78 1.68
conditions given

1.73 1.71

1.76

1.73

1.78

Interest rate offered was fair

1.87 1.91

1.87

1.82

1.86

1.87 1.89 1.84

To assess impact of microfinance institutions, respondents were presented with statements
on 5 point likert scale and asked to rank the statements by indicating how much they
agreed with the statements. The statements were ranked with ranks ranging from “5strongly agree” to “1-strongly disagree”. Averages for every statement were calculated
and the general average score evaluated. Scores were also converted to percentages for
easy interpretation. It is observed that the scores were also distributed across gender of the
respondents and level of income to provide comparative results.

Respondents were observed to rank averagely most of the statements with an average
score of 55%. Respondents agreed with the statements; “Reasonable total time taken to
complete a transaction-73%” and “Staff knowledge of products and services-65%” on the
other hand the respondents disagreed with the statements; “Before any loan is given this
organization conducts analysis of the viability of the business-40%” and “Trainings are
provided to customers geared towards increasing their knowledge on available products
and services-47%”.


41 | P a g e

Figure 4. 7: How do you agree with the following statements about your
microfinance?

Across the gender, female respondents were observed to rank most of the statements
higher than their male counterparts. Great discrepancies were not observed across income
level.

Table 4. 4: How do you agree with the following statements about your
microfinance?

Gender

Monthly Level of income
(“000”KSHs)



10 - 2020
30

3040

40

42 | P a g e

Before any loan is given this
organization conducts analysis of the 2.00 1.78 2.32
viability of the business

1.98 2.03 2.04 1.94 2.00

Business analysis done for customers is
2.74 2.56 3.01
informed by organization objectives

2.74 2.83 2.78 2.76 2.47

Trainings are provided to customers
geared towards increasing their
2.33 2.56 1.99
knowledge on available products and
services

2.33 2.23 2.42 2.18 2.56

The organization has a structured way
2.67 2.89 2.34
for evaluating training

2.68 2.62 2.69 2.60 2.81

Customers do value training they
2.34 2.22 2.51
receive in this organization

2.34 2.37 2.31 2.45 2.14

Training done to this organization is
2.67 2.44 2.99
geared towards meeting customer needs

2.64 2.74 2.72 2.60 2.64

After training, the organization is
2.40 2.22 2.67
geared towards meeting customer needs

2.39 2.38 2.41 2.46 2.36

Within the organization there is an
enabling environment for transfer of 2.93 2.44 3.64
training to thrive

2.92 2.97 2.96 2.96 2.81

There is reliable or efficient Service at
2.74 2.56 3.00
the counter, dependable for solutions

2.73 2.80 2.73 2.73 2.67

Friendliness of the Counter staff,
3.01 2.89 3.19
approachable for solutions

3.00 2.98 2.94 3.25 2.81

Politeness of the Counter staff, listens
3.13 3.22 3.00
or understands needs

3.12 3.17 3.22 3.01 3.14

Reasonable total time
Complete a transaction

3.67 3.89 3.34

3.65 3.66 3.68 3.69 3.67

3.26 3.33 3.16

3.26 3.20 3.21 3.28 3.47

Staff knowledge
services

of

taken

products

to
and

4.5 Strategies employed by the microfinance institutions
To assess strategies employed by the microfinance institutions, respondents were
presented with statements on 5 point likert scale and asked to rank the statements by


43 | P a g e

indicating how important the statements were. The statements were ranked with ranks
ranging from “5- most important” to “1-not important at all”. Averages for every
results.

Respondents rated most of the statements a very important with the general average of
91%. Efficient telephone services (95%) and receiving quick and efficient counter service
(93%) were ranked as the most important factors. The least in importance acoording to the
respondents were “Being greeted by friendly and Courteous staff-87%” and “Privacy for
discussing private matters-88%”.


44 | P a g e

Figure 4. 8: How important are the following statements in relation to MFI

Efficient telephone services

95%

Receiving quick and efficient Counter
service

93%

Staff addressing you by name

92%

Having staff available to answer questions

92%

Having information on products and
services available

91%

Publication of service charges

91%

Having a clean and tidy environment

91%

Privacy for discussing private matters

88%

Being greeted by friendly and Courteous
staff

Mean
score=91%

87%
82% 84% 86% 88% 90% 92% 94% 96%

Great discrepancies in responses were not observed across gender and monthly income.
Table 4. 5: How important are the following statements in relation to MFI

Gender

Monthly Level
(“000”KSHs)


of

income

10 -20 20-30 30-40 40

Being greeted by friendly and
4.34 4.22 4.50
Courteous staff

4.33 4.34

4.32

4.37

4.31

Receiving quick
Counter service

4.67 4.56 4.83

4.65 4.68

4.69

4.64

4.69

4.53 4.67 4.34

4.53 4.49

4.54

4.57

4.56

Having staff available to answer
4.60 4.67 4.50
questions

4.60 4.63

4.60

4.58

4.56

Having information on products
4.54 4.44 4.67
and services available

4.54 4.57

4.53

4.51

4.53

Having a
environment

clean

and

efficient

and


tidy

45 | P a g e

Privacy
matters

for

discussing

private

4.40 4.44 4.33

4.40 4.40

4.42

4.36

4.42

Efficient telephone services

4.73 4.78 4.67

4.75 4.74

4.73

4.73

4.69

Staff addressing you by name

4.60 4.67 4.50

4.60 4.60

4.58

4.63

4.58

Publication of service charges

4.53 4.56 4.50

4.53 4.51

4.58

4.49

4.58


46 | P a g e

CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction
In this chapter, key findings of our study have been discussed. In addition conclusions
from the main findings have drawn and recommendations made. The goal of this research
was to study the microfinance awareness and impact in Kenya. The research was guided
by four objectives including: To determine the level of awareness to microfinance among
Nairobi County residents; To assess the level of development of microfinance institutions
within Nairobi County; To assess the impacts of microfinance to Nairobi County residents
and To determine the strategies employed by the microfinance institutions in Nairobi
County to meet their objectives.

5.2 Summary of major findings
Summary of the key findings have been discussed in the following subheadings:

5.2.1 Awareness to microfinance
Most of the study participants were poor people who reported to be a monthly income of
less than ten thousands Kenya shillings. Most of the participants reported to have ever
applied for a loan from MFI to finance their businesses. These results are consistent with
those of Gertler (2009) who found out that microfinance institutions target poor
individuals whose management of livelihood related to resource allocation, uncertainties
and risks cannot be completely separated from their decisions about their household’s
production. Results also revealed that most of the study respondents obtained financial


47 | P a g e

services from more than one MFI. This results contradicts those from Shahidur(1998),
who found out that most of the beneficiaries of MFI were loyal to one MFI. From these
results respondents were observed to be aware of the existence of MFI and their benefits
towards improvement of living standards especially of the poor members of the society.

Since microcredit programs from microfinance institutions are able to reach the poor at
affordable cost, the programs are in a position to ensure that the poor become selfemployed. From the results almost three quarters of the respondents were in business or
farming and were assessing the MFI services. This result is in agreement with the findings
of Yunus (1983) who reported that microcredit services are supported by microfinance
institutions so as to enable the poor access institutional credit hence playing an important
role in alleviating poverty.

However, the study participants reported dissatisfaction with MFI services. These results
contradicts those of Thailand, Kaboski and Townsend (2005) who found out that majority
of the MFI customers were satisfied with the services rendered when they evaluated the
impacts of microfinance institutions in rural Thailand.

5.2.2 Development of microfinance institutions
Respondents agreed with the statement that they were served on a first come basis at their
MFI and the service provider made eye contact whenever they served them. These results
are consistent with those of Karlan & Zinman (2009) who found out that MFI treated their
customers with a lot of respect to earn their loyalty. Contrary, the respondents disagreed to


48 | P a g e

the statements: - services provider greeting them before service; service provider smiling
at them; being very satisfied with counter services and the service providers displaying
name tags at work. These results contradicts the findings of Banerjee (2010) who found
out that MFI service providers were trained on handling their customers with a lot of
courtesy.

5.2.3 Impacts of microfinance
Most of the respondents agreed to conclude that MFI has helped them in developing their
business. These results are in agreement with those of Ghalib (2007) who observed that all
microfinance program targets one thing in general; human development that is geared
towards both the economic and social uplift of the people they cater for. Most of the
respondents also agreed to the fact that the criteria used by MFI are easy to be met. This is
consistent with Hossain (1988) findings that MFI procedures are simple and customer
friendly.

Most of the respondents disagreed with the statements that it was easy to be given loan
from MFI which concurs with Mushimiyimana (2008) who observed that lack of collateral
and high interest rates are an impediment to access to loans from Micro finance
institutions by the majority. Respondent who had borrowed from MFI in the past
disagreed to being interested in obtaining another loan if need be from MFI. This is in
disagreement with Mushimiyimana (2008) who found out that those who secured funds
from such institutions spent bulk of their returns on investment in paying the cost of


49 | P a g e

capital, thus leaving them with none or little savings for reinvestment which makes them
borrow again and again.

Respondents disagreed with statement that interest rate offered by MFI was fair. In
addition most of the respondents argued that they were not happy with loan repayment
conditions given by the MFIs. These results contradicts findings of Olaitan (2001) and
Akanji (2001) who found out that products and services that make microfinance
institutions different from large financial institutions included increased provision of
credit, increased provision of savings, repositories and other financial services to low
income earners or poor households at affordable interest rates and friendly repayments
conditions.

5.2.4 Strategies employed by the microfinance institutions
Respondents viewed efficient telephone services, receiving quick and efficient counter
service, having staff available to answer questions, staff addressing you by name,
publication of service charges and having information on products and services available
as very important strategies employed by MFI. This results are consistent with UN
(20005) findings that in many cases, basic business skills accompany the provision of
micro loans to improve the capacity of the poor to use funds.

Most of the respondents did not value Having a clean and tidy environment and Privacy
for discussing private matters as strategies employed by MFI which was consistent with


50 | P a g e

Anandet.al. (2005) findings that most MFI interact with hundreds of customers daily
making privacy for each of the customer a challenge.

5.3 Conclusion
From the above findings the following conclusions were arrived at:
Poor people often had the perception that they do not have opportunities to influence their
inferior situation; however micro-finance with neo-liberal priorities has given them selfconfidence and also concrete tools to improve their lives. On the other hand, MFIs
approach is focused on individual poor entrepreneurs who to some extent have enabled
governments, NGOs and other responsible agents escape their duties and shift the
responsibility onto the MFIs. MFIs typically focus on people’s individual aspects, such as
engagement in economic activities, productivity and individual choice which has
empowered the poor members of the society.

The expansion of the informal sector cannot continue infinitely, and not all people are able
to be entrepreneurs. A sound national economy requires also the formal sector of the
economy or the traditional industrial sector. Micro-finance cannot solve all the problems
women and micro-entrepreneurs in the informal sector face. Some of these problems stem
from more global socio-economic problems and inequalities. There are reasons for
poverty both on the micro- and the macro-levels. Thus, eradicating poverty requires both
micro- and macroeconomic measures. Micro-finance is a micro-economic measure; in this
study macro-economic measures were not considered. On the micro-level micro-finance
has some advantages compared to more traditional and welfare-oriented development
intervention measures.

51 | P a g e

A micro-finance programme based on explicit empowerment strategies can empower both
women and men by giving them resources for developing their work and enterprises
towards a means of liberty and self-fulfilment. The policies of developing micro-finance
and the informal sector should have a gender perspective and the gender impact should be
studied. Even though the informal sector has been a form of exploitation or a feature of an
unsound economy, for the poor it provides opportunities and often their only source of
income. Thus governments should promote these opportunities and struggle against the
exploitative features of the informal sector.

Furthermore, results of this research portray that a significant portion of the respondents
deem the interest rate of micro-credit is reasonable despite the fact that the interest rate of
micro-credit is higher than commercial banking. Yet microfinance is becoming popular
day by day among the poor people. The major reasons that can contribute to such
popularity of MFI can include the fact that all poor people can get loan from MFIs without
any collateral. In addition, the loan taking procedure is less complex than that of
commercial banks. Furthermore, from the findings most of the respondents were not
aware of the interest rate of traditional banking system owing to not having easy access to
information. What’s more! They cannot compare the interest rates between the MFIs and
conventional banks because of lack of education. Another underlying reason is that the
services of conventional banking are not available in the villages.

To sum up, it can be noticed from our overall analysis that there is significant impact of


52 | P a g e

microfinance activities on improvement of the living standard of the family not only in
economic term but also in social term. Amazingly, the relation between different factors of
society and family became evident and clear, which were being neglected and not thought
about during the period of existence of only conventional banking system. From our study
and research, we have come to the conclusions that there is a noticeable and positive
impact of microfinance activities on the living standards, empowerment and poverty
alleviation among the poor people in the society.

5.4 Recommendations
From the study results the following recommendations were drawn:
1. As MFIs grow and some of them become part of the regulated financial system,
banking authorities are facing the need to learn more about this important financial
activity. In order to develop appropriate norms and regulations, policy makers
must understand how microfinance differs from conventional banking and, in order
to supervise microfinance effectively, bank supervisors need specialised training
on assessing the performance of microfinance institutions (MFIs).

2. There is a geographical constraint which needs to be overcome, especially in rural
areas. The physical infrastructure in the rural areas is perhaps the most critical
support structure currently lacking. Groundwork has been done by some MFIs to
think through what the main enabling factors are, one of them being enhancement
of the payment systems in rural areas.

3. Access to capital is a major gap. The Central Bank does not recognize the loan

53 | P a g e

book as collateral. Commercialisation moved the industry but brought with it its
own problems (e.g., donor credit programs that were localised and are in some
ways on their own with few grants available and without capital to grow). Most
MFIs will be unable to raise the KSH100 million minimum capital requirement to
become a deposit taking institution under the new Microfinance Bill and it will not
be easy to meet supervision standards. Donors could help develop the local capital
market for microfinance, including linking MFIs to banks so that they are not all
dependent on deposits for capital.

4. The lack of adequate MIS and sector data. Most MFIs have just gone through or
are going through an exercise of improving their MIS systems, some with more
hiccups than others. AMFI intends to undertake initiatives to fill the void of the
lack of information on the sector, including basic demand and supply estimation.

5. Credit referencing would strengthen the sector and is definitively needed. Survey
findings indicate that almost all microfinance clients have loans from other MFIs
as well. Although this happens in some other markets, the prevalence and scale is
particularly high in Kenya.

5.5 Areas for further research
The current study was based on small sample size taken from only Nairobi County.
Therefore, the results cannot be generalized to other counties of Kenya especially in the
analytical terms. Further research done on a bigger scale with large sample size could shed
light on how microfinance activities affect the average living standard of people of Kenya,

54 | P a g e

analytically.
The current study did not consider the reasons of motivation to join the microfinance
program. Another area that has not been investigated is the difficulties that the borrowers
face to repay the loan. These areas deserve to be studied by future researchers in the field.

Future research should also undertake an in-depth study on the microfinance sector,
including a formal estimation of total supply and demand estimation for the whole
microfinance sector (enterprise and non-enterprise). Results from such a study shall assist
the various public agencies involved to develop adequate prudential norms and
enforceable guidelines as well as reporting procedures and help them liaise with MFIs.


55 | P a g e

REFERENCES

Books
1. Blaikie, N 2000, Designing social research: the logic of anticipation, Cambridge
University Press, Cambrige.
2. Creswell, JW, 2003,Research design: qualitative, quantitative, and mixed method
sapproaches, 2nd edn, Thousand Oaks, Calif.: Sage Publications.
3. Dornyei, Z, 2007,Research methods in applied linguistics,Oxford University Press,
New York.
4. Khan, BH, 2005,Managing e-learning: Design, delivery, implementation and
evaluation, Idea Group Publishing, Hershey, PA
5. Creswell, JW, 2005,Educational research: Planning, conducting, and evaluating
quantitative and qualitative research, 2nd edn, Upper Saddle River, NJ: Pearson.
6. Lokesh, K, 2004,Methodology of educational research,Vikas Publishing Pvt Ltd,
New Delhi.
7. Okio credit, 2005,Noncredit financial services and Micro credit in Nigeria, a
textbook, 2nd edn,pg 131-142, Bolubestway Press limited, Nigeria.
8. Ledgerwood, J, 2009,Microfinance handbook: An institutional and financial
perspective, the World Bank publications, USA.
9. Berenbach, S, & Guzman D, 1994,‘The Solidarity Group Experience
Worldwide’,in The New World of Microenterprise Finance, edited by M. Otero
and E. Rhyne. KumarianPress, West Hartford CT.
10. Schreiner, M &Colombet H, 2001,Microfinance, Regulation, and Uncollateralized
Loans to Small Producers in Argentina, in Douglas R. Snow, Terry Buss, and


56 | P a g e

Gary Woller (eds) Microcredit and Development Policy, Nova Science Publishers:
Huntington, NY, ISBN 1–59033–001–3.
11. Otero, M, 1999,The New World of Micro Enterprise Finance, Kumarion Press, W.
Hartford, CT.
12. Mugenda OM &Mugenda AG, 2003,Research Methods, Quantitative &
Qualitative Approaches,Acts Press Publication.
Thesis
1. Betty K, 2006,Rural Financial Services in Kenya What is working and Why?
Inaugural dissertation, Egerton University.
2. Joy M, 2007,The impact of microfinance on rural poor households’ income and
vulnerability to poverty: case study of Makueni District, Kenya. Phd Thesis,
University of Nairobi. Kenya. Published
3. Khan, F, 2005,Microfinance and Development, Masters Thesis, Umeå School of
Business and Economics (USBE), Sweden.
4. Mjomba E, 2011,Micro-finance and financial empowerment of women in Kenya.
Phd Thesis, University of Nairobi. Unpublished.
5. Sebstad J, Neill C, Barnes C & Chen G, 1995, Assessing the impact of
microenterprise interventions: a framework for analysis. Washington, DC,
USAID.


57 | P a g e

Journals
1. Banerjee, A., Duflo, E., Glennerster, R. &Kinnan, C, 2010,The miracle of
microfinance? Evidence from a randomized Evaluation. Bureau for Research and
Economic Analysis of Development.
2. Brennan, D, 2008, One mission, myriad benefits from microfinance institutions.
Microfinance

Reviews.

Available

at:

http://nuwireinvestor.com

/articles/

microfinance-institution-reviews-51486aspx. (Accessed on 03/08/2013).
3. Bryman, A & Bell, E, 2003, Business Research Methods”, Oxford University
Press Oxford, UK
4. Cameron AC, &Trivedi PK, 2005,Microeconometrics: methods and applications.
Cambridge: Cambridge University Press.
5. Collins D, Morduch J, Rutherford S& Ruthven O, 2009,Portfolios of the poor:
how the world's poor live on $2 a day. Princeton: Princeton University Press.
6. Cooper, Donald R. Schindler &Pamela S. ,2003, “Business Research Method”, 8th
Edition, McGraw-Hill Higher Education, Boston, USA
7. Gertler P, Levine DI, Moretti E, 2009, Do microfinance programmes help families
insure consumption against illness? Health Economics, 18(3): 257-273.
8. Kaboski, JP& Townsend, RM, 2005, Policies and Impact: An Analysis of VillageLevel Microfinance Institutions. Journal of the European Economic Association,
3(1), pp.1–50.
9. Karlan, D &Zinman, J2009, Expanding Microenterprise Credit Access: Using
Randomized Supply Decisions to Estimate the Impacts in Manila. Oxford
Journals, Review of Financial Studies, Society for Financial Studies, vol. 23(1),
pages 433-464
10. McKernan SM 2002, The impact of microcredit programmes on self-employment
profits: do non-credit programme aspects matter? Review of Economics and
Statistics, 84 (1): 93-115.
11. Morduch J 1995, Income soothing and consumption smoothing. Journal of
Economic Perspectives. 9(3): 103-14.


58 | P a g e

12. Nino-Zarazua M &Copestake J 2009, Financial inclusion, vulnerability and mental
models: from physical Access to effective use of financial services in a low income
area of Mexico City. Savings and Development. 32(4): 353-80.
13. Rutherford S 2001,The poor and their money. New Delhi: Oxford University
Press.
14. Saunders M, Lewis, P, &Tronhill, A 2007, “Research Methods for Business
Students”,Fourth Edition, Pearson Education Ltd., p. 32
15. Schreiner M 2010, Seven Extremely Simple Poverty Scorecards, Enterprise
Development and Microfinance, Vol. 21, No. 2, pp. 118–136.
16. Silverman, D 1997,“Qualitative Research: Theory, Method and Practice”,
SAGEPublications Limited, London, UK
17. Simeyo, O., Lumumba, M., Nyabwanga, R. N., Ojera P &Odondo, A.,J 2011,
Effect of Provision of Microfinance on performance of micro enterprises: A study
of Youth micro-enterprises under Kenya Rural Enterprise Program(K-REP), Kisii
County, African Journal of Business Management Vol. 5(20), pp. 8290-8300 ISSN
1993-8233 ©2011 Academic Journals
18. Sinha H 2008,Microcredit: impact, targeting and sustainability. IDS Bulletin,
volume 29, issue n°4.

Papers.
1. CGAP ,2004, Scaling up poverty reduction: Case study for Microfinance,World
Bank Financial Sector Network., Washington , D.C.
2. Graheem Bank 2000,Annual report on of the GrameenBank , Bangladesh, Dhaka.
3. Kodhek, GA 2003,Feast and Famine: Financial Services for Rural Kenya,
Working Paper, Tegemeo Institute of Agricultural Policy and Development.
4. Onumah GE 2002, Improving access to rural finance though regulated warehouse
receipts systems in Africa. A case study paper presented at an international
conference on best practice”. Malden, MA. Polity Press. Blackwell

59 | P a g e

5. Schreiner, M 2003,The Performance of Subsidized Microfinance Organizations—
BancoSol of Bolivia and the Grameen Bank of Bangladesh, Lewiston, NY: Edwin
Mellen Press, ISBN 0–7734–6730–0
Online sources
1. Bruhn, M. & Love, I, 2009,The economic impact of banking the unbanked :
evidence

from

Mexico.

The

World

Bank.

Available

at:

http://ideas.repec.org/p/wbk/wbrwps/4981.html
2. Coetzee, G., Kamau K, & Andrew, N, 2003, Taking Banking Services to the
People:

Equity’s

Mobile

Banking

Unit.

Nairobi,

Kenya:

MicroSave.

www.seepnetwork.org/files/2084_Equity_Mobile_Banking_Unit_Coetzee_et_al.1.
doc
3. Hossain, M 1988,Credit for alleviation of rural poverty: the Grameen Bank in
Bangladesh. International Food Policy Research Institute (IFPRI). Available at:
http://ideas.repec.org/p/fpr/resrep/65.html
4. Khandker, R 1998,Fighting Poverty with Microcredit : Experience in Bangladesh
e-book.

World

Bank.

Available

at:

http://www.serc-

china.org/upfiles/200910/20091026164639913.pdf.
5. Mustafa, S. et al. 1996,Beacon of Hope: An impact assessment study of BRAC’s
Rural Development Programme. BRAC Research and Evaluation Division.
Available

at:

http://www.bracresearch.org/publications_details.php?scat=29&tid=95&v=
6. United Nations, 2005,Building inclusive financial sectors to achieve the
millennium

development

goals.

Available

at:

www.internationalyearofmicrocredit2005.com . (accessed on 03/08/2013).


60 | P a g e

7. Zaman, H1999,Assessing the impact of micro-credit on poverty and vulnerability
in

Bangladesh.

The

World

Bank.

Available

at:

http://ideas.repec.org/p/wbk/wbrwps/2145.html


61 | P a g e

APPENDIX: QUESTIONNAIRE
General Questions

1. What is your gender?
a) Male
[
]
b) Female
[
]

2.
a)
b)
c)
d)

Your age is between
18-35
[
]
36-45
[
]
46-60
[
]
Above 60 [
]

3.
a)
b)
c)
d)
e)

Where do you work?
Employment
[
]
Farming
[
]
Trading
[
]
Artisan works
[
]
Others (Please specify)………………………..

4. Have you ever applied for a loan (“borrowed capital”) to finance your business?
a) Yes [
]
b) No [
]
If yes where?
a) Microfinance institution [
]
b) Bank
[
]
c) others (specify)………………………….

Level of awareness of microfinance
5. What is the name of your microfinance institution?


62 | P a g e

Dissertation on the Impacts of Microfinance in Kenya final report

Dissertation on the Impacts of Microfinance in Kenya final report

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

Similaire à Dissertation on the Impacts of Microfinance in Kenya final report

Similaire à Dissertation on the Impacts of Microfinance in Kenya final report (20)

Plus de Fred Mmbololo

Plus de Fred Mmbololo (20)

Dernier

Dernier (20)

Dissertation on the Impacts of Microfinance in Kenya final report