The Impact of Microfinance on Economic Empowerment Of Beneficiary Households within Kisumu Municipality
ALAMBO, A. Alphonce
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Microfinance has become very important in global poverty reduction debates. The popular assumption is that enabling poor households access to credit helps households begin micro entrepreneurship which would enable them improve their incomes and, eventually escape poverty. Evidence from research so far has been scanty, and many results have been highly contested. Studying the impact of microfinance intervention is important to assess its viability on poverty reduction. The study focused on the impact of MFls programs at household and enterprise levels within Kisumu Municipality. The study sought to examine the services offered by micro finance institutions toward s economic empowerment of the poor in Kisumu Municipality; assess the nature and change of wealth in the beneficiary households as a result of the delivery of micro finance services; and examine the impact of micro finance on productivity of the enterprises in the Municipality. The study population for this study composed of the treatment group and the control group with the basic principle being to compare these two groups along different impact indicators and to identify any differences. The target population under the study constituted of 1,820 respondents from which a representative sample of three hundred of eighteen. Stratified systematic sampling was used to draw 210 and 108 representative samples from treatment and control groups respectively. The research employed the use of applied descriptive and quantitative research design. The methodology used direct observation, and both open and closed questionnaires distributed to the respondents within the study area. Secondary data were also gathered from different relevant publications. The study applied frequencies, averages and percentages as the main statistical tools. The study revealed that the services offered by microfinance institutions to clients in Kisumu Municipality included microcredit, savings, training, and monitoring and supervision. The study further analyzed the impact of micro finance to the poor clients based on economic indicators at the household and enterprise levels. The study findings revealed that microfinance programs have significantly (p<O.OJ) improved the households' income and savings, asset ownership and housing condition of the MFI clients in the Municipality at 95% confidence interval. Additionally, it significantly (p<O.OJ) increased enterprises' production capacities, net profit, and employment opportunities. However, the research findings did not show any significant impact of microfinance programs on households' access to education and household expenditure (p?.05). The study recommended that Microfinance Institutions should promote market segmentation to enable poor people to acquire more assets, increase household welfare, and to better cope with vulnerability. MFls should further support market research for designing new and varied financial products to promote customer retention rates, client satisfaction levels and impact. The study also recommended that MFls should establish more links with microfinance sector, academic and research institutions to disseminate key lessons learnt in the Municipality. Therefore, strengthening the operations and development of MFIs in Kisumu Municipality will be an appreciated to realize the objectives of the Poverty Reduction Strategy of the Kisumu County. The study was of great significance in highlighting the role of microfinance institutions in the empowerment of the poor through the provision of microcredit, entrepreneurial training, monitoring and supervision.