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EFFECT OF MICROFINANCE SERVICES ON WOMEN FINANCIAL EMPOWERMENT IN KISII CENTRAL DISTRICT, KENYA .

A CASE OF KWFT IN KISII CENTRAL DISTRICT

PATRICK MIGIRO

AN APPLIED RESEARCH PROPOSAL IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF A MASTERS DEGREE IN BUSINESS ADMINISTRATION IN THE DEPARTMENT OF BUSINESS ADMINISTRATION OF AFRICA NAZARENE UNIVERSITY

Octob ! "#$%

DECLARATION I declare that this research proposal is my original work and that it has not been presented in any other university for academic credit.

Name of Student

Signature: .. Date ...............................

SUPERVISOR&S DECLARATION

This applied research proposal is submitted for e amination with my approval as the university supervisor.

Name of the Supervisor:

Signature: Date...

DEDICATION I dedicate this research report to my late parents! my dear wife "ayne and our beloved children! #ravin! Dr. $ynthia! Tim and %eith for the support they accorded me in the course of my study.

Table of contents

ACKNOWLEDGEMENT

&y sincere gratitude to all whose various contributions made this work possible' my supervisor (rof. "ared )n*gon*ga for his valuable and insights through all the stages of the study. The director! Na+arene ,niversity-%isii campus &r. Nyariki! lecturers and support staff of Na+arene%isii campus. Thanks to my entire family for their moral and financial support and finally my friends who encouraged me. &ay #od bless you all.

ABSTRACT

.omen today form the ma/ority of the total world population. )ut of the 0 billion global inhabitants about 1 billion form women population. They are poor and poverty surrounds their economic lives. 2fforts have been made to reduce this level of poverty and support women to change their livelihoods. 3or instance! e perts have advised that if grants and loans are e tended to women they will assists to build up their own wealth and empower families which will eventually generate employment opportunities for themselves. Nevertheless! when such efforts are! one 4uery that needs to answered is the level to which grants and soft loans may be given to women to help them take gain from micro entrepreneurship opportunities that surrounds them. In addition such efforts will at the end assist women limit lack of basic needs amongst them. (overty amongst women is still widespread and that is why such credit is important to change their livelihoods. )f the 1 billion women today in the world! half of them live on not more than a dollar a day. Such economic conditions are mainly evident in third world nations like %enya. 5esponding to all these! this study will seek to investigate the effects of microfinance services on the financial empowerment of women in %isii $entral district in %enya. In particular! the researcher will seek to establish the effect of savings mobili+ation by &icrofinance institutions on the women financial empowerment! establish the effect of &icro finance loans on investments by women and ascertain the effect of Training on micro enterprises on financial management skills of women in %isii $ounty. The researcher will target the 6777 microfinance beneficiary women in women groups and

individual women who had obtained financing from %enya .omen finance trust. The study will follow a descriptive survey. 5andom and (urposive sampling approaches will be adopted to pick respondents from two clusters. (rimary data will be obtained using a self-administered pretested

structured and semi structured 4uestionnaire. Secondary data will be obtained from published books! /ournal articles and reports. 8nalysis will be done using descriptive statistics involving measures of central tendency and dispersion. The study will show effect of microfinance services on the financial empowerment of women in the %isii $entral District! %isii $ounty. The study will make recommendations upon conclusion of the research to %.3T on how to better meet its ob/ectives.

D '()(t(o) o' t !*+ Lo,)+-working capital S,-().+ *ob(/(0,t(o)-pooling of resources T!,()().- provision of ade4uate business and management skills on micro enterprises

$.# INTRODUCTION

#iven the status of women particularly in third world nations! financial empowerment of women has become a development agenda at both global and country levels in recent decades! particularly since the 9ei/ing .omen:s conference in ;<<= >8nderson ? 2swaran! 177=@. Aistory informs us that women in many third world nations are underprivileged when it comes to social and economic status. .hen they are compared to men women are disadvantaged on many social! economic! independence! they have no control of the available resources not e cluding credit facilities! entitlement to own land and inheritance! lack of opportunities to get educated and support services as well as minimal participation in the decision-making process. Supporting e4ual

opportunities and e4ual access and control over productiveBeconomic assets! social resources and essential services for all is argued to be critical to poverty reduction! gender e4uality and overall women empowerment >D3ID! 1777@ ;.; M(c!o '(),)c + !-(c + &icro finance Services refer mainly to small loans' savings mobili+ation and training in micro enterprise investment services e tended to poor people to enable them undertake self employment pro/ects that generate income. &icro finance came into being from the

appreciation that micro entrepreneurs and some poorer clients can be :bankable*! that is! they can repay both the principal and interest! on time and also make savings! provided financial services are tailored to suit their needs >Con! ;<<;@. &icro finance is perceived as the provision of financial and non financial services by micro finance institutions >&3Is@ to low income groups without tangible collateral but whose activities are linked to income

generating ventures >Didgerwood! ;<<< and 9usiness and &anagement 5eview Col. 1>6@ pp. 11E6= &ay! 17;1ISSN: 17F0 -76<G. $hristen and 5osenberg! 1777@. These financial services

include savings! credit! payment facilities! remittances and insurance. The non-financial services mainly entail training in micro enterprise investment and business skills. There is also a belief that micro finance encompasses micro credit! micro savings and micro insurance >5oth! 1771@. &icro finance is not a new development. Its origin can be traced back to ;<0H! when &uhammad Iunus set up the #rameen 9ank! as e periment! on the outskirts of $hittagong ,niversity campus in the village of "obra! 9angladesh. The aim was to provide collateral free loans to poor people! especially in rural areas! at full-cost interest rates that are repayable in fre4uent installments. 9orrowers were organi+ed into groups and peer pressure among them reduced the risk of default >%han and 5ahaman! 1770@. In many cases! basic business skill training should accompany the provision of micro loans to improve the capacity of the poor to use funds >.ebster and 3idler! ;<<H@. &icro financing should addresses capital investment decisions! general business management and risk management. In the world over! provision of micro finance services to the women has been considered an innovative and sustainable approach to women financial and micro enterprise activities empowerment leading to generation of income so as to improve their livelihoods and contribute to economic growth. Debates on e tending the reach of microfinance to the very poorest people increasingly focus on savings facilities. 3or many women! savings facilities are essential in increasing the amount of income under their control and in building assets. In remote areas! mobili+ation and intermediation of member savings may be crucial first steps before accessing e ternal loan funds. 8 number of studies have observed that savings-led groups perform better than credit-led ones >8llen 177=' &urray and 5osenberg 177H' 5itchie 1770@. 8ccess to micro-finance has the potential to assist the poor in earning income from microenterprises! smooth their income and consumption >Jeller! ;<<<@! help households

diversify their income sources. >8nand et al. 177=@. 8ccording to &osley >1777@ microfinance makes a considerable contribution to the reduction of poverty. It helps increase income earning and asset building opportunities which make households less reliant on a single asset type and conse4uently deal with disasters. >8nand et.al. 177=@. 8ccording to Aassan >1771@! many #rameen 9ank borrowers were actually building larger houses. (anganiban>;<<G@ advances that the income of borrowers has risen and their assets base has widened. Investments made by loans appear to have been e tremely productive and to have contributed significant improvements in household output! income and consumption >#hai! ;<GF@. In Tegucigalpa and $holteca in Aonduras in 1776! effect assessment studies revealed that H7K and =7K of the recipients had their sales and incomes increase respectively one year after receipt of credit for working capital 8gricultural 3inance $ooperation Dimited in 177G in India! assessed development effect of microfinance programmes. $lients reported increase in income from 0HK of activities. There is therefore reason to believe microfinance services in its entirety should report effect on savings! income and investments alongside non financial effect such as change in skills through training. This study will be specific in investigating these aspects. $.$.$M(c!o'(),)c S !-(c + () t1 Wo!/2 The current global women population is very large. )f the world*s more than 6 billion people estimated to be under the age of 1=! appro imately ;.6 billion are women! as estimated by the ,N >.omen Save! 17;7@. Iet women the world over are aware of the ine4uities of the global system! which leaves them vulnerable in many ways.. &oreover in line with most cultures in developing countries! the employed have to look after the unemployed e tended family members! thereby reducing their ability to save and opportunities for wealth creation that is

needed to spur economic growth. To this end! microfinance! the provision of a wide range of financial services! has proved immensely valuable to poor people! especially the women and young people on a sustainable basis. 8ccess to financial services has allowed many families throughout the developing world to make significant progress in their own efforts to escape poverty >.right! 177=@.The provision of credit has increasingly been regarded as an important tool for raising the incomes of women! mainly by mobili+ing resources to more productive uses. 8s development takes place! one 4uestion that arises is the e tent to which credit can be offered to the women to facilitate their taking advantage of the developing entrepreneurial activities. The generation of self-employment in non-farm activities for e ample! re4uires investment in working capital. Aowever! at low levels of income! the accumulation of such capital may be difficult. ,nder such circumstances! loans! by increasing family income! can help the women to accumulate their own capital and invest in employment-generating activities >Aossain! ;<GG@.

$." M(c!o'(),)c S !-(c + () A'!(c, &any diverse institutional models of micro financing are functioning in 8frica! but most clients are served by credit unions and co-operatives Eoften based >particularly in 2ast 8frica@ on the agricultural commodities their 9usiness and &anagement 5eview Col. 1>6@ pp. 11E6= &ay! 17;1ISSN: 17F0 -76<G members sell >e.g. coffee! tea! cotton etc.@ or the nature of their employment >.right! 177=@. In .est and $entral 8frica however! savings and credit cooperatives are generally more community-based. In contrast to 8sia! the lack of population density means that rural and agricultural finance is particularly challenging! and thus many &3Is are urban-based and focused. (erhaps as a result the "uly 1776 &icro 9anking 9ulletin identified only G sustainable institutions and estimated that only around 1= million clients are being served

throughout the continent. Aowever! these numbers may under-estimate or ignore the large numbers being served by cooperatives and postal banks. Nonetheless both international and domestic banks are starting to take an interest in the potential of the low-income market in 8frica. The last twenty years have seen significant improvements in micro financing through advances in understanding and providing financial services to better advance development and eradicate poverty. This includes providing the financial means to save! access credit! and start small businesses! with the potential to enhance community development! as well as local and national policy making. .hen properly harnessed and supported! microfinance can scale-up beyond the micro-level as a sustainable part of the process of financial empowerment by which the poor can lift themselves from poverty. The micro financing revolution effectively demonstrates that when poor households have access to financial services! not only do they save! but! they also have high repayment rates when they borrow. It is noted that! microfinance institutions have made financial services available to millions of poor households worldwide but this still represents a tiny fraction of the population in developing countries where the ma/ority lack access to formal financial services. $.$.3 M(c!o'(),)c S !-(c + () K )4, In %enya! the women are about ;6 million which is e4uivalent to =HK of the population >&inistry of .omen and Sports! 177G@. )f the ;6 million women! less than =7K are in gainful economic activities in the formal! informal and public sectors of the economy while ma/ority are unemployed! >Simeyo et al.17;;@. They comprise a big percentage of the unemployed. This trend is worrying and calls for intervention measures. &icro finance lending and associated services are one such intervention. Aowever! lack of collateral and high interest rates is an impediment to access to loans from &icro finance institutions >&3Is@ by the women >&ushimiyimana! 177G@.

The women who secure funds from such institutions spend the bulk of their returns on investment in paying the cost of capital! thus leaving them with none or little savings for reinvestment. 8s a result! ma/ority of the women in the women investments fail to grow into Small and eventually &edium enterprises. Therefore! to bring the women on board! the %enyan government with the support of development partners in 177H established women enterprise development fund that is channeled to &icro finance Institutions and other financial intermediaries for onward lending to the women without collateral. Such a fund attracts a greatly reduced cost of capital which stands at GK per annum as a strategy to make the fund affordable to the women who in many cases do not have collateral and therefore ideal for start-ups. #iven that the vision of micro finance is to promote the growth of micro enterprises! &3Is and other financial intermediaries have e perienced rapid growth to support the women financial re4uirements. Institutions such as the %enya 5ural 2nterprise (rogram >%-52(@! a nongovernmental organi+ation that was started in ;<GF under the funding of the ,S8ID are some microfinance institutions. Today! %-52( is fully licensed as a bank and offers a wide range of banking services in addition to its micro finance specialty >Dondo! ;<<;@. %-52( operates two ma/or loan programs for micro and small entrepreneurs! "ihudi and $hikola. 2ach "ihudi group consists of three to eight individuals. The $hikola loan program works through e isting rotating savings and credit self help groups >5)S$8S@ that comprise of individual micro entrepreneurs >%ioko! ;<<=@. 8 number of &3Is and financial intermediaries including %52(! 24uity bank! %enya .omen 3inance Trust >%.3T@! 3aulu etc have since then come up to provide micro finance services to the low income groups for purposes of starting or developing income generating activities.

In view of the increasing microfinance services in the $ountry targeting the poor with anticipation of an increase in positive outcomes! particularly in the counties! as is evidenced by the efforts above' this research seeks to establish the effect of micro finance lending and related services on financial empowerment of women in %isii $entral District! %isii county.

$." St,t * )t o' t1 R + ,!c1 P!ob/ * The current global women population is very large. In %enya! the &inistry of .omen and Sports report >177G@ indicates that the women are about ;6 million which is e4uivalent to 60K of the population. )f the ;6 million women! less than =7K are in gainful economic activities.! informal and public sectors of the economy while ma/ority are unemployed! >Simeyo et al.17;;@ and live on less than two dollars a day! as estimated by the ,nited Nations.. 8ttempts to alleviate the women from this poverty level have been carried out in as many places in %enya. The provision of credit! for e ample! has increasingly been regarded as an important tool for raising the incomes of these women! mainly by mobili+ing resources to more productive uses. ,nfortunately poverty has continued to prevail among them even with such loans. There is therefore the need to investigate the effect of micro finance services on the financial empowerment of women! particularly in %isii central District. There are insufficient studies on this area with no studies carried out to determine how %enya .omen 3inance Trust has impacted on women in %isii central. It is for this reason that this study seeks to investigate the effect of micro-finance services on the financial empowerment of women in %isii central District. Specifically! the research seeks to determine the effect of microfinance services on the social economic development of women in %isii central district as advanced by %.3T.

$.% Ob5 ct(- + o' t1 St624 The study will be guided by the following ob/ectives: ;. To assess the effect of micro-creditBloans on women financial empowerment in %isii central District. 1. To determine the effect of savings mobili+ation by &3Is on .omen 3inancial empowerment in %isii central District 6. Identify the effect of training on &icro enterprise investment on .omen financial empowerment in %isii central District.

$.7 R + ,!c1 Q6 +t(o)+ The following are the research 4uestions: ;. .hat is the effect of &icro creditBloans on women financial empowermentL 1. .hat is the effect of Savings mobili+ation by &3Is on women:s financial empowermentL 6. .hat is the effect of training on &icro enterprise investment on women financial empowermentL $.8 S(.)('(c,)c o' t1 St624 )n the premises that for self-esteem and dignified life' women need to increase their access to and control over the necessary resources! it becomes important to e plore the e tent to which the prevailing credit schemes in %enya! have been able to facilitate the empowerment process of women given that this ability is basically limited to this group. The research aims at providing additional empirical findings on effectiveness

of grass root financial institutions in bringing positive change to the women' given that few studies on the sub/ect matter have been conducted in 8frica compared to the 8sian countries. &oreover! given that micro-finance industry in %enya is relatively young the study will potentially provide insights to the microcredit service providers i n % e n y a a n d o t h e r development actors on the progress of women empowerment initiative through microcredit in %enya. 3urthermore! only a few studies in %enya have investigated if microfinance services are truly a way forward for empowering women or not. This reveals a research gap that calls for research to be done to understand the position of women who are members of &3Is in %isii central district. Therefore! the study will investigate the relationship between women entrepreneurs* participation in microfinance services and their empowerment central District who have benefited from %.3T. $.9 Sco: o' t1 St624 The study will cover %enya women finance trust establishments operating within %isii $ounty. The branches to be covered will be randomly sampled among the branches in %isii $ounty .The information to be used to derive the findings will span a period of = years! from 177G to 17;6.This is the period that has seen the hype of &3Is and women empowerment initiatives that have been brought to kisii county $.; L(*(t,t(o) o' t1 St624 The problems to be encountered in the research will be varied in nature. Aowever! lack of time! financial constraints! and available data and literature on the sub/ects among &3Is in %enya are some of the constraints likely to be e perienced in the study . 9e as it may! data will be collected and analy+ed using both 4ualitative and 4uantitative methods. $.< T1 o! t(c,/ '!,* =o!> . This study will be guided by the microfinance theory of change which provides the thinking process before and after taking a loan. 8 poor person goes to a microfinance provider and takes a loan >or saves the same amount@ to start or e pand a microenterprise which yields enough net revenue to repay the loan with ma/or interest and still have sufficient profit to increase personal or household income enough to raise the personMs standard of living. This by using the combination of large 4uantitative and 4ualitative data from selected women groups in %isii

individual takes a loan from >or save with@ a microfinance institution >or similar entity@! Invests the money in a viable business and then &anages the business to yield ma/or return on the investment. This theory doesn*t always apply to all poor people as they can choose not to participate in the process even when they can! this then leaves a gap that has to be studied conclusively to unravel the mystery that is improved livelihoods resulting from access to loans from %.3T. Co)c :t6,/ F!,* =o!> o' MFI+

1. Micro Loans

2. Savings Mobilization.

WOMEN FINANCIAL EMPOWE MENT.

3. Training

I.V So6!c ? R + ,!c1 ! "#$%

D.V

Scholars and practitioners have proposed different frameworks for m e a s u r i n g w o m e n empowerment. %abeer >177;@ proposed a framework for measuring women empowerment. 8s it has been noted earlier! %abeer*s >177;@ concept of empowerment refers to the e pansion in people*s ability to make strategic life choices in a conte t where this ability was previous denied. This concept is about getting out of disempowered position where one cannot make any choices and to be in an empowered position where one can be able to make

choices. In order to change in the ability to e ercise choices! for %abeer! empowerment can be thought of in terms of resources! agency a n d a c h i e v e m e n t s . 5 e s o u r c e s c a n b e m a t e r i a l ! s o c i a l o r h u m a n ' r e s o u r c e s f o r m t h e conditions under which choices are made. 8gency is the heart of the process by which choices are made' is the ability to define one*s goals and act upon them. 5esources and agency together constitute capabilities! the potential that people have for living the lives they want! of achieving valued ways of :being and doing* >Ibid@.&alhotra and Schuler >177=@ provide a framework of dimensions and indicators of women*s empowerment in household! community and broader arena. 8ccording to them! &ost of the indicators of empowerment refer to women*s ability to make strategic decisions that affect their well-being and their families. The author posits the dimensions of empowerment in framework as economic! social and cultural! legal! political and psychological. 2conomic empowerment i n c l u d e s w o m e n * s c o n t r o l ! access to credit! contribution to family support and increased household ownership of properties and assets. Social and cultural empowerment includes freedom of movement! lack of discrimination against daughters! c o m m i t m e n t t o e d u c a t i n g daughters! participation in domestic decision making! control over se ual relations! ability to make childbearing decisions! use contraception! control over spouse selection and marriage timing and freedom from violence. Degal empowerment includes the knowledge of legal right s and mechanisms and familial support for e ercising rights. (olitical empowerment includes the knowledge of political system and means of access to it! familial support political engagement and ability to e ercise fight to vote. (sychological empowerment includes women increased selfesteem! self-efficacy and psychological well-being >Ibid@.Drawing from &alhotra and Schuler! >177=@ %abeer! >177;@ and $hen >;<<0@ the most used indicators of women empowerment in different studies are control over savings and income !ownership of assets! decision-making! self-efficacy! and self-esteem. This study uses these indicators of women empowerment as the outcome of participating in &3Is to understand the positions of women who are members scenario can be depicted by the following framework. of %.3T in %enya. The above

CHAPTER "? LITERATURE REVIEW ".# I)t!o26ct(o) &icrocredit broadly speaking is the provision of loans to very small businesses it is an increasingly common weapon in the fight to reduce poverty and promote economic growth. Traditional micro lenders target women operating small-scale businesses and use group lending mechanisms. 9ut as micro lending has e panded and evolved into its Nsecond generation!O it often ends up looking more like traditional retail or small business lending for-profit lenders! e tending individual liability credit! in increasingly urban and competitive settings. 3or e ample! recent estimates suggest that about one-half of microfinance institutions are individual liability lenders! and about one-4uarter are for-profits or cooperatives >$ull et al. 1770' 177<@. The impact of microcredit is a sub/ect of much controversy. (roponents state that it reduces poverty through higher employment and higher incomes. This is e pected to lead to improved nutrition and improved education of the borrowersM children. The available evidence indicates that! compared to the number of microloans advanced! microcredit has facilitated the creation and the growth of a tiny number of businesses. #oing further! the e tremely high failure rate of most informal microenterprises often leaves the average individual micro-entrepreneur worse off into the longer run! when household assets! land and housing have to be sold off >often under duress@ to repay an outstanding microloan. In addition! new poverty-push micro-entrepreneurs also take business away from already struggling microenterprises! which reduces the turnover in e isting businesses! and so also net income. Taking both downside effects into account! this

generally means that there is no net positive impact arising from the application of microcredit This is especially the case in the poorest locations where there has always been very little demand from local people for the simple goods and services provided by the typical informal microenterprise that microcredit helps create. &icrocredit has been directed at women because it was believed that! compared to men! they are better clients of microfinance institutions and that womenMs access to microcredit has more desirable development outcomes! since women tend to spend more money on basic needs compared to men. &icrocredit has also been promoted as a tool to empower women. 2arly studies tended to confirm this positive picture. 3or e ample! a ;<<H study in 9angladesh claims that the PsuccessP of reaching women with microcredit was Phighly impressiveP! but also notes that loans are often given over to male relatives or husbands. )nly in a minority of cases there was an increase in domestic violence for women who did not get the loan or had to wait a long time to get the loan. The study also showed that women are more likely to retain control over their loans in traditional women*s work like livestock rearing that are considered Nwomen*s workO. The (resident of #rameen 3oundation ,S8 suggested in 177=! based on a review of various studies! that Pthere is strong evidence that female clients are empoweredP. It also found that Peven in cases when women take but do not use the loan themselves! they and their families benefit more than if the loan had gone directly to their husbandsP. ".$ T 1 M(c!o@c! 2(t ,)2 =o* ) '(),)c(,/ *:o= !* )t

&icro loan borrowers typically lack the credit history or collaterali+able. .ealth needed to borrow from traditional institutional sources such as commercial banks. $asual observation suggests that many micro-entrepreneurs face binding credit constraints. $redit bureau coverage of micro-entrepreneurs in the %enya is 4uite thin! so building a credit history is difficult for poor business owners and consumers. Informal credit markets and serial borrowing from moneylenders charging 17K per month or more is common. 8ccess to information has a significant influence on micro credit accessibility. There is increasing awareness among policy makers of the important contribution that women entrepreneurs can make to employment and the economic growth of their countries. 8ccording to the National 3oundation for .omen 9usiness )wners >N3.9)@! women entrepreneurs represent one-4uarter to one-third of the total business population >)2$D! 1777@. In developed countries such as the ,nited States! women own 6G per cent of small enterprises! which employ

=1 per cent of the private sector workforce and generate =; per cent of private sector output >&ilken Institute!1777@. In some countries such as 9ra+il! the 5epublic of Ireland! Spain and the ,nited States! women are creating new enterprises at a faster rate than men >)2$D! 177;@. Nevertheless! several studies have shown that women in developing and developed countries encounter serious difficulties when accessing finance especially for start-ups! but also for the e pansion of established enterprises. .omen entrepreneurs who deal with financial institutions are often confronted with problems associated with gender bias. N#ender bias refers to lender behaviour that fosters inappropriate consideration of the applicant*s gender in the credit underwriting and approval process. #enderbiased behaviour can severely hamper women seeking small business credit and impede the formation of profitable customer relationships! even before customers* needs or loan re4uests are assessedO >.oos! ;<<F@. .hen there is gender bias at high levels of management! loan re4uests will re4uire additional and unnecessary documentation! additional guarantees or co-signers or other conditions different from male applications. Some e amples of the difficulties that women e perience when working with financial institutions are: a general lack of interest in women entrepreneurs* pro/ects' 4uestions from loan officers regarding personal and family situations such as the spouse*s view of the business! marriage plans! plans for childbearing or other remarks unrelated to the financial aspects of the application' delays in the loan application process' limited information about alternative financial products and lack of e planations when financing re4uests are denied. Due to social-cultural constraints! women often have a more difficult time accessing finance than men! forcing them to depend on their savings or that of their relatives and on informal sources of finance. The particular difficulties encountered by women entrepreneurs may be e plained by the following: - Small si+e of the enterprises: women entrepreneurs own small enterprises and are on average more likely to have micro-enterprises! located in the service and retail sectors. Thus! women re4uire small loan amounts that are not considered profitable by banks. - Dack of collateral: women in general have less personal capitalBfewer assets to start a business or to be used as collateral. This may be due to social and legal disadvantages! such as lower wage incomes or limitations in the ownership of property. NIn many countries! women cannot even hold land titles! thus they are effectively barred from formal sector credit.

- 8nother type of constraint is the re4uirement for the male spouse*s co-signature' and it is also often a re4uirement that women must obtain a guarantee declaration from the husband or fatherO >International Dabour )rgani+ation! ID)! ;<<<@. &oreover! since women*s enterprises are usually in the service sector and do not have tangible assets for collateral! such firms rely mainly on intangibles assets >which are difficult and costly to evaluate for financing institutions@. -Dack of skills: women entrepreneurs have lower education levels and less professional e perience than male entrepreneurs. They lack management skills and competencies in finance and accounting! which are key to improving access to finance. 3urthermore! due to social and educational factors! they fear complicated bank procedures and lack confidence to deal with lending institutions and effectively convey their business proposals. - Dack of information: women entrepreneurs often lack information on the e istence of credit facilities! financial instruments! networks and the borrowing conditions of financial institutions. - Dack of track records: women entrepreneurs have difficulty showing past business performance information or continuous business activity since they are often forced to interrupt their careers to take care of their families. - 3amily obligations: women entrepreneurs normally combine their business activities with their family obligations! which may be viewed with distrust by financial institutions. "." R / , t ( o ) + 1 ( : =o* ) &icrofinance has emerged globally as a leading and effective strategy for poverty reduction with the potential for far-reaching impact in transforming the lives of poor people. 8ccording to most observers! microfinance can indeed facilitate the achievement of the &illennium Development #oals >&D#s@ as well as national policies that target poverty reduction! women*s empowerment! vulnerable groups! and improving standards of living. 8s noted by former ,N Secretary #eneral! %ofi 8nnan! during the launch of the International Iear of &icro $redit >177=@! Nsustainable access to microfinance helps alleviate poverty by generating income! creating /obs! allowing children to go to school! enabling families to obtain health care! and empowering people to make the choices that best serve their needs P >,nited Nations! 177F' 8siama! 1770@. 8lthough microfinance is not a panacea for poverty reduction and its related development challenges! when properly harnessed it can make sustainable contributions through financial b t= ) /o,)+ ,2-,)c 2 ,)2 '(),)c(,/ *:o= !* )t o'

investment to the empowerment of people! which in turn promotes confidence! self-esteem! and civic and economic participation! particularly for women. Normally! providing the poor women financial services increases their income and that is why microfinance productivity and reducing poverty services have been developed to fill these gaps! with increasing assistance from the various financial institutions and other donors. &icrofinance services is emerging as a powerful tool to reduce poverty and improve access to financial services for the poor women in world wide in general and in 5wanda 2conomic power means access especially to income! assets! food! markets and decision-making power in the economic activities. Social power means access to certain bases of individual production such as financial resources! information! knowledge! skills and (sychological power means the participation in social organi+ations. Individuals sense of potency! which is demonstrated in self-confident 8ccording of the Dowlands >;<<=@ describe it behavior and self esteem. as Na process whereby women become able to organi+e themselves to increase their own self-reliance! to assert their independent right to make choices and to control resources which will assist in challenging and eliminating their own subordination. ".3 M F I S + , - ( ) . + * o b ( / ( 0 , t ( o ) , ) 2 ( t + '' ct o) =o* )&+ *:o= !* )t

8lthough women*s access to financial services has increased substantially in the past ;7 years! their ability to benefit from this access is often still limited by the disadvantages they e perience because of their gender. Some &3Is are providing a decreasing percentage of loans to women! even as these institutions grow and offer new loan products. )thers have found that on average women*s loan si+es are smaller than those of men! even when they are in the same credit program! the same community! and the same lending group. Some differences in loan si+es may be a result of women*s greater poverty or the limited capacity of women*s businesses to absorb capital. 9ut they can also indicate broader social discrimination against women which limits the opportunities open to them! raising the 4uestion of whether micro-enterprise development programs should do more to address these issues. 8nd looking at the leadership of many &3Is! we see very few women. Their contributionsQwhether setting the vision on a board of directors! designing products and services! or implementing programsQare missing. Thus! as the industry becomes more sophisticated in developing targeted products and services! it makes

sense to look at both targeting women and empowering women. &icrofinance programs have the potential to transform power relations and empower the poorQboth men and women. In well-run microfinance programs! there is a relationship of respect between the provider and the client that is inherently empowering. This is true regardless of the methodology or approach >whether the institution takes a minimalist approach of delivering financial services only or a more holistic or integrated approach@. 8s a conse4uence! microfinance has become a central component of many donor agencies* and national governments* gender! poverty alleviation! and community. International aid donors! governments! scholars! and other development e perts have paid much attention to microfinance as a strategy capable of reaching women and involving them in the development process. The microfinance industry has made great strides toward identifying barriers to women*s access to financial services and developing ways to overcome those barriers. 8 177; survey by the Special ,nit on &icrofinance of the ,nited Nations $apital Development 3und >S,&B,N$D3@ of microfinance institutions revealed that appro imately H7 percent of these institutions* clients were women. Si of the 1< focused entirely on women. 8mong the remaining 16 mi ed-se programs! =1 percent of clients were women. The study also showed! however! that those programs offering only individual loans or relatively high minimum loan amounts tended to have lower percentages of women clients. These findings affirm the importance of designing appropriate products for women. 8ccording to ,S8ID*s annual &icroenterprise 5esults 5eport for 1777! appro imately 07 percent of ,S8ID-supported &3Is* clients were women. $onsiderable variation among the regions was seen! however! with percentages of women clients ranging from 10 percent in the Near 2ast to G0 percent in 8sia. In 2astern 2urope! where ,S8ID has traditionally supported individual-lending programs! the percentage of women clients dropped as low as FG percent in ;<<< before rising to =F percent in 1777! when ,S8ID began to support more group-lending programs offering smaller loans. 8lthough the ,N$D3 study found that larger programs tended to have lower percentages of women clients! data collected by the &icrocredit Summit $ampaign found no statistically significant correlation between the numbers of very poor clients served by each institution and the percentage of those clients who were women. &icrofinance institutions around the world have been 4uite creative in developing products and services that avoid barriers that have traditionally kept women from accessing formal financial services such as collateral

re4uirements! male or salaried guarantor re4uirements! documentation re4uirements! cultural barriers! limited mobility! and literacy. Nevertheless! in a number of countries and areas few or no institutions offer financial services under terms and conditions that are favorable to women. Together! these findings confirm that the type of products offered! their conditions of access! and the distribution of an institution*s portfolio among different products and services affect.

8ccording to the Daily news

>GB1GB177<@ .omen entrepreneurs throughout the world

contribute to economic growth and the sustainable livelihood of their families and communities. &icrofinance helps empower women from poor households to make this contribution. &icrofinance Q the provision of financial services to the poor in a sustainable manner Q utili+es credit! savings and other products such as micro insurance to help families take advantage of income-generating activities and better cope with risk. .omen particularly benefit from microfinance and many microfinance institutions! or &3Is! target female clients. &icrofinance services lead to women*s empowerment by positively influencing women*s decision-making power and enhancing their overall socio-economic status. 9y the end of 177H! microfinance services had reached over 0< million of the poorest women in the world. 8s such! microfinance has the potential to make a significant contribution to gender e4uality and promote sustainable livelihoods and better working conditions for women. #oet+ and #upta >;<<H@ point to another less developed link in the literature on credit and empowerment. They argue that the ability of women in bringing credit a valuable and productive resource to the household may enhance their position within the family! resulting in economic empowerment. Aowever! they completely ignore this lead in their empirical approach of measuring and 4uantifying empowerment. ,sing an inde reRecting the degree of control the women have on the loans that they take! they conclude that most women have minimal control over their loans.

".% T!,()(). o) M(c!o )t !:!(+ + ()- +t* )t+ . In the field! I38D-commissioned e perts have helped %.3T become more efficient. (reviously! %.3T field officers met with client groups every week. Now! groups are given an initial intensive training period of 6-H months. 8fter that! they meet with %.3T field officers only once a month. This has allowed field officers to greatly e pand the number of clients and outstanding loans they can handle. 3ield officers can reach large sections of rural %enya by using motorbikes to cover a radius of 1= kilometers from each branch. Aigher staff efficiency has made it possible to develop financially sustainable operations! even in rural areas. %.3T has also improved its relationship with clients! intensifying its client training efforts and handing over more power to groups to manage their own affairs. #roup leaders become! in effect! %.3T field managers! taking active care of the group*s loan application and repayments. %.3T*s own field staff takes annual courses on customer care. 8s a result! relations between clients and staff tend to be very good. The Trust is committed to the on-going training of personnel and improvements in the management information system. To a large e tent! the remuneration and training policies will determine the organi+ationMs ability to sustain a program of financial services delivery. 5etaining 4ualified staff entails matching the remuneration policies of competitors. %.3T has found that setting targets and strategies on a yearly basis >assisted by .omenMs .orld 9anking@ has added value to the management and evaluation of the credit program. Aowever! there is no Poff-the shelfP system for monitoring the loan portfolio. &oreover! trying to develop one is e pensive and re4uires considerable e pertise. The %.3T is an affiliate of .omenMs .orld 9anking. Its programmes can be split into two basic types: training of women and credit for women. 8lthough credit has more e posure! the training is considered the core program me for the Trust. 8ll potential credit recipients must take the training course as a prere4uisite to receiving a loan. Aowever! training is also given to women who will not be receiving a loan. 8 one-week course is provided to all applicants! with a small fee charged to cover the costs of tea and supplies. Training is in small groups! whenever possible! for women of similar educational background and from the same area. The topics

covered are managing a business' setting business ob/ectives' salesmanship' sales promotion and displayBmarketing' basic bookkeeping' stock control' bankingBcredit' personnel management' planning' legal awareness' leadership skills and 4uality control. The ma/or constraint in running the courses has been the limited education of the participants. %.3T is developing a training approach directly attuned to the needs of the illiterate and semiliterate who form the ma/or part of the potential clientele in the rural areas. The courses are geared to overcome this problem as much as possible through using a combination of lectures! drama! role play and discussions. To date! over H77 women have participated in the training course! and 0=K of these have taken loans. The womenMs own evaluation of the courses is that they are e tremely useful but too short. Source: 3ong and (errett! ;<<;. ".7 R + ,!c1 G,: 9aumback S;<GGT states that! a ma/or constraint on women financial empowerment and their business ventures is their inability to obtain ade4uate financing! either in absolute sense or because of the cost in terms of interest rates is often prohibitive .Ae further argues that the high cost of small business borrowing has put considerable pressure on the overall small business marginal profits. Ae points out that most .omen entrepreneurs rely primarily on or e clusively on own savings and reinvested marginal profits which has a big impact of the women financial empowerment. The researcher therefore seeks to determine the effect of the services provided by &3Is to these women if they have had any impact on their financial empowerment

CHAPTER THREE? RESEARCH DESIGN AND METHODOLOGY 3.$ I)t!o26ct(o) The aim of this chapter is to present the methodology to be used in the study. It includes the r e s e a r c h design! the target population! sample si+e and s a m p l i n g d e s i g n ! d a t a s o u r c e a n d collection procedures and data analysis techni4ues that will be utili+ed. The usefulness of the statistical analysis depends on the ade4uacy and correctness of the information obtained. It will be noted that once the information and the data are flawed! perhaps through bias or ambiguities other or types of errors! the fanciest and the most sophisticated tools may not be ade4uate to compensate for deficiencies. The sources of the information and the data with the method of collection must be correct! entitled to acceptance and of established credibility. 3." R + ,!c1 2 +(.) The researcher will use a descriptive survey research design. 8ccording to Singh >17;1@! survey research is used to answer 4uestions that have been raised! to solve problems that have been posed or observed! to assess needs and set goals! to determine whether or not specific ob/ectives have been met! to establish baselines against which future comparisons can be made! to analy+e trends across time! and generally! to describe what e ists! in what amount! and in what conte t. 8 r y ! " a c o b s ! ? 5 a + a v i e h ! > 1 7 7 < @ i d e n t i f i e d t h r e e d i s t i n g u i s h i n g c h a r a c t e r i s t i c s o f s u r v e y research. 3irst! survey research will be used to 4uantitatively describe specific aspects of a given population. These aspects often involve e amining the relationships among variables. Second! the data re4uired for survey research are collected from people and are! therefore! sub/ective. 3inally! survey research uses a selected portion of the population from which the findings can later be generali+ed back to the population. Therefore! the option of survey research will be to offer a

rich field and a large understanding through a combination of 4uantitative and 4ualitative methods. Descriptive study will be used because it describes the e isting conditions and attitudes through observation and interpretation. 8ccording to 8ry et al.! >177<@! the suitability of descriptive r e s e a r c h d e s i g n f o r t h i s s t u d y r e s t s o n t h e f a c t t h a t h u m a n b e i n g s l i v e b y i n t e r p r e t i n g phenomenon around them. This study will embrace the use of 4uestionnaires! interviews and observations so as to address the factors surrounding &3Is and women empowerment in %enya. 3.3 R + ,!c1 +(t ,)2 !,t(o),/ This proposal will be carried out at selected branches of %.3T. This proposal will have three components: research! research capacity development! and policy support. The aims of this proposal will be to: 2laborate! derive and test a conceptual model on the relationship between entrepreneurial leadership! social capital! resource assembly and performance of small and medium-si+ed enterprises in %isii county! Disseminate the research findings to both researchers and practitioners using different channels such as /ournal papers! conferences! policy briefs! popular media and policy forums! Train young researchers! including graduate students in the participating universities! and develop a teachingBtraining material for entrepreneurship scholars and students and to (rovide scientific and other support towards policy development! research capacity development and entrepreneurial capacity building for S&2s! especially on leadership! management! resource assembly and performance enhancement. 3.% T,!. t Po:6/,t(o) The research will target %.3T women members! in branches within %isii $ounty. These will be assumed to be a good representative of the scenario of &3Is throughout the country. The study will focus on women members who have been in the &3IS for a period of more than four years. This is presumed as the minimum duration in which the impact of would have taken place. 3.7 S,*:/(). :!oc 26! The sampling procedure will utili+e convenience sampling. The reason for choosing convenient sampling would be that the techni4ue is fast! ine pensive! and easy. In addition! the sub/ects are also readily available. 8ccording to #ravetter ? 3or+ano >17;1@! convenient sampling is a

non- probability sampling techni4ue where sub/ects are selected because of their convenient accessibility and pro imity to the researcher. 3.8 S,*:/ +(0 )ne of the pivotal aspects of planning a study is the calculation of the sample si+e. It is naturally neither practical nor feasible to study the whole population in any study. Aence! a set of participants is selected from the population! which is less in number >si+e@ but ade4uately represents the population from which it is drawn so that true inferences about the population can be made from the results obtained. The formula for calculating the sample si+e is as below'

J 1 U >p@ U >;p@ c1

.here: J V J value >e.g. ;.<H for <=K confidence level@ p V percentage picking a choice! e pressed as decimal >.= used for sample si+e needed@ c V confidence interval! e pressed as decimal >e.g. .7F V WF@ 3.9 R + ,!c1 ()+t!6* )t+ 8 combination of 4ualitative and 4uantitative research methods will be u s e d i n o b t a i n i n g information from the bank branches selected for the study. It is intended that the information gathered in the course of this work will enable the researcher to the scenario of &3Is and women financial empowerment in %enya as a basis for comparison with generally accepted practices and make recommendations for improvements. 9asically! the sources of data collected e ist in any research methodology! namely' primary and secondary sources. 3.9.$ P!(*,!4 So6!c + o' D,t,

3or the purpose of this work! the researcher will collect the data through the use of 4uestionnaire! structured interview! and observation. 8 4uestionnaire is as a data collecting instrument comprising of 4uestions designed f o r r e s p o n d e n t s t o a n s w e r . T h e s t u d y r e c o g n i + e s t w o t yp e s o f 4 u e s t i o n n a i r e s ! s t r u c t u r e d 4uestionnaires and open ended 4uestionnaire. The structured 4uestionnaire re4uires a respondent to answer a 4uestion by simply choosing the appropriate answer from options provided. The open-ended 4uestionnaire provides a space for the respondents to write their answers. .ith the structured 4uestions! responses may be easily 4uantified! but when it comes to obtaining of i n f o r m a t i o n which a research may not even e pect from the respondents! the open e n d e d 4uestions would be better. 3or this research! both types of 4uestions will be used in a single 4uestionnaire to give better results. 3.9." S co)2,!4 So6!c + o' D,t, Secondary data is the information collected by other agencies but with the utility of the researcher in this study. &uch of the facts presented in this research will come from secondary data. It will provide a starting point for the research proposal. I n t h i s r e s e a r c h ! secondary data will comprise information from te t books and other relevant publications. The following sources will provide the secondary data needed in this research: Te tbooks by various authors on co-operative development' Seminar papers on women empowerment organi+ed by women empowerment programs in %enya' 8nnual reports of women empowerment programmes and &3Is in %enya' Daily news papers! business maga+ines! and periodic /ournals! and Internet resources including statistics by the world bank and census report. 3.; P(/ot(). o' ! + ,!c1 ()+t!6* )t+ (ilot studiesM refers to mini versions of a full-scale study! as well as the specific pre-testing of a particular research instrument such as a 4uestionnaire or interview schedule. (ilot studies are a crucial element of a good study design. $onducting a pilot study does not guarantee success in the main study! but it does increase the likelihood.

3.; .$ R /(,b(/(t4 ,)2 V,/(2(t4 o' R + ,!c1 ()+t!6* )t+

The study will ensure validity and reliability in the research methods and the data collection tools to be used. In validity! this study will ensure that the data collection tools measure what they are supposed to measure >Smith! 17;7@. To guarantee this! the data collection tools will be piloted to ensure that the tools are well understood by the respondents! and that they address the research ob/ectives and 4uestions. $ollections will be done before printing out the final copies of tools that will collect the data. To ensure reliability in this study! common 4uestions will be asked. 8ll the data collection instruments will comprise standardi+ed 4uestions for all the respondents. Interpretation of the 4uestions to different respondents according to their levels of understanding will be done with caution! in order to avoid bias from the researcher. 8ccording to &ugenda ?&ugenda >;<<<@! reliability is the degree to which results obtained f r o m a n a l y s i s o f t h e data actually represent the phenomena under Study. 3.< D,t, co// ct(o) ()+t!6* )t+ 3or the purpose of this work! the researcher will collect the data through the use of 4uestionnaire! structured interview! and observation. 8 4uestionnaire is as a data collecting instrument comprising of 4uestions designed f o r r e s p o n d e n t s t o a n s w e r . T h e s t u d y r e c o g n i + e s t w o t yp e s o f 4 u e s t i o n n a i r e s ! s t r u c t u r e d 4uestionnaires and open ended 4uestionnaire. 3.<.$ D,t, ,),/4+(+ ,)2 :! + )t,t(o) Data analysis consists of e amining! categori+ing! tabulating or otherwise re-combining the evidence! to address the initial propositions of a study.* >Iin! ;<GF: <<@ Data analysis is the process of developing answers to 4uestions through the e amination and interpretation of data. The basic steps in the analytic process consist of identifying issues! determining the availability of suitable data! deciding on which methods are appropriate for answering the 4uestions of interest! applying the methods and evaluating! summari+ing and communicating the results.Data will be presented by use of bar graphs and pie charts. 3.$# Et1(c,/ co)+(2 !,t(o)+. 2thics are measures which are connected with beliefs and principals about what is right and wrong >8.S. Aornby 17;7@. The issue of ethics is very important in research despite the high

knowledge gained through research' knowledge cannot be pursued at the e pense of human dignity. The following ethical considerations will be made'

3.$#.$ R +: ct I)2(-(26,/ A6to)o*4 8utonomy means the freedom to decide what to do. 2ven when someone has signed a $onsent 3orm! they must be made aware that they are free to withdraw from the study at any time! without giving a reason. They must also be able to re4uest that the data they have given be removed from the study. 3.$#." A-o(2 C,6+(). H,!* The duty of the researcher is not to cause harm. "udgments need to be made about what are acceptable levels of harm. 3.$#.3 M,()t,() A)o)4*(t4 ,)2 Co)'(2 )t(,/(t4 &aking data :anonymous* means removing the contributor*s name.. )ther information can help to identify people! for e ample: /ob title! age! gender! length of service! membership of clubs! and strongly e pressed opinions. The more pieces of information that are presented together! the easier it is to identify someone. )rgani+ations! units! and groups may also need their anonymity protected. #eographical information! combined with the type of organi+ation! can give away identity 4uite 4uickly. Take as many precautions as you can to protect anonymity! and only promise the level of anonymity that you can realistically provide. .

REFERENCES