Benard Binder EFFECTIVENESS OF GROUP LENDING ON THE GROWTH OF WOMEN BORROWERS
Benard Binder EFFECTIVENESS OF GROUP LENDING ON THE GROWTH OF WOMEN BORROWERS
Benard Binder EFFECTIVENESS OF GROUP LENDING ON THE GROWTH OF WOMEN BORROWERS
BORROWERS
The Primary Concern of the Research is Assessing the effectiveness of group lending on
the growth of women borrowers.
i. To determine the extent of Group lending Model effectiveness for the growth of
Women Groups borrowers.
ii. To identify the characteristics of the Women groups borrowers in group lending
iii. To highlight the Challenges faced by Women group members in regard to group
lending
The study requested respondents to indicate the age category that respondents were.
Table 4.2 shows the summary of the findings, from the study 33% of the respondents
aged between 35-45 years, 26% aged between 25-35 years, 23% aged between 45-55
years while the rest 17% were above 55 years. This shows that most of the group
comprised of energetic young person who are eligible to benefit with funds set by the
government to support the youth and other vulnerable groups in the society.
Frequency Percentage
25-35 years 21 26
35-45 years 27 33
45-55years 19 23
Above 55 years 14 17
Total 81 100
From the findings, most (39, 48%) of the respondents were married, 31% (25) of the
respondents were not married while 21% (17) were either divorced, separated or their
partner died. This implies that the group comprises various categories of the members
regardless of their marital status in the community.
The findings most (43%) of the respondents indicated that their groups were funded by
NGOs 26% pointed that their group was funded by local government, 14% by
Community Based Organization, 11% by Faith Based Organizations (FBOs) while the
rest (6%) were funded by the individual incomes either in self employment or in formal
employment
The researcher also requested respondents to indicate the highest academic qualification.
From the findings, most (40%, 32) of the respondents had attained secondary certificate
as their highest academic qualification, 23%(19) held had acquired certificate in various
courses, 16%(13) had attained diploma level, 12%(10) had attained primary certificate
while the rest (9%, 7) of the respondents had a degree as their highest academic
qualification. This illustrates that most of the group in rural and slum members consisted
of member who had different academic qualifications.
The findings established that 48%(39) of the respondents were members in the
interviewed group, 20%(16) were secretaries, 17% held positions of the chairpersons
while 15%(12) were treasures. This implies that the information given by the respondents
is reliable since the official targeted by the study participated in the study.
The study also established that 15% of the respondents were elected as the treasurers,
11% were secretaries, 10% were chairpersons and organizing secretaries as shown in
each case, 9% were assistant secretaries while 7% were vice chairpersons. This depicts
that most of the respondents held various positions in various group with the region.
The researcher requested respondents to indicate extent to which some skills enhance
their leadership judgment in the group. Mean score and standard deviation for each
statement were computed and presented in table 4.8.
Mean STDev
Decision Making skills 3.52 0.168
Ethical and high Moral standards 3.77 0.297
Effective Communication skills 3.70 0.198
Team Work 4.01 0.196
Marketing & Selling skills 3.64 0.284
Problem solving skills 4.20 0.147
Conflict Management skills 4.00 0.388
From the findings, most of the respondent pointed that problem solving skills to a great
extent influence their leadership judgment in the group (M=4.20, S D=0.147). Team work
skills influence respondents’ leadership judgment in the group to a great extent as
depicted by mean of 4.01 and SD 0.196. Conflict management skills influence
respondents’ leadership judgment in the group to a great extent (M=4.00, SD=0.388).
Ethical and high moral standards influence respondents’ leadership judgment in the group
to a great extent (M=3.77, SD=0.297). Ethical and high moral standards influence
respondents’ leadership judgment in the group to a great extent (M=3.70, SD=0.198).
Marketing and Selling skills influence respondents’ leadership judgment in the group to a
great extent (M=3.64, SD=0.284). Respondents indicated that decision making skills
influence respondents’ leadership judgment in the group to a great extent (M=3.52,
SD=0.168).
Frequency Percentage
Between 1 -5 years 21 26
Between 5 -10 years 35 43
Above 10 years 25 31
Total 81 100
The study established that 60% of the group had more than 30 members while 40% had
between 20-30% above. This implies that most of the groups have met the set rules by the
government on benefit of available funds such as Uwezo funds.
Group constitution
The study requested the respondent to indicate whether their group has constitutions that
guide their operation. From the findings, 77% of the respondents pointed out that they
have a constitution while the rest (23%) indicted that the group had not developed any
comprehensive constitution. Most of (73%) of the constitutions have stipulated methods
of election of officials to the office while 27% of the constitution does not stipulate the
date of election.
Frequency Percentage
Yes 62 77
No 19 23
Total 81 100
The study sought to investigate how often the group conducts elections and AGM. From
the findings, most (40%) of the respondents conduct elections and AGM annually, 30%
after six months, 20% quarterly while 11% conduct on members request. This implies
that most of the groups have a well structured constitution that give right for the members
to exercise their right through voting and accessing their financial and performance
positions. The findings indicate that (78%) of the respondents consider voting as an
important practice within a group since it creates confidence among the members on their
contributions and that the goals of the group are safeguarded by the officials elected.
Frequency Percentage
Quarterly 16 20
After Six Months 24 30
annually 32 40
On Members request 9 11
Total 81 100
F % F % F % F %
Chairperson 15 19 22 27 31 38 13 16
Organizing 13 16 24 30 33 41 11 14
Secretary
Treasurer 12 15 25 31 34 42 10 12
Frequency Percentage
Monthly 38 47
Quarterly 27 33
Twice annually 4 5
annually 2 2
Once a Week 10 12
Total 81 100
Frequency Percentage
Yes 58 72
No 23 28
Total 81 100
Mean STDEV
The Activities and Offered services have identifiable positive 4.030 0.287
impacts on the growth of my life.
To Nurture a savings culture and self empowerment is one of the 3.091 1.646
most important aspects for the group
Existing group members were making visible progress and 4.030 0.336
transformation towards financial self sufficiency and that
contributed to my joining the group.
I needed a place I can save and network with fellow women, and 4.270 0.391
address the social issues that affect women in general.
My savings are coming from the informal businesses for example 4.200 0.147
the Micro and Small Enterprises (SME) and save in SACCOs
Mean STDev
We did not meet the Minimum number of members required for 3.74 1.041
registration as a Government requirement
We did not find it important to have it registered at the time being. 3.47 0.899
The Registration requirements are difficult to meet with no 4.15 1.009
flexibility.
Statements of Group Accounts for at least 1 year showing Group 3.73 0.87
contribution were a critical requirement for the group to be
registered which we didn’t have.
The Group MUST have held at least 3 AGMs before registration. 3.44 0.943
Training and its influence on savings culture
The study also sought to investigate whether training offered by the financial institution
encourage saving culture among the group members. From the findings majority (63%)
of the respondents indicated that training offered by financial institution encourage
saving culture while 37% were of the contrary opinion of the majority.
Frequency Percent
Yes 51 63
No 30 37
Total 81 100
Mean STDev
Total loans Applications 3.67 0.131
Was there an increase on overall loans disbursed 3.56 0.913
Total Volumes of loans disbursed 3.18 0.948
Profit & Investments opportunities 3.84 0.746
Loans repayments performance 3.63 0.808
Repeated loans Applications 4.01 0.196
Accumulated collaterals / Deposits , Security documents e.g. Title 3.64 0.284
deeds , Share Certificates , Total Assets held
Frequency Percent
Yes 64 79
No 17 21
Total 81 100
of
Loan disbursed
women groups
contributions
investments
Application
Increased
Members
Growth
Loan
Growth of women Pearson 1
groups Correlation
Sig. (2-tailed)
Increased Pearson .5120 1
investments Correlation
Sig. (2-tailed) .0023
Loan Application Pearson .6090 .3381 1
Correlation
Sig. (2-tailed) .0031 .0012
Loan disbursed Pearson .7320 .1210 .060 1
Correlation 8
Sig. (2-tailed) .0027 .0150 .004
2
Members Pearson .5180 .3370 .000 .1580 1
contributions Correlation 0
Sig. (2-tailed) .0168 .0031 1.00 .0028
0
All the four independent variables that were studied, explain only 83.4% of the growth of
women borrowers as represented by the adjusted R2. This therefore means that other
factors not studied in this research contribute 16.6% of the growth of women borrowers.
Therefore, further research should be conducted to investigate the other factors (16.6%)
that influence growth of women borrowers.
The regression equation above has established that taking all factors into account
(increased investments, loan application, loan disbursed and members’ contributions)
constant at zero, growth of women borrowers will be 1.217. The findings presented also
shows that taking all other independent variables at zero, a unit increase in investment
will lead to 0.546 increase in growth of women borrowers; a unit increase in loan
applications will lead to 0.728 increase in growth of women borrowers; a unit increase in
loan disbursement will lead to 0.765 increase in growth of women borrowers and a unit
increase members contributions will lead to a 0.612 increase in growth of women
borrowers. This infers that loan disbursed contribute most to growth of women borrowers
followed by loan applications then membership contribution while increased investment
contributed the little to growth of women borrowers.
From the findings the study concluded that there are several characteristics that are
similar in most women group such as most of the group have been in operation for 5-10
year and, most group had more than 30 members. Procedural resolution by reconciliation
is generally the method most appropriate in most groups though the groups also come up
with a possible strategy for reducing conflict over how to reach an agreement that aims to
achieve the objectives of the group. Likewise group set rule on conflicts resolution where
issues are discussed and make final decision is based on the information and situations.
Most groups have a constitution that guides on achievement of the group objective and
ensure cohesiveness among the members. Elections and AGM in most groups are done
annually with most of the chairpersons serving in their group for a period of 1year. Most
groups have been operating saving accounts to encourage culture of saving among the
members where they use their saving to borrow money from financial institutions such as
in Banks, SACCOs and DTMs.
To the challenges faced by women group in borrowing, the study established that most
group do not understand the loan application process and its requirements, others feel that
they did not meet the requirements from the banks. Lack of collaterals to secure the loan
facility among the groups, strict terms and condition and high interest rate set by the
financial institution hinders women group to borrow fund from the institutions. Need for
saving and networking with fellow women to address the social issues, need to engage in
activities and offer services that are identifiable and bring positive impacts on the growth
of the women life and king visible progress and transformation towards financial self
sufficiency were the main reasons behind establishing a women group.
On effectiveness of the group lending, the study established that most of the most of the
groups are not registered with Ministry of Devolution and Welfare services due to
difficulties in registration requirements which are not flexible. Likewise, most of the
group did not meet the minimum number of members required for registration as a
government requirement and that statement of group accounts for at least 1 year showing
group contribution was a critical requirement for the group to be registered which most
groups didn’t qualify. However, most of the groups gain from the training offered by the
financial institutions which has led to the growth of the group to a great extent. The study
found that repeated loans applications, profit and investments opportunities, total loans
applications, accumulated collaterals/deposits, and security documents and Loans
repayments performance influence growth of the group to a great extent. However, most
of the members felt that there is need to diversify investment approach.
To the factors influencing effective of the group, the study established that for the last
five years, 2010-2015, most of the women group have experienced rapid growth which
were influenced by various factors. For example in year 2010, most of the group
experienced rapid growth in repeated loan applications, the volumes of loans disbursed,
amount of loans repaid, Total Loans that are currently in Arrears and the Number of New
Products and initiatives. In 2011, Total Number of loans disbursed, Total loan
Applications, Number of New Products and Initiatives, Repeated loan Applications, The
Volumes of loans disbursed and Total Loans that are currently in Arrears or Non
performing highly improved. In 2012, Growth of Members overtime, Amount of loans
repaid and Total Loans that were in Arrears or Non performing highly improved. In 2013,
Growth of Members overtime, Amount of loans repaid, The Number of New Products
and Initiatives highly improved. In 2014, total number of loans disbursed, total loan
applications, mount of loans repaid, repeated loan applications and number of new
products and initiatives improved significantly.
5.3 Conclusion
The study aimed at finding out the effectiveness of group lending on the growth of
women borrowers. Based on study findings, the study concluded that most of the women
groups have several characteristics that are similar such as most of the group had more
than 30 members. Procedural resolution by reconciliation is generally the preferred
method adopted by most groups to find solution to the conflicts within the groups. Some
group set rule on conflicts resolution where issues are discussed and final decision is
reached based on the information availed. Constitution is the supreme tool that guides
most of the women group to attain their objective and to ensure cohesiveness among the
members. Elections and AGM in most groups are conducted annually where the
constitution provision stipulated that the official bearers should be in office for 1year.
Members have a saving account that aims to encourage saving culture among the
members which acts as the security during borrowing.
The study established that poor understanding of loan application process and needed
requirements, lack of collaterals to secure the loan facility among the groups, strict terms
and condition and high interest rate set by the financial institution are some of the
challenges facing most of the women group in borrowing fund from the institutions. Need
for saving and networking with fellow women to address the social issues, need to
engage in activities and offer services that are identifiable and bring positive impacts on
the growth of the women life and king visible progress and transformation towards
financial self sufficiency were the main reasons behind establishing a women group.
To the effectiveness of the groups, the study concluded that most groups are not
registered with Ministry of Devolution and Welfare services due to difficulties in
registration requirements which are not flexible. Less numbers of the membership
required for registration and weak statement of group accounts are some of critical
factors that hinder most of the group not to register since they don’t meet the terms.
Training offered by the financial institutions has led to the growth of most women group
to a great extent. The study concluded that repeated loans applications, profit and
investments opportunities, total loans applications, accumulated collaterals/deposits and
Loans repayments performance influence growth of the group to a great extent. However,
most of the members felt that there is need to diversify investment approach.
The study established that in 2010, repeated loan applications, the volumes of loans
disbursed, amount of loans repaid, Total Loans that are currently in Arrears and the
Number of New Products and initiatives highly improved. In 2011, Total Number of
loans disbursed, Total loan Applications, Number of New Products and Initiatives,
Repeated loan Applications, The Volumes of loans disbursed and Total Loans that are
currently in Arrears or Non performing improved significantly. In 2012, Growth of
Members overtime, Amount of loans repaid and Total Loans that were in Arrears or Non
performing highly improved. In 2013, Growth of Members overtime, Amount of loans
repaid, The Number of New Products and Initiatives improved rapidly. In 2014, total
number of loans disbursed, total loan applications, mount of loans repaid, repeated loan
applications and number of new products and initiatives improved significantly.
5.4 Recommendation
Based on the study findings, the following recommendation were made, Each and every
group have its own ideals and norms which are supposed to be followed by the members.
Whoever deviates from the existing group-norms should be severely punished. These
norms should be in the form of customs, folk ways, mores, traditions, laws etc. They may
be written or unwritten. The group should exercise some control over its members
through the prevailing rules or norms. Likewise, the study recommended that given that
the groups have a diverse interest, to make a decision by considering not only the
dissimilarity among the group members, but more importantly, the weights of individual
members within this group.
The study recommended that financial institutions and policies makers should review the
requirement needed for the vulnerable group to access fund set aside by the government
and also loan from the financial institutions. Government should encourage integrating
the financial needs of the poor women into the country’s system; the job of government is
to enable financial services. The key bottleneck to formal group lending schemes is the
shortage of strong institutions and managers. Interest rate ceilings hurt the poor;
government should encourage micro finance institutions not to increase group-lending
costs, which choke off the supply of credit. Access to finance may contribute to a long-
lasting increase in income by means of a rise in investments in income generating
activities and to a possible diversification of sources of income; it may contribute to an
accumulation of assets; it may smooth consumption; it may reduce the vulnerability due
to illness, drought and crop failures, and it may contribute to a better education, health
and housing of the borrower. In addition, access to finance may contribute to an
improvement of the social and economic situation of women.
Group lending should be promoted in order to help poor people especially women out of
poverty. It is also a way of promoting economic development, employment and growth.
The poor stay poor, not because they are lazy, but because they have no access to capital.
Till today a large number of poor people remain outside the formal banking system. The
role of group lending is to reach this set of the population that remains unbankable or
unbanked and make financial services accessible to them.
Funds should be made available to women by banks and the government. Instead of
lending directly to individual borrowers money should lend to groups of borrowers who
are jointly liable for a single loan. This would serve several mutually reinforcing
purposes. Group lending minimizes administrative and transaction costs for lenders by
replacing credit checks and collateral processing with self-selection of groups by
borrowers. Borrowers who are jointly liable for the loans of their group have a vested
interest in choosing trustworthy partners. Joint liability also discourages default because
group members exercises peer pressure to repay on their partners, as well as providing a
business support network that offer advice, correction and potential markets. The model
works by generating revenue through interest in which is paid by each borrower to help
finance the cost of lending the others. Such a model can lead to self-sustaining micro
lending programs that cover their own costs. A successful program will generate more
resources with each individual helped because of added interest, which enables program
to generate more income than they actually spend helping more people in need. These
mechanisms towards self-sustaining and even profit making ventures have lead some
banks to both profitability and serve the workers poor. Indeed group lending is fast
emerging as a powerful instrument for poverty alleviation in growing economies.
5.5 Recommendations for Further Studies
The study explored effectiveness of group lending on the growth of women borrowers.
Groups in Kenya however comprised of various categories across the country with
different objectives which differ in their way of management and have different settings
all together. This warrants the need for another study which would ensure generalization
of the study findings that reflects real situation across the groups hence pave way for new
policies. The study therefore recommends another study be done with an aim to
investigate the impact of relationship lending on credit availability to groups in Kenya.