Effect of microfinance services on poverty reduction in Makueni County

Abstract

Poverty is a condition in which a person of a community is deprived of the basic essentials and necessities for a minimum standard of living. Poverty reduction has been a major concern for successive governments in Kenya over the years because it is believed to be the universally accepted way of achieving economic growth in the country. The intended purpose is to raise the living standards of the people and improve upon their quality of life. The Kenyan government has been implementing polices to expand financial access to the poor including promoting microfinance credit access to the poor. Microfinance programmes are increasingly publicized as one of the most successful tools for development with the ability to positively affect its participant’s economic and social status. However, the effect of access to microfinance services in Kenya remains unknown. This study was carried out to show the effect of Microfinance services on poverty reduction in Makueni County. Descriptive research design was used to assess the extent to which poverty alleviation correlates with Microfinance services. The study targeted 6 deposit taking institutions in Makueni County. Systematic simple random sampling method was used to select 244 MFI members from the deposit taking microfinance. Primary data was collected using questionnaires and presented by descriptive statistics methods like pie charts and graphs. Data was analyzed using SPSS version 2.1. Multivariate regression model was used to determine the relative importance of the variables with respect to poverty reduction. The study found that Microfinance services have positive and significant effect on Poverty reduction in Makueni County. Savings had the highest impact followed by Micro-credit, Micro-insurance and finally training. The study recommends that Micro-finance Institutions operating within the county to be empowered through provision of finances which can be advanced to the locals as micro-credit to facilitate rapid economic growth. The study recommends that Micro-Finance Institutions operating within the county to undertake several trainings on financial management courses so that the customers can learn the best financial management skills and thus improves their businesses which will lead to higher income from the business thus leading to poverty alleviation in Makueni County.