Factors influencing access to micro-finance credit by young women entrepreneurs’ projects in Athi-river, Machakos county,Kenya.

Abstract

Entrepreneurship is actually progressively recognized as a vital driver on economic growth, productiveness, creativity as well as career, which is generally recognized as being essential area of economic dynamism. Up to the recent past, the significant numbers of enterprises were owned by men. As such it was not possible to see womenowned businesses worldwide particularly in developing countries. Microfinance credit has now become a major tool of development and is fast developing as an international industry with its own trade associations. Microfinance credit seeks to provide practical, workable solutions to the deep-seated challenges of poverty particularly to women who for longtime they have been sidelined with perception that they are inferior. The purpose of this study was to investigate factors influencing the access to microfinance credit by young women entrepreneurs in Athi River Sub-County. The study was guided by four objectives which were; to assess whether interest rates charged, level of literacy, number of lending institutions and demand for collateral security have any influence on access to micro-finance credit among young women entrepreneurs in Athi River. The study employed descriptive research design. According to Athi-River Municipality (2013), there are 270 enterprises run by women under 35 years. This study adopted Krejcie and Morgan theory of determining sample size thereby acquiring a sample of 165 respondents. The study relied mostly on primary data where self-administered questionnaires were utilized for gathering data. Data collected purely was quantitative. Quantitative data was coded and entered into Statistical Packages for Social Scientists and analyzed using descriptive statistics. The findings are presented inform of frequency tables and explanation is in prose. The study established that majority of the young women entrepreneurs had borrowed money from the nearby micro-finance institutions the loan accrues interest rate imposed by the financial institutions as well as demand for collateral security and they found it unreasonable. The study also found out that most of the entrepreneurs had attained secondary school certificate as their highest academic qualification and was a determinant for uptake of loans. Finally, the study established that licensing of more financial institutions would encourage uptake of loan among women entrepreneurs since uptake of loan is low and this would influence business performance. The study concluded that lack of collateral security has become a constraint to young women entrepreneurs accessing loans since most of them may not have deeds to capital assets to present as security against the loans and that most of young women entrepreneurs have had loans applied for rejected due to failure to produce collateral security. Finally, the study recommends that for the under-privileged women to access credit, alternative approaches on collateral security requirements get adopted through the emphasis on social capital tools such as trust and network relations for securities. It also recommends that the government offers deliberate and targeted training to the young women entrepreneurs in order to encourage entrepreneurship culture hence creation of job opportunities. Government should also ensure policies that are friendly to creation of more lending institutions.