Utilisation Of Micro-Finance Institutions’ Funds By Borrowers In Arid And Semi-Arid Lands In Kenya

Abstract

Despite a lot of efforts in terms of resource mobilisation in Arid and Semi-Arid Lands (ASAL) , the poverty levels are still very high and the defaulted loans from the four Micro-Finance Institutions (MFIs) in Maralal town amounts KES 15 million. The study sought to establish whether economic characteristics of entrepreneurs and whether literacy levels affect application and usage of borrowed funds in the ASAL regions of Africa. The study was limited to Maralal Town, one of the main towns in the ASAL region of northern Kenya. An ex-post facto study design was considered appropriate for the research. Data collection was done using questionnaires from a population of 40 MFIs staff and 10,600 MFIs Clients who accessed credit in the last five years. The data collected was analyzed through both descriptive and inferential statistics and presented in form of tables. The study has established that economic characteristics of entrepreneurs determine the use of borrowed funds from MFIs. Literacy levels were found to have a significant relationship with use of borrowed funds. The findings of the study are useful to, the Government and other researchers interested in this field.