Loan Repayment and Sustainability of Government Funded Micro-Credit Initiatives in Murang’a County, Kenya
Mungai John Njangiru, Maingi James, Muathe SMA

Abstract
In the attempt to alleviate poverty and empower the poor, many non-governmental organizations and Government line agencies have been providing credit money and social services to rural dwellers in Kenya. The role of these credit schemes is to help the rural poor, to earn a decent living, through their on-going income-generating activities. The government of Kenya overtime has formulated a series of rural development programmes to counter the problem. The most notable and current, is Youth Enterprise Development Fund and the Women Enterprise Fund which were both conceived in 2006 and 2007 respectively. In these programmes, identifying the marginal borrower has not been a simple affair owing to the complex interplay of costs, returns, and risks in credit markets. The role of the government in providing start-up funds and their relationship to sustainability is crucial. The main focus of this research was to analyze the loan repayment and sustainability issues of government micro-credit initiatives in Murang’a County. The specific objective of the study was to establish the effect of borrower characteristics to micro-credit repayment in Murang’a County. The study adopted a positivism philosophy of research, where the researcher was independent on what was being observed and what was studied. Descriptive survey design was used to determine the level of government funded micro-credit loan repayment and its effect on sustainability for other borrowers. The target population was 1520 social and economic groups in Murang’a County. Clustering and Simple Random Sampling techniques were applied to select a sample size of 307 groups including a census of 16 constituency credit officers, who were interviewed. This, in total accounted to 19.5% of the total population. A questionnaire and an interview schedule were used to collect data. Descriptive data were analysed using tables and charts. Qualitative data were analysed using Chi-square, Analysis of Variance and Logit Regression Model. Hypothesis testing revealed statistically significant results, for borrowers’ characteristics effect to loan repayment and sustainability. The study found that due to problems of high risk and high cost of borrowing, uncertainity of repayment capcity on the rural borrower has been reported high due to irregular income streams. Systems should be developed to ensure consistent incomes and expenditure to reduce/remove uncertainty. The study found some spouses who had run away from homes after receiving loans, to evade repayment or to evade the nugging demands from their partners or to part with some/all the amount borrowed. This may be one of the explanations of wife/husband buttering in Cental Kenya reported by the local media.

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