A dissertation submitted in partial fulfillment of the requirement for the award of Master of Science in commerce in the school of business and public management at KCA University
In the past ten years most people in underdeveloped countries have subscribed to MFIs in order to realize their economic empowerment (self employment, access to borrowings and increased savings) (Gupta, 2005).Studies carried in Kenya of the last couple of years suggest that to some extent, microfinance is an effective tool of containing poverty. Most recent studies have majored on positive effects, few on negative effects and very few on neutral effects (Kiiru, 2007). This study mirrored out the impact of microfinance on poverty alleviation in Busia County. Descriptive research design was used to assess the extent to which poverty alleviation co-relates with Microfinance Institutions services. The study targeted three Deposit Taking Microfinance institutions operating within the entire Busia County. The researcher considered scale of operations, distribution level in the county among other factors when choosing the three institutions. Simple random probability sampling was applied to select twenty (20) active MFIs members from three (3) DTMs, adding to sixty (60) respondents. Primary data was collected through questionnaires. Data collected was presented by descriptive statistics like pie charts and graphs. From the analysis, the results showed that microfinance institutions act as a key fulcrum to economic empowerment of residents in the County. However, it is important to note that the ability of members to start micro-enterprises does not guarantee financial improvement to all of them. It is important to note that there are other factors apart from availability of microfinance at play. The study found that costing of products by microfinance institutions to be the most important factor considered by members in the area. Accessibility to services on offer throughout the county is critical and in addition, microfinance institutions should endeavor to improve and differentiate their products. It is therefore important for the county government to find ways of encouraging increased microfinance operations in the entire county so as to reach as many potential members as possible in far flung areas. Those in remote parts of the county must be given the opportunity to access the services when they need them at the local level. Though MFIs are trying to address this, having their operations localized in town with weekly field visits is not sufficient. The results were re-affirmed by a linear regression analysis using SPSS version 20. The findings could be used to make policy proposals that will see MFIs meet the economical empowerment of people in County with high levels of poverty. The progress will help Kenya prepare to achieve its vision 2030 goals.
