An Evaluation of Microfinance Services on Poverty Alleviation in Kisii County, Kenya

Abstract

Despite the success of microfinance in including the poor people in the financial sector, critics claim that this antipoverty tool lacks hard data to prove its positive impact on reducing poverty levels.  This study sought to establish the impact of micro-finance services on poverty alleviation in Kisii County. The study employed a causal study. The population for this study consisted of six microfinance institutions registered under AMFI that were consistently operational in the Kisii County between January 2008 and December 2013. Stratified random sampling was used to select 200 respondents for the study. Data was collected by use of a questionnaire. The data was pre-processed using Statistical Package for Social Sciences (SPSS). Multiple regression analysis between different variables related to standards was conducted to determine whether a group of variables together predicted a given dependent variable. The study found out that the four variables considered in this study were relevant in explaining the effects of microfinance institutions on the poverty alleviation in Kisii County. Credit facilities had the highest impact followed by personal savings of the residents, training services and finally insurance. The study also recommends that the MFIs operating in the County be empowered through provision of finances which can be advanced to the locals as credit to facilitate rapid economic growth. With an elaborate MFI structure in the County, the County population will be more than willing to take up the financial advances and undertake development projects. To build capacity among the County residents, the study recommends that the MFIs operating in the County undertake regular training especially on financial management courses so that the local can learn the best financial management skills and thus improve their businesses.

Key Words: Micro finance services on poverty alleviation in Kisii County, Kenya