Article thumbnail

Self-Help Groups and Income Generation in the Informal Settlements of Nairobi

By Eliana La Ferrara


The aim of this paper is to understand the functioning and the scope of self-help groups in the informal settlements of urban areas as a means of generating income for poor households. The paper uses a unique dataset collected by the author in 1999 surveying all individual group members from several informal settlements of Nairobi. It studies the individual determinants of earnings within groups and relates group composition to various indicators of group functioning. Sex, age and ethnic identity are among the most important determinants of individual reliance on group income and of access to group loans. Heterogeneity in earnings among members is shown to reduce their ability to borrow from the group as a whole but not from each other. The impact of ethnic and other forms of heterogeneity on the division of labor, choice of compensation schemes, sanctioning technology and recruitment criteria is also described.self-help groups, cooperative, participation, social capital

OAI identifier:

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.

Suggested articles


  1. (2000). Can Good Projects Succeed in Bad Communities? Collective Action in the Himalayas”, mimeo,
  2. (1999). Can Social Cohesion Be Harnessed to Repair Market Failures? Evidence from Group Lending in Guatemala”, T h eE c o n o m i cJ o u r n a l ,
  3. (2000). Communty Participation and Social Sanctions in Kenyan Schools”, mimeo,
  4. (2000). Ethnic Diversity and School Funding in Kenya”, mimeo,
  5. (1998). Groupes Informels de Solidarité dans un Bidonville du Tiers-Monde: Le Cas de Kibera,
  6. (2001). Inequality and Group Participation: Theory and Evidence from Rural Tanzania”, Journal of Public Economics,f o r t h c o m i n g .
  7. (1993). Making Democracy Work: Civic Traditions in Modern Italy,
  8. (1995). Nonmarket Institutions for Credit and Risk Sharing in Low-Income Countries”,
  9. (1999). On kin groups and wages in the Ghanaian labour market”,
  10. (2000). Participation in Heterogeneous Communities”,
  11. Promotion of Micro Enterprise Activities among the Youth as a Practical Alternative to Formal Employment: Focusing on Youths in Korogocho Slums,
  12. (2001). Social Capital and Group Banking”,
  13. (1999). Social Capital, Household Welfare, and Poverty in Indonesia”, Local Level Institutions Working Paper No.6, The World Bank.
  14. (2001). The E¤ect of Social Capital on Fertilizer Adoption: Evidence from Rural Tanzania”, mimeo,
  15. (1999). The Economics of Lending with Joint Liability: Theory and Practice”,