MICROFINANCE INTERVENTIONS ON RURAL AND URBAN HOUSEHOLD POVERTY LEVELS IN KISII COUNTY, KENYA

Abstract

Poverty is a global phenomenon that affects nations, continents and individuals differently. It afflicts individuals in different depths and levels at different times and stages of existence. This study sought to establish the influence of microfinance interventions in the management of rural and urban household poverty levels in Kisii County. The objectives were to: compare financial services on rural and urban household poverty levels, compare influence of non-financial services on rural and urban household poverty levels and examine collateral challenges rural and urban households face in accessing microfinance interventions. Group lending model was used and a comparative survey research design adopted. Target population was 50 credit officers of microfinance institutions and 6,667 customers totaling to 6,717. Respondents were stratified and thereafter a simple random sampling technique used to select 130 respondents for the study. Structured questionnaires were used to collect data from the selected sample. The data was analyzed using both descriptive and inferential (ANOVA) statistics. The study found that loans had greater influence on rural respondents in meeting health services, paying school fees for their children and expanding their businesses. As for the urban respondents loan played a vital role in starting business and improving their living standards. Further, savings is a requirement by the microfinance institutions though it is either compulsory or voluntary. However, medical insurance is not offered to clients {ANOVA p= 0.047}. Findings showed that non-financial services had a greater influence on urban households than to rural households in training on bookkeeping, entrepreneurial skills, financial statement, budgets and consultancy services {ANOVA p=0.043}. Equally, the study found that security is a requirement when one borrows a loan and neither guarantors nor chattels alone can be used as security. In addition, title deeds and logbooks are not the only security used by the MFIs, security influences credit given to clients and can be sold to clear outstanding balance if clients fail to repay, informal deeds are not accepted {ANOVA p=0.022}. The study recommends that the institutions should offer non-financial services like training on how to prepare financial statements and business plans, marketing services and consultancy services to the clients to enable them maintain proper records and run their businesses efficiently.