Assessment of rural financial institutions as tools for alleviation of rural Poverty: a case of karia catholic church self-help group in kiambu district

Abstract

The main objective of this research was to assess the extent to which rural financial institutions (RFIs) are effective as tools of rural poverty alleviation. This objective was to be achieved through determining the relationship between the RFI services and rural poverty in terms of income levels, literacy levels, accessibility to health services, and the income generating activities financed through loans from th~ RFIs. A case of Karia Catholic Church Self Help Group (KCCSHG) was selected to provide data on how RFls operate, the services they offer to their members and the strengths and weaknesses that affect them. The design employed to meet the objectives was the survey method. This method was chosen because of its ability to capture first hand information on how members of the RFI have benefited from their activities. Three instruments of data collection used were questionnaires, which were administered using the leave-and-pick method. Secondly, interview schedules were used in the acquisition of information from the management. Observation was the last method used in the verification of data acquired from the questionnaires and in getting information that would otherwise be difficult to describe using the questionnaires, such as the standards of living of the members of the RFI. The validity and reliability of the data instruments used was assured by taking a pilot study. Triangulation was also used in order to test validity of the answers given to certain pertinent questions like income levels before and after the investment of loans. Through the findings of the research, RFls can be classified among the most effective tools of alleviating rural poverty. Of the total number of 500 people interviewed, 96% of them experienced and increment in their income levels after investing the loans acquired from KCCSHG. Education levels and access to health care also improved due to the improved income levels. RFls have a common weakness of over reliance on the Government to provide extra funds to finance their operations, while their major strength lies in the mutual trust that members have with each other and their finances. Several recommendations have been given at the end of this research, such as ensuring that the communication lines between the institutions and the clients are always open to both sides. Confidentiality of clients' financial information is crucial for maintenance of security. Another recommendation is the adoption of technology in all organizational processes would not only speed up service delivery but will also improve effectiveness and efficiency. Lastly, better and stringent methods of loan follow up should be formulated to ensure prompt loan repayment.