Abstract
This study examined the determinants of domestic savings mobilization among the rural poor in Uasin-Gishu county, Kenya. The general notion is that the subsistence farmers are too poor to save. This seems to be unfounded given the fact that they are general excluded from formal financial services and studies on poverty in the country show that the average propensity of the rural households to save is higher than the national average. What are the factors which motivate small scale farmers to save? The study was conducted on 446 table banking groups under the aegis of JOYWO, a table banking grouping in Kenya. Data was collected using structured questionnaires from members of groups under the umbrella of JOYWO. The findings of the study indicates that household income had a positive and significant effect on savings mobilization while dependency ratio had a negative and significant effect on savings mobilization. Household size was not significant. The results point to the need to expose the rural poor to informal savings and financing models expected to enhance income generating capabilities of the rural poor and lower the level dependency through government welfare funding for senior citizens and essential services for the young Keywords: Savings mobilization, Table banking, Rural Poor, Joyful Women Group. DOI : 10.7176/RJFA/10-6-02 Publication date :March 31 st 2019
Highlights
There has been a sustained interest by economists, international organizations and governments in developing countries on the mobilization of deposits, to increase domestic savings and to achieve sustained economic growth and development in order to strengthen domestic financial intermediaries (Vogel et al 1984, Gonzalez-Vega & Poyo 1986, Robinson 1994)
About 21.2% fell between 46-55 years, 12.5% above 65 years and 5.8% were aged below 25 years. This implies that they are within the active working years to be productive enough to mobilize some savings and be in need of credit for meeting the needs of their dependents. This observation is shown by the household size being highest in the category of 4-6 dependents accounting for 45.2% of the respondents
The findings presented shows that taking all other independent variables at zero, a unit increase in household income will lead to a 0.285 increase in the scores of savings mobilization; a unit increase in household size will lead to a 0.101 decrease in saving mobilization and a unit increase in dependency ratio will lead to a 0.096 decrease in savings mobilization
Summary
There has been a sustained interest by economists, international organizations and governments in developing countries on the mobilization of deposits, to increase domestic savings and to achieve sustained economic growth and development in order to strengthen domestic financial intermediaries (Vogel et al 1984, Gonzalez-Vega & Poyo 1986, Robinson 1994). Adriana de la Huerta (2010) found that household savings has positive effects on economic growth and poverty alleviation. The available data about rural incomes and family budgets show that the average propensity of the rural households to save is higher than the national average. Economic theory indicates that savings represents the difference between income and consumption where income includes earnings from all sources during a year and is net of costs incurred in producing that income. Consumption on the other hand is the total amount of goods and services expended by the rural household during a year. Rural households manage to save in two ways: first, they increase their meagre incomes by 25 to 30 percent by non-farm incomes which come from off-farm work, business, and service; second, they squeeze their consumption expenditure on items which are not essential for survival. What are the factors which motivate small farmers to save? What is the rationale for this savings behaviour? This is an area in which not much work seems to have been done
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