The need for development that saw the Kenya develop several strategies and plans such as the vision 2030 and the millennium development goals has led to development of the finance sector. The need for financing of the development projects has developed micromanage institutions in the country. Micromanage has received a lot of attention since its inception in the early sass perhaps, as argued by Credited (2005: due to the ability of micromanage to enable poverty alleviation and economic development through provision of credit and savings services to those earning low income.
The attention has seen development of efferent definitions to micromanage. According to Otter (1999: 8) micromanage is “the provision of financial services to lonesome poor and very poor self-employed people”. On the other hand, Screener and Colombia (2001 : 339) define micromanage as “the attempt to improve access to small deposits and small loans for poor households neglected by banks. ” Independent of the definition provided to micromanage it is a general agreement in the economic field that micro financing alleviates economic development.
The money or funds that are provided by micromanage institutions in terms of credit and micro loans enables hose who are poor to invest into productive activities that are bound to earn them income helping them boost their economic level and alleviate poverty in the entire economy. Micromanage institutions therefore are an opportunity for sustainabledevelopment. The extent opportunities available to generate income and the ability of citizens to respond to the available opportunities are to a large extent determined by the degree or ability to access financial services that are affordable.
Micromanage being able to provide such financial services is being pursued by every economy worldwide. Initially micromanage aimed at providing donor finances and financing experimental projects. This has developed to financial institutions that provide a wide range of services and several routes to opportunities that are significant for economic development and expansion (Khan, 2005:131-142). The concept of micromanage in most instances has been used interchangeably with microcircuit imploring that they have the same meaning.
However microcircuit and micromanage are two different concepts. In an attempt to describe the difference between microcircuit and micromanage, Sinai (1998: 2) states that, “microcircuit refers o small loans, whereas is appropriate where non-governmental organizations (Nags) and micromanage institutions (Miff) supplement the loans with other financial services (savings, insurance, etc)”. This definition indicates that microcircuit is part of micromanage since it involves providing credit to the poor.
Micromanage is an overall concept as it involves both credit and non-credit financial services such as insurance, savings, pensions and other payment services. 4 Micromanage institutions, given the nature of their objective of ensuring that the prop are able to access financial services, operate in several models. The most commonly identified models of operations of micromanage institutions include the Rotating Savings and Credit Association (Rascals), the Grahame Bank and the Village Banking models.
Rotating Savings and Credit Association are formed when a group of individuals come together and form an agreement to make regular cyclical contributions with an aim of developing to a common fund. After some period of specified time the lump sum of the contributions is given to one member of the group in each cycle. As argued by Screener (2010: 112-119), this model is a very common form of savings and credit. The solidarity group model is based on based on group peer pressure. Loans are made available to individuals who are in organized groups of four to seven peoples (Breach and Gunman, 1994: 119).
The advantage of being in groups is that the members collectively guarantee loan repayment. They are therefore able to access subsequent loans depending on successful repayment by all group members. These payments are usually made after a specific period of time, usually one week (Lodgers, 1999: 137). This model of micro financing is the most commonly used by banks. It has proven to be more effective in the long run as here are few loan defaulters as each member of the group is a guarantor of the other.
Breach and Gunman (1994: 119-139) argues that, solidarity groups have proved effective in deterring defaults as evidenced by loan repayment rates attained by organizations. Village banking model are based on village banks which are normally countermanding. The banks are established and managed by credit and savings associations established by Nags to provide access to financial services, build community self-help 5 groups, and help members accumulate savings (Screener, 2003: 118-136). This is midair’s.
Usually these village banks normally consist of 25 to 50 members who major low-income earning individuals are seeking to improve their lives through solemnity’s activities. In Kenya, the need for economic development has seen the development of micro finance institutions which in normal cases start as Chasms. Chasms are small groups of individuals, who come together, collect money in a pool through continuous contributions with an aim of accomplishing an investment objective. According to Nonhuman (2002), the development of Chasms has led to the development of banks in Kenya.
For example, equity bank developed from a micro insane institution where its major purpose was to help customers get mortgage loans for individuals who are low income earners in the society. It was initiated as equity building society (Cottage, Kamala and Andrew, 2003). There has been other current deposit taking micromanage institutions in Kenya such as Raffia and Jamie Boar who are also in the same path. The rapid development of micro finance institutions in Kenya has helped the country develop economically with the current rate standing at 5% improvement annually(CAP, 2004).
This has shown that there are several impacts of the financial institutions to the economy. There are also business that were major part of the institutions that have flopped in the economy. Independent of the connection of economic development to these financial institutions many Kenya residents are not members of the micromanage institutions, let alone being aware of their existence (Choked, 2003). It is in line with this background that the study wishes to determine the 6 level of awareness and impact on micromanage institutions among the residents of Nairobi County.
Micromanage institutions have been identified to be the major component to economic development. In her study on Rural Financial Services in Kenya: What is Working and Why? Betty (2006) possess that micro financing institutions have in a large extent helped the development of the Kenya rural community; “micromanage institutions will continue serving the rural people and will transform themselves into community based micro-credit units. This will most likely reduce unemployment in the rural areas”.
Development practitioners and policy makers have as well identified efficient micromanage services as important for a variety of reasons; helping the poor manage their risks, build their assets, enhance their income earning capacity, be able o develop small enterprises to generate income, and these in turn will ensure improved life. Micromanage has also positive impacts on poverty alleviation and specific economic indicators such as nutrition status, women empowerment and children schooling.
Despite the several merits attributed to micro financial services, the level of poverty in Kenya is still high with 40% of Kenya leaving below a dollar, businesses are performing poorly and this is indicated by the slow economic development of below 5%, many Kenya are still not members of any micromanage institution. This may be attributed to lack of information on the positive impacts of micro financing and the lack 7 of awareness by the general public on the existence of micromanage institutions and the services such institutions offer.
Few studies have been done in Kenya revolving around micromanage. However none of these studies provide direct information on the impacts of micromanage institutions in Kenya. Macomb (2011) studied micro-finance in Kenya by specifically considering micro finance on financial empowerment of women in Kenya. This study though identified the impact of micro financing as empowering women positively, it jarred on Kenya Women Finance Trust and was also bias to women only. Therefore it lacked evidence on other impacts of micromanages in Kenya.
A similar study by Joy (2007) majored on the impact of micromanage on rural development with a setting of Making County. Although this study was a great milestone to the studies on the field of impact of micro financing services, it narrowed down to poor households, income and poverty eradication. The setting was also rural. This study therefore lacks enough evidence to ascertain the awareness and impacts of micromanage in Kenya. Therefore, we remain unable to Judge the Aladdin of this tentative explanation. That is, there remains insufficient empirical evidence to assess this claim.
To assess the impacts of micromanage to Nairobi County residents 4. To determine the strategies employed by the micromanage institutions in Nairobi County to meet their objectives 9 1. 5 Research Questions 1 . What is the level of awareness of Nairobi County residents on micromanage institutions and the services they offer? 2. What are the impacts of micromanage to Nairobi County residents? 1. 6 Hypothesis 1 . Nairobi County residents are unaware of micromanage institutions within the mount and the services such institutions offer 2.
Micromanage has positive impact to economic and social development of Nairobi County residents 1. 7 Significance of the Study To the government In line with the ability of micro financing services to ensure economic development by providing savings and credit to low income earners, the government has been pushed to support the development of micromanage institutions. This has seen a lot of investment by the government in providing financial support to the micromanage institutions.
The information from this study on the impact of micromanage may help he government in determining the viability of their investments. Micromanage institution’s management The micromanage institutions are formed with the objective of ensuring that low income earners have access to financial services. There are several Kenya who fall under the bracket of low income earners. Micromanage institutions aim at ensuring that all these citizens who are low income earners are catered for in terms of provision of financial services.
It is therefore necessary for the institutions to understand the perceptions of the citizens on the impact of the micromanage services hey are offering and the level of awareness of the public on the existence of micromanage institutions and their services. This information may be used by the management of the micromanage institutions in determining areas for improvement so as to ensure their success. Academicians/ researchers Little research has been done in sub-Sahara Africa to directly identify the impacts of micromanage.
Considering the benefits attributed to micromanage institutions in economic development and the rapid development of these institutions, impact of micromanage has received attention of researchers and academicians. Therefore a study on the awareness and the impact of micromanage in Kenya, with major focus on Nairobi County, may therefore attract researchers and academicians who are in need of educating more and providing solutions to lack of access to financial services in suburban Africa.
