Finance
Availability of enough funds was found to play a very important role in ensuring success
of the WGs MSEs. Lack of enough funds has contributed significantly to the MSEs
failure. In fact, the stakeholders agreed that funding for WGs MSEs was poor, which led
to poor financial base. Only five per cent of the sampled WGs indicated commercial banks
as a minor source of funding for the MSEs. The rest do not borrow from the banks at all
due to lack of collateral, high interest rate, and general fear of getting a loan. Furthermore,
96 per cent of the WGs’ MSEs operate bank accounts, some with only minimum account
balances and yet they pay bank charges which they consider to be quite high.
The major source of funding MSEs was indicated as members’ contributions.
However, this source had led to high default rate that had resulted in stalled MSEs.
Fund raising was one of the minor sources of funds. However, the researcher feels that
this could be one of the major sources of funds for the groups if the MSEs were
organized and pursued economically viable MSEs. This is because Kenyans have a
long tradition of helping each other through fund raising activities.
The government was a minor source of funding for WGs’ MSEs except for the funds
received from the Women Development Fund of 1997. Even so, this source was
inadequate such that some WGs only managed to open bank accounts and keep the
money as minimum account balances. Furthermore, the funds were distributed once
and most WGs who benefited were registered for only that purpose and have since
ceased to exist. These funds also generated a lot of misunderstanding between the
members and split the groups instead of uniting them. Research findings also indicate
that some WGs shared the money among members.
Micro-finance institutions appeared to be playing insignificant role in funding WGs
MSEs. This may be due to ineffective outreach programme on their part and relatively
high interest rate charged. In fact most WGs had not sought credit from formal
financial institutions, micro-finance institutions and other lenders due to lack of
collateral, high interest rates, lack of insurance cover for their businesses, and general
fear of prosecution in case of default since these might lead to their properties being
taken away (Wawire, 2008). This fear was gained through experience (Musa, 1999).
Only 12 per cent of the WGs MSEs sampled had received at least some financial
help from donor agencies and embassies. These international donors do not specifically
target the WGs MSEs but the community as a whole. Individual community members
did not contribute any funds towards the WGs’ MSEs although the findings indicate
that give advice to the groups. The WGs indicated they pay tax to the government
which adversely affects their operation through reduced working capital, hence
interferes with their expansion plan of their businesses.