Credit Access in Self-Help Groups and Community-Based Organizations in Makueni County, Kenya: Challenges and Opportunities

Christine Wavinya Mwangangi

doi:10.59413/eafj/v5.i2.3

Authors

Christine Wavinya Mwangangi School of Business and Economics , Daystar University Author

DOI:

https://doi.org/10.59413/eafj/v5.i2.3

Keywords:

Credit Access, Self-Help Groups, Community Based Organizations, Financial Literacy, Institutional Governance

Abstract

Access to credit remained a critical factor influencing the growth and sustainability of Self-Help Groups (SHGs) and Community-Based Organizations (CBOs) in Makueni County, Kenya. Despite the significant role these organizations played in promoting social cohesion and local development, many faced persistent challenges in obtaining adequate and affordable credit to support their income-generating activities. This study investigated credit access in SHGs and CBOs in Makueni County, examining both the challenges and opportunities influencing their financial inclusion and development outcomes. The study was guided by four objectives: to examine institutional factors influencing credit access; to determine the effect of group governance on credit access; to assess the influence of financial literacy on credit access; and to explore opportunities for improving credit access. A descriptive research design was adopted, targeting 180 registered SHGs and CBOs from which 120 respondents were selected through stratified and purposive sampling. Structured questionnaires were used for data collection, and data were analyzed using descriptive statistics, Pearson correlation, and multiple regression analysis via SPSS. Correlation results revealed that institutional governance had a strong positive relationship with credit access (r = 0.63, p < 0.05), while financial literacy also showed a significant positive relationship (r = 0.52, p < 0.05). Regression analysis established that institutional governance, financial literacy, and group savings discipline had positive and significant effects on credit access, whereas adverse socio-economic conditions had a negative and significant effect. The study variables jointly explained approximately 58 percent of the variation in credit access (R² = 0.58). The study concludes that strengthening group governance, enhancing financial literacy, and fostering partnerships with financial institutions can significantly improve credit accessibility for SHGs and CBOs. It recommends stronger regulatory oversight of lending conditions, investment in digital financial platforms, and targeted capacity-building initiatives for community groups.

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