The Impact of Microfinance Credit on Micro Enterprises’ and Entrepreneurs’ Household Incomes and Livelihoods in Butere, Mumias, Matungu and Khwisero Sub-Counties, Kenya
Grassroots institutions such as self-help groups (SHGs) exploit existing linkages with other stakeholders, within Kenya’s development framework, to enhance members’ development activities and improve their livelihoods. For instance, entrepreneurs who are members of SHGs in Butere, Mumias, Matungu and Khwisero Sub-counties operate MEs to generate or diversify their incomes so as to improve their households’ livelihoods. However, shortage of capital remains one of the major obstacles to the performance of ME-sector. A number of microfinance institutions (MFIs) provide ‘friendly’ credit to entrepreneurs; preferably those who are members of SHGs, to improve their MEs’ income, entrepreneurs’ household incomes and subsequently, their livelihoods. This study, therefore, aimed at assessing the impact of microfinance credit on incomes generated from MEs and subsequently, how it affects total incomes and livelihoods of entrepreneurs who are members of SHGs in Butere, Mumias, Matungu and Khwisero Sub-counties, Kenya. Descriptive and experimental research designs were used in this study to ascertain ME variables and assess the impact of microfinance credit on MEs incomes. A ample of 265 entrepreneurs, who were members of SHGs and owners of microfinance credit-assisted MEs located in 40 centres, was drawn using stratified and proportional random sampling techniques for study. Also, a control sample of 155 entrepreneurs who had not received credit was drawn purposely to aid in determining the impact of microfinance credit on MEs incomes. Data, sourced mainly from entrepreneurs and credit officers of MFIs, was collected using a semi-structured questionnaire. Mini-case studies and key informant interviews were also used to collect data. Data generated was analyzed using: descriptive statistics. The study found out that microfinance credit impacted significantly on MEs incomes, entrepreneurs’ and households’ incomes and subsequently their livelihoods. The study, therefore, recommends that the provision of microfinance credit to entrepreneurs operating MEs and who are members of SHGs, be strengthened in the study area as an avenue in the development of the ME-sector and improvement of entrepreneurs’ household incomes and livelihoods at the grassroots. Keywords: Entrepreneurs, Grassroots, Impact, Livelihoods, Micro enterprise, Microfinance Credit, Household Incomes and Self-help Groups.
