Social Capital and User-owned Microfinance Organizations: Savings, Loans, and Associational Life in RoSCAs and ASCAs

Abstract

. Various studies, literature, and the resultant policy discussions on microfinance exist, especially on the economic aspects of microfinance organizations globally, and particularly in Kenya. Yet, the precise ways in which the underlying socio-cultural institutions influence participation in user-owned microfinance organizations remain unknown. The focus of this article is on the socio-cultural context in which user-owned microfinance systems operate. The objectives of this article are twofold: (a) to identify and analyse the underlying socio-cultural institutions that influence savings and borrowing behaviour in user-owned rnicrofinance organizations; and (b) to identify and analyse the underlying socio-cultural institutions that influence the associational life of members in these organizations. The central assertion underlying the analysis in this article is that local cultures continue to give meaning to economic activity as well as to ins pire participation in Rotating Say ings and Credit Associations (RoSCAs) and Accu mula ted Savings and Credit Associations (ASCAs). The discussion is based on data collected from a broader study carried out in Rarieda division, Bondo district, on socio-cultural institutions influencing participation in user-owned microfinance organizations through a random survey of seventy-two RoSCA and ASCA mem¬bers sampled (rom twelve organizations; three different sets of focus group discussions from each of the following categories: leaders, women members, and men; and key informant interviews. The article concludes, firstly, that intra-group ties have to be stronger than the ties outside the group for the continuity and survival of these organizations. Secondly, the commitment that the members have towards these groups is conditioned by institutions of the society in which they live