Influence of micro-finance institutions group lending mechanism on enterprise development of rural women in Transnzoia west sub-county, Kenya

Abstract

Group lending has received a great attention from economists and policymakers for its successful delivery of credit to poor borrowers and its role in alleviating poverty in the developing countries. While there is a host of theoretical models explaining the success of group lending, empirical research has lagged behind. The focus of this study was to establish the influence of micro finance institutions group lending mechanism on enterprise development among rural women in TransNzoia West sub-county, Kenya. The objectives of the study were to: evaluate the influence of joint liability on enterprise development of rural women; examine the influence of training on rural women enterprise development of rural women; determine the influence of the group representation on rural women enterprise development of rural women and assess the influence of the loan size on rural women enterprise development of rural women. The study utilized a descriptive survey research design. The study targeted the rural women development groups that access loans as a group within Trans Nzoia West County. The total target population comprised of 781 members and by using Krajcie and Morgan table of determining sample size, the sample size consisted of 260 respondents. There was also 8 key informants from the micro-finance institutions within TransNzoia County. Both open-ended and close-ended questionnaires were used, as well as an interview guide for the key informants. In this research, descriptive statistics was used. The questionnaires were edited first for accuracy, and completeness. The study used frequency distribution and percentages, and computer software-Statistical Package for Social Scientists (SPSS) as a tool of analyzing data, and to establish relationships between variables. The analyzed data was tabulated for presentation. The study established that joint liability mechanism was an effective mechanism of ensuring that borrowed funds were appropriately utilized mainly towards the development of their enterprises, and through it women group members had acquired various business linkages and networks. The study also established that most of the women group members had not attended any attended any technical/ entrepreneurial training on group borrowing for enterprise development despite it having an influence on the growth of the women owned enterprises in the Sub-County. The study further established that that through the numbers of the women group members they were able to easily access loans. Lastly, the study established that women groups got between Kshs 30,000 and Kshs 40,000 which was encouraging since such an amount could provide the women group enterprise with a strong base for development. Women groups‘ lack of collateral limited their access loans to initiate businesses. The study recommends that there should be some enhanced and standardized training for all the women group members who intend to develop enterprises. The loans should be remodeled towards more of individual lending than group lending since at enterprise development members in a group cannot have the same thinking level, attitude and commitment as there are personal differences. It is hoped that, the findings of this study will assist the government policy makers to focus more on micro finance institutions as a means of promoting development of women group enterprises as means of uplifting the socio-economic status of women in Kenya.