Causes of Default on Micro - Credit among Women Micro - Entrepreneurs in Kenya. A Case Study of Women Enterprise Development Fund (Wedf) Msambweni Constituency

Abstract

The government of Kenya has developed many credit schemes aimed at providing cheap credit to women and the disadvantaged groups in the society however many of these programs have sustained heavy losses due to poor loan repayment. The main objective of this research was to establish the causes of default in micro-credit advanced to small scale women entrepreneurs by WEDF within Msambweni Constituency in Kenya. The specific objectives to be investigated were how business failure influences loan repayment, the influence of gender roles on loan repayment, the influence of borrower’s entrepreneurial skills on loan repayment and how diversion of loan funds by borrowers affected the repayment of such loans. The study targeted a total of 74 women groups operating in the constituency which had benefited from the facility. Out of the 74groups, 19 groups were sampled each with membership of 10members, out which 4 members were picked from each of 19 groups using a simple random sampling for each stratum, so that every member of the sample population could have an equal and independent chance of being selected as a respondent. Data was collected by use of structured and semi-structured questionnaire and analysed by using quantitative technique and tabulated frequency tables, pie charts and bar graphs. The study found out that the amount of money given by WEDF was inadequate for investment that would generate returns to repay the loan and sustain the business and the entrepreneur, multiple and competing gender roles robbed off majority of the women entrepreneurs their time to attend to businesses; many did not find the applicability of the training attended in the running of their business and diversion of loans was true and it lead to repayment problems as the funds were used for other critical purposes but un intended. The recommendations are, the amount of loan advanced to women entrepreneurs be increased so that they can have adequate capital, loan beneficiaries be trained and advised to have other income generating activities so as to avert diversion of loan funds for other purpose. Causes of Default on Micro Credit among Women Micro Entrepreneurs in Kenya. A Case Study of www.iosrjournals.org 34 | Page Abbreviations and Acronyms MFIs Micro Finance Institutions, MDGsMillennium Development Goals, SMEs Small and Medium Enterprises, WEDF -Women Enterprise Development Fund. Definition of Key Terms The following will be the operational definitions of key terms used in this study. Defaulting: Failure to pay money that one owes at the right time, Capital: Money or property especially when used to start a business or produce more wealth, Collateral: Property or other goods that one promises to give someone if he/she unable to pay back the money lent, Creditworthy: People considered being able to pay debts, Entrepreneurs: Someone who starts a business or arranges business deals in order to make money often in a way that involves financial risks, Financial services: Provision of loans and savings by financial institutions such as banks, Loan: An amount of money borrowed from a bank or financial institution, Micro-credit: Small loans given to the poor and underprivileged population for income generating activity that will improve their standard of living, Microfinance: Is the provision of financial services to the poor and low income clients who traditionally lack access to banking and related activities.