An evaluation of the factors influencing access to credit from micro-finance institutions: a case of Kinango District Kenya

Abstract

According to World Bank estimates, around one in every .five of the world population lives on less than $1 a day (extreme poverty) and around one or two live on less than $2 a day (moderate poverty). Poverty is characterized by the inability of individuals and households to acquire sufficient resources to satisfy their basic needs. In Africa, more than 40% of its 750 million people live below the internationally recognized poverty line ofSI a day, and the evidence is even more worrying for sub-saharan Africa. The number of the poor has grown relentlessly, causing Africa's share of the world's absolute poor to increase from 25% to 30% in the 1990s (UNDP, 2001 and 2002).

In the Kenyan context, available data indicate that over 56% of the Kenyan population is absolutely poor. Though poverty in the urban areas is growing fast, poverty in Kenya still remains overwhelmingly a rural phenomenon (Republic of Kenya, 2004). Major characteristics of the poor include landlessness and lack of education. This study was therefore aimed at investigating the key factors that inhibit the poor from accessing credit in the midst of many Micro-finance institutions as tools for poverty alleviation, thereby leading to increased poverty.

The study was carried out in Kinango District in the Coast province of Kenya. The sample of the study comprised 200 respondents drawn from the four divisions (Kaserneni, Kinango, Ndavaya and Samburu) that make the district. Structured questionnaires were used to collect primary data from the sample respondents. The data collected from the field was analyzed using descriptive statistical measures, namely frequency distribution and cross tabulation. Once analyzed, interpretation and discussion of the results was done after which conclusions and relevant recommendations were made.

The findings of this study are essential in further unearthing the root causes of low accessibility to credit by the poor from Micro-finance institutions. This will therefore help micro-finance programmes to be more focused in their approach and address the inhibiting factors that cause low accessibility to credit, hence increased poverty in the midst of many Micro-finance institutions.