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.