EFFECT OF CREDIT ON HOUSEHOLD WELFARE: THE CASE OF “VILLAGE BANK” MODEL IN BOMET DISTRICT, KENYA

In recent years, governmental and nongovernmental organizations in many low-income countries have introduced credit programs targeted to the poor. Many of these programs specifically target the poor on the premise that they are more likely to be credit constrained and have restricted access to the wage labour market. Though participation is by choice, little is known about the role of credit on welfare. The purpose of this study was then to assess the role of credit service on welfare of the microfinance clients. It was also to enable the microfinance institutions assess if they are achieving the intended objectives of their program. The study area was Bomet District and the sample was drawn from Mulot and Silibwet “village banks”. A sample of 125 “village bank” members was selected, out of which 91 had used the credit service and the other 34 had not. Primary data on the selected respondents were collected using a structured interview schedule and secondary data were obtained from the selected “village banks” operating in the study area and relevant government departments in the district. The study used analysis of variance and Heckman’s selection model which corrects for selectivity bias in the sample. This consists of a probit equation (borrowing participation equation) and target equation of household expenditure. The results from the study indicated that farm income, off farm income, distance to market and household assets influences the probability to participate in “village bank” credit. The household income of credit participants was also higher than that of the non-participants. There was a positive relationship between the amount borrowed and household expenditure. Age of the household head, farm income, distance to market and off farm income also plaid a significant role in influencing the wellbeing of a household.Agricultural Finance, Farm Management,

Analysis of the Nature and Level of Social Capital in Smallholder Grain Farmers Marketing Groups in Kenya

Bridging and bonding social capital has been known to widen the benefits of collective action. Data drawn from 100 smallholder grain farmers groups in Mt. Kenya region was used to measure three dimensions of bonding social capital namely: relational, cognitive and structure. Social capital results indicated that the groups’ bonding social capital was relatively high and equal as indicated by strong close connections, trust among members and sharing a common vision. However, the groups varied significantly (p≤0.1) in their level of bridging social capital where high performing groups in collective grain marketing had the highest average score (0.88), followed by average groups (0.44) and then low groups had the least (0.35). This indicates that bridging social capital could have had a positive and significant influence on group grain marketing performance. This shows that strong bridging social capital embedded within a group with strong bonding social capital fosters more successful collective action. Keywords: Bridging social capital, bonding social capital, farmer groups, Kenya DOI: 10.7176/JEP/11-24-04 Publication date: December 31st 202

Households’ Welfare Effects of Snow Peas Production by Small Holder Producers in Mt. Kenya Region, Kenya

This study aimed at determining the households’ welfare effects of snow peas production by evaluating the difference in income, assets and expenditure of adopters and non-adopters of snow peas farming in Mt. Kenya region, Kenya. Propensity score matching technique was used to evaluate the impact. Findings reveal that the impact of snow peas farming was significantly different between participants and non-participants in terms of their income, assets and expenditure. The estimation of treated effect on treated showed that participating farmers had relatively higher monthly income, higher total value of assets and higher expenditure compared to non-participating farmers. To enhance participation, farmers are encouraged to form and actively participate in farmer groups through collective productiction and marketing of their produce. Policies that provide extension services to farmers and affordable credit are also important in enhancing farmer’s participation in snow peas production. Keywords: snow peas, welfare effects, propensity score matchin

EFFECT OF CREDIT ON HOUSEHOLD WELFARE: THE CASE OF “VILLAGE BANK” MODEL IN BOMET DISTRICT, KENYA

In recent years, governmental and nongovernmental organizations in many low-income countries have introduced credit programs targeted to the poor. Many of these programs specifically target the poor on the premise that they are more likely to be credit constrained and have restricted access to the wage labour market. Though participation is by choice, little is known about the role of credit on welfare. The purpose of this study was then to assess the role of credit service on welfare of the microfinance clients. It was also to enable the microfinance institutions assess if they are achieving the intended objectives of their program. The study area was Bomet District and the sample was drawn from Mulot and Silibwet “village banks”. A sample of 125 “village bank” members was selected, out of which 91 had used the credit service and the other 34 had not. Primary data on the selected respondents were collected using a structured interview schedule and secondary data were obtained from the selected “village banks” operating in the study area and relevant government departments in the district. The study used analysis of variance and Heckman’s selection model which corrects for selectivity bias in the sample. This consists of a probit equation (borrowing participation equation) and target equation of household expenditure. The results from the study indicated that farm income, off farm income, distance to market and household assets influences the probability to participate in “village bank” credit. The household income of credit participants was also higher than that of the non-participants. There was a positive relationship between the amount borrowed and household expenditure. Age of the household head, farm income, distance to market and off farm income also plaid a significant role in influencing the wellbeing of a household