FINANCIAL FACTORS DETERMINING MICRO-LOAN UPTAKE BY WOMEN ENTERPRISE GROUPS IN NAKURU EAST CONSTITUENCY, NAKURU COUNTY

ABSTRACT 
Acknowledging that women had been marginalized in access to formal financing, the government of Kenya introduced the Women Enterprise Fund (WEF) to provide an alternative, easily accessible and affordable finance. However despite the efforts made by the government, most women enterprises still are not accessing the funds as anticipated in this government endeavors. There has been concern among various stakeholders that even though the government has availed affordable funds for women with minimal regulatory factors, some of these funds lie idle with lenders therefore the study sought to determine financial factors determining micro-loan uptake by women enterprise groups in Nakuru East Constituency, Nakuru County. Specifically the study sought to establish the extent to which financial characteristics, lending procedures, financial literacy and loan repayment policies affect micro-loan uptake by women enterprise groups in Nakuru East Constituency, Nakuru County. The research employed descriptive research design. The target population was 322 women groups in Nakuru Town East Constituency. Nassiuma’s formula was employed to sampled 82 groups. Primary data was collected through semi structured self-administered questionnaires. Pilot testing was conducted on eight selected women groups from each ward which were not included in the actual study population. Both descriptive and inferential statistics was used to analyze data. Multiple regression analysis was used as the principal data analysis method. From the findings the researcher concluded that the group maintains and keeps a list of their assets and liabilities. From the findings all the null hypotheses were rejected and conclusion made that financial characteristic, lending procedures, and financial literacy and loan repayment policies has a significance influence on uptake of micro-loans by women enterprise groups in Nakuru East Constituency, Nakuru County. From the finding the researcher recommended that MFIs and governments should design products specifically tailored to meet the needs of women so as to address their challenges. Women should be equipped with financial literacy skills; this can be through conducting workshops to teach these women how to start and maintain their businesses in proper financial state at all times. The study suggested that further research should be carried out to assess the effect of group dynamic on loan repayment.

CHAPTER ONE 
INTRODUCTION 
Background of the Study 
Micro loans refers to small-scale financial services for both, credits and deposits that is provided to people who operate small or micro enterprises, where goods are produced. Micro credit is not limited to credit and savings it also includes micro insurance and remittance services. It is seen as a basic requirement for any economic activity in the present economic condition. Micro loan is deeply concerned with the poor and those who have limited or no access to formal financial services (MIX, 2015). Microloan is a component of microfinance in that it involves providing credit to the poor, but microfinance also involves additional non-credit financial services such as savings, insurance, pensions and payment services (Okiocredit, 2015). The difference between microcredit and the subsidized rural credit programmes is that microcredit insisted on repayment, on charging interest rates that covered the cost of credit delivery and by focusing on clients who were dependent on the informal sector for credit. 

Micro loan uptake refers to the possibility that individuals, groups or enterprises can access financial services, including loans, deposits, payment, insurance and other risk management services. Loan uptake is the absence of price and non-price barriers in the use of financial services (World Bank, 2015). According to Beck & Honohon (2016) those who involuntarily have no or only limited access to financial services are referred to as the unbanked. The limited access to credit has been attributed to factors such as lack of collaterals, high risk profile of SMEs, oligopolistic banking sector and biasness of SMEs by financial institutions (Gallardo, 2013) 

Global Micro-Loan Uptake among Women 
In the U.S. Bailey CEO and founder of Women’s Economic Ventures, notes that while the Grameen peer lending model has proven fruitful among some groups in the developing world, it has not met needs of low-income entrepreneurs in the U.S. where there is little public funding or awareness of micro-enterprise development. Ackerly (2015) provides a view of Germany experience where he argues that unlike many members of the microcredit groups in the development world, poor women in the Germany are educated, however, they have nonbusiness expertise. In Britain, credit is available to women even though most of the women don’t necessary use the credit to start up business. In fact many women are in debt because of focusing on nonproductive goods like shoes and cars (CGAP, 2014). A study in Brazil by Rama chandar & Pertti (2009) on microfinance and women empowerment showed that only 2% of potential microfinance clients were getting this financial service and 1.4% of their potential credit needs; 70% of Brazil’s population is said to be completely excluded from the banking system, not having any kind of account. There are various factors that work against women in having the same sort of access to micro financings compared to men. Almeyda (2010) in a study aimed at Assessing Gender Issues carried in Mexico asserts that these factors include the fact that women are very involved in agriculture and devote considerable time to the farms, women’s income generating activities are mainly home-based and women have less education. 

Regional Micro-Loan Uptake among Women 
A study by Makombe & Kihombo (2014) in Tanzania on Credit Schemes and Women Empowerment found that Women's efforts in alleviating poverty through the credit schemes are affected by various factors such as imperfect markets, stiff competition, inadequate loans and poor weather conditions. The effect of these problems is that about three-fifths of the women's Income Generating Activities (IGAs) are not sustainable. In South Africa the informal sector women entrepreneurs possessed some information and communication technologies, their location, demographic composition, poor education, low economic status and occupation, negatively affect their ability to benefit fully from the existing opportunities emanating from the information and knowledge society. A collective wisdom has emerged that women’s repayment rates are typically far superior to those of men (Jaylee, 2016). In Ghana women have better repayment records and cooperativeness (Chest & Khun, 2012). The Canadian International Development Agency (CIDA) had a fund known as Training Fund for Tanzania Women (TFTW) which aimed at enhancing women's technical and managerial skills. 

Micro-Loan Uptake among Women in Kenya 
In Kenya, gender equity has taken centre stage resulting in the development and enactment of various legal and policy interventions including enactment of the National Commission on Gender and Development Act in 2003 and the subsequent establishment of the National Commission on Gender and Development in November 2003; introduction of gender desks in key parastatals and police stations; introduction of the Women’s Enterprise Fund; the passing of the National Policy on Gender and Development in 2006 and the 30% Presidential decree on affirmative action in public appointments, among others. Despite these achievements, the Ministry of Planning and National Development Assessment Report (2005) points out the glaring gender gaps existing in access to control of resources and economic opportunities in Kenya. A survey conducted by the Kenya National Bureau of Statistics (KNBS) (2008) on the well-being in Kenya, found out that 50.8% of females are poor with 31.2% of poor households being female headed. 

Additionally, the Government of Kenya recognizes the role played by the women in contributing to the economic growth and the constraints they face that limit their capacity to fully exploit their potentials in all sectors of development. Limited access to financial services has been identified by the women and the government as the one of the main limiting factors to active participation in all aspects of development. To address the needs of women and reduce the existing disparities between men and women, the government of Kenya initiated a Women Enterprise Fund (WEF) in 2006 (Republic of Kenya, 2006). The main aim of establishing WEF was to enable women access the necessary financial services to for the development of their enterprises and ultimately reduce the poverty levels. 

Women Enterprise Fund 
The Women Enterprise Fund was established through Legal Notice No. 147, 2007 and began its operations in December 2007. The mandate of the Fund includes providing loans to women through and the Ministry of Gender, Children & Social Development under the Constituency Women Enterprise Scheme (C-WES). Under C-WES the clients targeted for funds channeled through the constituencies are women entrepreneurs. They are able to borrow an initial amount up to Kshs. 50,000 as a group and the group act as collateral. The group-based approach has been recognized as having the capacity to empower the most vulnerable and marginalized, especially women, by creating a community-based structure that builds mutual support and trust (Paxton, 2006). C-WES operates on this principle of group-based lending, commonly referred to as ‘solidarity groups’. However, group-based models are not without their limitations. 

Mayouc (2012) has raised questions regarding the extent of outreach, the limits of their ability to enforce repayments and the intensity of empowerment effects. The extent to which C-WES conditions influence the low uptake of C-WES services amongst women entrepreneurs in Nakuru East has not been investigated. Other than the conditions, C-WES has to contend with the disadvantages that women face in determining the control and access of credit. 

The mandate of the Fund includes providing loans to women through and the Ministry of Gender, Children & Social Development under the Constituency Women Enterprise Scheme (C-WES). Under C-WES the clients targeted for funds channeled through the constituencies are women entrepreneurs. They are able to borrow an initial amount up to Kshs. 50,000 as a group and the group act as collateral. However, a study by Omolo (2016) shows low uptake of C-WES services amongst women entrepreneurs in Kisumu East Constituency. The group-based approach has been recognized as having the capacity to empower the most vulnerable and marginalized, especially women, by creating a community-based structure that builds mutual support and trust . 

C-WES operates on this principle of group-based lending, commonly referred to as ‘solidarity groups’. However, group-based models are not without their limitations. Mayouc (2017) has raised questions regarding the extent of outreach, the limits of their ability to enforce repayments and the intensity of empowerment effects. The extent to which C-WES conditions influence the low uptake of C-WES services amongst women entrepreneurs in Nakuru East has not been investigated. Other than the conditions, C-WES has to contend with the disadvantages that women face in determining the control and access of credit.

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Item Type: Kenyan Project Material  |  Attribute: 67 pages  |  Chapters: 1-5
Format: MS Word  |  Price: KSh900  |  Delivery: Within 30Mins.
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