Effects of Multiple Borrowing on the Living Standards of Microfinance Clients at Kenya Women Finance Trust, Trans Nzoia Region

Abstract

This study sought to establish the effects of multiple borrowing on the living standards of microfinance clients at Kenya Women Finance Trust, Trans Nzoia Region.. The study was guided by the Grameen model has been used as an ideal theory for microfinance. Descriptive research design was used to elicit data from 47 clients from 8 groups with the micro finance  who had been selected to form the study sample representative due to homogeneity. Structured questionnaires and document analysis were the main data collection tools. Validity and reliability of these instruments was established through conducting a pilot study and getting expert opinions. The collected data was then coded and analyzed using the SPSS version 16 computer program. Descriptive statistics such as frequencies, percentages and standard deviations and Inferential statistics such as Pearson’s Product Moment Correlation Coefficient test was used in the qualitative and quantitative analysis of data. The study therefore concluded that major reasons for multiple borrowing were insufficient loans from MFIs, loan recycling, and family obligations. Over 70% of the respondents had problems in loan repayment because of multiple pending loans. Its found that education level and number of dependents of the respondent significantly influenced the number of loan contracts. As was explained in the analysis section, the study concluded that there is a strong relationship between multiple borrowing and investment of client’s variables which implies that if income increases, the client’s ability for savings also increases. If the savings increase, then there will be a positive impact on financial situation of the family. The study recommends that In order to control the incidences of multiple borrowing we recommend that Micro finance institution should devise a way of sharing clients’ loan information. In addition, Micro finance institution should provide adequate loans so as to avoid the practice of clients to reapply to other MFIs to meet their requirements. Some form of training should also be provided to help clients distinguish between business and family matters.

In order to achieve this purpose, objectives were formulated which included to examine the effects of multiple borrowing on investment of clients; to determine the effects of multiple borrowing on health and safety of clients and to find out the effects of multiple borrowing on income levels of clients

Keywords: Investment; health and safety; income levels and multiple borrowing