EFFECTIVENESS OF GROUP LENDING ON THE GROWTH OF WOMEN

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

iv. To recommend coping Strategies on improving the group lending Model.

 CHAPTER FOUR
DATA ANALYSIS AND INTERPRETATION OF FINDINGS
4.1 Introduction
This chapter presents data analysis, interpretation and presentation of the findings. The
purpose of the study was to analyze effectiveness of group lending on the growth of
women borrowers. The researcher made use of frequency tables and figures to present
data. The finding was intended on answering the study’s research questions. Data
composed was collated and reports were produced in form of tables and figures and
qualitative analysis done in prose.

4.2 Response Rate

The study targeted a sample of 105 respondnets’ from organized group in Kibra region.
However, out of 105 questionnaires distributed 81 respondents completely filled in and
returned the questionnaires, this represented 77% response rate. This is a reliable
response rate for data analysis. According to Mugenda and Mugenda (2003) pointed that
for generalization a response rate of 50% is adequate for analysis and reporting, 60% is
good and a response rate of 70% and over is excellent. However, 23% of the respondent
were reluctant to fill the questionnaire this was due to reasons like, the respondent were
not available to fill them in at the required time and even after persistence follow-ups
there were no positive responses from them. The response rate demonstrates enthusiasm
of the respondents’ to partake in the survey that the study sought.

Table 4.1: Response Rate

Response Frequency Percentage (%)
Filled in questionnaires 81 77
Un returned questionnaires 24 23
Total 105 100

4.3 Background Information

As part of the general information, the research requested the respondents to indicate
their age, marital status, source of income, academic qualification, postiond held by
respondnets and leadership skill acquired by office bearers. This is vital as it would
reflect on the reliability of information based on the responses and information given by
the respondents.

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).

4.4 Group Profile and Characteristics

This section presents the groups and characteristics of the groups. From the findings,
43% (35) of the group have been operating for 5-10 years, 31%(25) have been operating
for over 10 years while the rest 26% (21) of the group have been operating for 1-5 years.
This implies that the respondents of the study were conversant with the information that
the study sought.

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.

The study established that procedural resolution by reconciliation and/or compromise is

generally the method most appropriate in most groups. Some groups come up with a
possible strategy for reducing conflict over how to reach an agreed-upon goal might be to
redefine the situation in terms of new means toward the acceptable goals - a new bond
issue rather than depleting existing funds. Likewise most of the groups have set rule on
conflicts resolution where they discuss the issues arising and make final decision based
on the information and situations. Some groups form a conflict resolution team that
engage in other preemptive conflict management strategies to help avoid conflict.
Preemptive conflict management strategies includes the development of cooperation and
trust-building among members, team contracts that identify how to handle difficult
situations and develop norms for managing communication within a group. These actions
help the group effectively to address conflicts and reduce destructive impact of conflict\s
when they occur. Many conflict reduction approaches are adopted and designed to build
trust among the members in conflict. For example bargaining through telephone calls
before the bargaining session increases the chances of reaching into agreement by 50%.

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

Frequent of Election and AGMs

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

Duration served by Elected Group Officials

Table 4....shows the findings of the study on duration served by the elected official in
their respective group. From the findings, most (38%) of the chairpersons have served in
their group for a period of 1year, 27% for only 6months, 19% for less than 4months while
16% have been in office for more than 1 year. The study established that 41% of the
organizing secretary have served the

less than Upto 6 months 1 year only more than 1

4months year

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 of holding a meeting

The study requested respondents to indicate duration in which they hold a group meeting.
Most of the respondents indicated that the hold group meeting monthly, 33% quarterly,
12% once a week, 5% twice annually, 2% annually. This implies that most of the groups
are active and that they prefer having a group meeting monthly.

Frequency Percentage
Monthly 38 47
Quarterly 27 33
Twice annually 4 5
annually 2 2
Once a Week 10 12
Total 81 100

Operation of Savings Account

Table 4…..shows the study findings on whether the groups operate saving accounts.
From the finding, majority (72%) of the respondents indicated that they operate saving
accounts while 28% indicates that the do not operate saving accounts. The study
established that 68% of the groups have borrowed some amount from the financial
institutions such Banks, SACCOs and DTMs while 32% have not borrowed any amount
due to lack of meeting the requirements demanded by the financial institution such as
security, guarantors and poor financial statement of the groups.

Frequency Percentage

Yes 58 72

No 23 28

Total 81 100

Reasons for Not Seeking Borrowing from the Financial Institutions

The researcher requested respondents were required to indicate their level of agreement
with regards to the credit borrowing in the financial institutions. Most of the respondents
agreed that they did not understand the loan application process and its requirements as
shown by a mean score of 4.76. The respondents further agreed that as a group they still
felt that they did not meet the requirements from the banks as shown by a mean score of
4.18, lack of collaterals to secure the loan facility among the groups while the terms and
conditions were stringent hence hindering them to apply for loan as shown by a mean
score of 3.88 in each case, High Interest rates was a high consideration factor when
seeking for borrowing as shown by a mean score of 3.15. Finally, some group member
pointed that they fear that they still do not qualify for a loan facility hence they failure to
seeking for borrowing as shown by a mean score of 3.06.
 Mean STDEV
The fear that we still do not qualify for a loan facility 3.06 0.144
As a group we still felt that we did not meet the requirements 4.18 0.846
from the Banks
We did not have collaterals to secure the loan facility 3.88 0.781
We did not understand the loan Application Process and its 4.76 0.152
requirements
High Interest rates was a high consideration factor 3.15 0.503
In General , the terms and Conditions were stringent 3.88 0.746

Reasons for Starting a Women Group

Table 4….shows the findings of the study on the reasons behind members starting a
women group. From the findings, most of the respondent agreed that they needed a place
where they can save and network with their fellow women and address the social issues
that affect them in general as indicated by a mean of 4.27, respondents also agreed that
they wanted to collective save their incomes from informal businesses for example the
Micro and Small Enterprises ( SME ) and save in SACCOs as depicted by mean of 4.20,
some members started a group to engage in activities and offer services that are
identifiable and bring positive impacts on the growth of the women life as illustrated by
mean of 4.03, Existing group members were making visible progress and transformation
towards financial self sufficiency and that motivated them joining the group as shown by
mean score of 4.03, lastly respondents agreed that they formed a group to nurture a
savings culture and self empowerment as it is one of the most important aspects for the
group as depicted by mean score of 3.091.

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

4.5 Effectiveness of Group Lending

The researchers requested the respondent to indicate their level of agreement on their
group registration with the Ministry of Devolution and Welfare services. From the
findings most of the respondents pointed that registration requirements are difficult to
meet with no flexibility as agreed with majority as shown by mean score of 4.15,
respondents also agreed that they did not meet the minimum number of members
required for registration as a government requirement and that statements 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 have as depicted by mean score of 3.74
and 3.73 respectively. Respondent were neutral that they did not find it important to have
it registered at the time being and that the group MUST have held at least 3 AGMs before
registration as illustrated by mean score of 3.47 and 3.44 respectively.

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

Growth of the Group

The researcher also requested the respondents to indicate the extent to which some
aspects of group growth. Most of the respondents pointed that repeated loans applications
and profit and investments opportunities influence growth of the group to a great extent
as depicted by mean score of 4.01 and 3.84 respectively, respondent pointed that total
loans applications, accumulated collaterals / deposits, security documents and Loans
repayments performance influence growth of the group to a great extent as shown by
mean score of 3.67, 3.64 and 3.63 respectively. Further respondents indicated that there
an increase on overall loans disbursed influence growth of the group to a great extent as
illustrated by mean score of 3.56, few of the respondents opined that total volumes of
loans disbursed influence growth of the group to a moderate extent as shown by mean
score of 3.18.

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

Diversification of Investments Approach

Table 4…. shows the findings of the study on whether there is need to diversify the
investment approach in the groups. Majority (79%) of the respondents indicated that
there is need to diversify investment approach while the rest (21%) pointed that there is
no need for diversifying investment approach.

Frequency Percent

Yes 64 79

No 17 21

Total 81 100

4.6 Factors Determining Effectiveness

Performance of the Group for Overtime

The researcher requested the respondent to indicate the performance of their group for the
last 5 years. During year 2010, the study established that repeated loan applications
improved rapidly as shown by mean score of 4.59, 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 as shown by mean score of 4.52, 4.50, 4.21 and
4.11 respectively. 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 as depicted by mean score of 3.93, 3.71, 3.67, 3.66, 3.62 and 3.54 respectively.
In year 2012, Growth of Members overtime, Amount of loans repaid and Total Loans that
are currently in Arrears or Non performing highly improved as illustrated by mean score
of 4.73, 4.70 and 4.47 respectively. In 2013, Growth of Members overtime, Amount of
loans repaid, The Number of New Products and Initiatives highly improved as depicted
by mean score of 4.33, 4.15 and 3.75 respectively. In year 2014, total number of loans
disbursed and total loan applications improved highly as shown by mean score of 4.60 in
each case. Further the study established that amount of loans repaid, repeated loan
applications and number of new products and initiatives highly improved 4.50, 4.40 and
4.02 respectively.

2010 2011 2012 2013 2014

Total loan Applications 3.39 3.71 4.40 3.74 4.60
Total Number of loans disbursed 3.54 3.93 4.20 3.66 4.60
The Volumes of loans disbursed 4.52 3.62 4.20 3.47 4.20
Amount of loans repaid 4.5 3.25 4.70 4.15 4.50
Repeated loan Applications 4.59 3.66 4.30 3.73 4.40
Total Loans that are currently in Arrears 4.21 3.54 4.47 3.44 3.80
or Non performing.
Amount of Collaterals that have been 3.87 3.03 4.4 3.93 3.70
charged to secure loans
Growth of Members overtime 3.02 3.14 4.73 4.33 3.91
The Number of New Products and 4.11 3.67 4.33 3.75 4.02
Initiatives

4.7 Inferential Analysis

To compute the strength between dependent variable and the independent variables the
study conducted inferential analysis which involved coefficient of correlation, coefficient
of determination, ANOVA and a multiple regression analysis.

4.7.1 Karl Pearson’s Coefficient of Correlation

To compute the correlation (relationship) between the study variables and their findings
the researcher used the Karl Pearson’s coefficient of correlation (r). From the findings, it
was clear that there was a positive correlation between growth of women borrowers and
increased investments as shown by a correlation figure of 0.512, it was also clear that
there was a positive correlation between growth of women borrowers and loan
application as depicted by a correlation figure of 0.609, there was also a positive
correlation between growth of women borrowers and loan disbursed with a correlation
value of 0.732 and a positive correlation between growth of women borrowers and
members contributions with a correlation value of 0.518. This shows that there was a
positive correlation between growth of women borrowers and increased investments, loan
application, loan disbursed and members’ contributions.

Table 4.1 Coefficient of Correlation

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

4.7.2 Regression Analysis

The researcher further conducted a multiple regression analysis so as to analyze
effectiveness of group lending on the growth of women borrowers. The main purpose of
multiple regressions is to explain more about the relationship between several
independent or predictor variables and a dependent or criterion variable. The researcher
applied the statistical package for social sciences (SPSS) to code, enter and compute the
measurements of the multiple regressions for the study.
4.7.3 Model Summary
The coefficient of determination was carried out to measure how well the statistical
model was likely to predict future outcomes. The coefficient of determination, r 2 is the
square of the sample correlation coefficient between outcomes and predicted values. As
such it explains the contribution of the four independent variables that were studied
(increased investments, loan application, loan disbursed and members’ contributions).

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.

Table 4.2 Model Summary

Model Adjusted R Std. Error of

R R Square
Square the Estimate

1 0.913 0.834 0.751 0.4538

4.7.4 ANOVA Results

In trying to test the significant of the model, the study used ANOVA. From table 4.12 the
significance value is 0.001 which is less that 0.05 thus the model is statistically
significance in predicting how increased investments, loan application, loan disbursed
and members’ contributions determine growth of women borrowers in lending groups.
The F critical at 5% level of significance was 2.49. Since F calculated is greater than the
F critical (5.52>2.49), this shows that the overall model was significant.

Table 4.3 ANOVA

Model Sum of df Mean F Sig.
Squares Square
1 Regression 0.342 4 0.086 5.52 .001
Residual 0.636 76 0.016
 Total 0.978 80

4.7.5 Regression Coefficient

Multiple regression analysis was conducted as to determine the relationship between
growth of women borrowers and the four variables. As per the SPSS generated table
4.19, the equation

(Y = β0 + β1X1 + β2X2 + β3X3 + β4X4+ ε) becomes:

Y= 1.217+ 0.546X1+ 0.728X2+ 0.765X3+0.612X4

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.

Table 4.4 Regression Coefficients

Standardize
Unstandardized d
Coefficients Coefficients
Std.
Model B Error Beta t Sig.
(Constant) 1.217 0.342 1.528 .0342
Increased investments 0.546 0.310 0.162 3.228 .0267
Loan application 0.728 0.156 0.209 3.441 .0278
Loan disbursed 0.765 0.322 0.059 3.536 .0201
Members’ contributions 0.612 0.245 0.132 3.427 .0241
 CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction
This chapter presents the summary of the data findings on the effectiveness of group
lending on the growth of women borrowers, the conclusions and recommendations are
drawn there to. The chapter is structured into summary of findings, conclusions,
recommendations and area for further research.

5.2 Summary of the Findings

The objectives of this study were to ascertain the extent of Group lending Model
effectiveness for the growth of women groups’ borrowers, to identify the characteristics
of the Women groups’ borrowers in group lending and to highlight the challenges faced
by women group members in regard to group lending.

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.