Abstract:
The socio-economic growth and development of Nakuru Municipality is to a great extent dependent on farming and small scale enterprise. Majority of the people working in these sectors are low income earners whose main source of credit facilities is the micro lending institutions. However, little infonnation exists on the actual effects of the micro lending on the welfare of the households benefiting from the credit schemes offered by these institutions in the area. This study sought to assess the effects of micro lending on the welfare of the households in Nakuru Municipality. This study adopted a correlation survey research design. The targeted population included client groups and managers of three micro lending institutions within the municipality. Purposive sampling was used to select a random sample of 50 household respondents belonging to client groups that had accessed credit from micro lending institutions and three managers of the institutions. Primary data was collected through administration of a structured questionnaire (households) and an interview schedule (managers) with the selected respondents. Secondary data was collected from documented information to supplement the primary data. The collected data was processed and analyzed using descriptive and inferential statistics with the aid of Statistical Package for Social Sciences (SPSS) for windows version l 1.5. The study supports the following findings: credit programs offered by micro lending institutions valy according to functions and conditions attached to them; and majority of the household rated the level of change in each of the indicators of welfare of the household as above average (3.0). Based on the study findings, two key recommendations were made. First, there is a need for the borrowing household and client groups to consider the type of credit programs offered by the micro lending institutions and the conditions attached for maximum benefit. Second, there is a need for the borrowing household and client groups to consider their ability to repay the credit in determining the amount of credit that they can access from the micro lending institutions.
