Exploring the challenges and opportunities in microfinance group lending model among poor aids affected households
Abstract
Micro financing has been taken as panacea in disaster mitigation. In helping poor and AIDS affected
households come out of poverty in Kakamega County, Kenya, microfinance institutions (MFIs) use group
lending model. This model enables MFIs to secure their loans through joint liability using coercion and group
pressure. The effect of this approach remains unknown particularly on households dissipated by AIDS
pandemic. To find out the challenges and opportunities experienced by MFIs and their AIDS affected clients,
cross-sectional survey design was used. A total of 205 AIDS affected clients were surveyed and data analyzed
descriptively. The study found that micro financing is a major instrument for asset rebuilding in AIDS
disaster situations. However, the sub-sector lacks infrastructure and policy to guide its operations.
Consequently, high interest rates, loan defaulting and hawking among other challenges abound. Creation of
enabling environment including clear policy is significant for this critical sub-sector in Kenya.
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