Authors Reuben Kikwatha, Dr Mulwa , Dr Kyalo

INTRODUCTION This paper advocates for urgent interventions to

promote sustainable development through improved management of microfinance funds by self –help groups.

It is based on an empirical study carried out to establish the factors influencing the performance of self-help groups in the management of microfinance funds for sustainable development in Kenya

BACKGROUND OF THE STUDY

Sustainability and sustainable development

Sustainability - goal of any development efforts

Concept - difficult to pin down as specific meaning

and practical applications are highly dynamic.

Largely promoted in environmental sustainability

But sustainability of projects and programs is major

concern in todays economy than before.

Yet not enough is known about what makes programs

sustainable

Sustainable development is a process of change brought

about by implementation of sustainable projects

Ensuring that the exploitation of resources - enhance both

current and future potential to meet human needs and

aspirations

Different strategies and approaches employed towards

sustainable development

Particularly participatory approach which enhances

community empowerment through SHGs

Self Help approach to sustainable development

Doctrine of sustainability stresses participatory approaches

The poor should become self-reliant, mobilizing their own

energies and resources to solve their own problems

Empowering communities to implement sustainable projects

and programs

Through self-help groups – though not the panacea if not well

managed

Financial empowerment of communities – through advancing

loans by micro-finance institutions

Microfinance as an approach to sustainable development

Microfinance - “banking the un-bankable,

Despite the increase in the number of microfinance

institutions - only few can show tangible benefits and real

impact in alleviating poverty and promoting sustainability.

Sometimes has been the cause of self help group

disintegration

Characterized by - Poor repayment, delayed or event default

Most of studies focused on performance of microfinance

institutions – not much on the drivers of their success

(performance of self-help groups)

Firm and Successful groups – success in microfinance

approach in enhancing sustainable development

Paper focuses on - Factors specific to self help groups

performance

Assumed that strong groups – ability to manage finances

Delimited within Kikuyu sub-county

OBJECTIVES OF THE STUDY

1. To investigate the extent to which group leadership

influences the performance of self-help groups in

managing microfinance funds for sustainable

development in Kikuyu sub-county, Kenya.

2. To establish the extent to which clarity of group goals

and objectives influence the performance of self-help

groups in managing microfinance funds for sustainable

development in Kikuyu sub-county, Kenya.

LITERATURE REVIEWFrom empirical literature - evident that sustainable development

gains its boost especially in developing world due to the contribution

of institutions such as microfinance, business organization and

non-governmental organizations.

Bakhtiari (2006) says that microfinance has gained a universal

consensus as an effective tool for alleviating poverty and wellbeing

improvement.

Sameer, et.al (2014) agrees with this sentiment that the role of

microfinance institutions in poverty reduction and wellbeing

improvement has attracted the Policymakers’ attention in the

developing countries across the globe.

Sameer, et.al (2014) - by providing microfinance

services, poor will be able to participate in the economic

market through forming their small businesses.

Akudugu (2014) One of the greatest tools used to fight

poverty in this century is credit delivered to self-help

groups (SHGs)

Ananda (2011) agrees that the group lending is the preferred

model of micro credit collateral.

Akudugu (2010), SHGs create opportunities for the poor who cannot

individually secure financial services

Ramesh (1997), while studying SHGs concludes that members share

common perception on needs and belong to almost same economic and

social status.

Lesley (2000) shared vision, missions’ goals and objectives provides the

foundation the group needs into the future.

Curran et.al (2009) says that leadership impact on improving project

management practices in order to reduce uncertainty and complexity

associated with project pursuit.

Mulwa (2005) advises that that transparency and accountability leadership

is what it takes to ensure authentic participation of all stakeholders

RESEARCH METHODOLOGY

The research design employed was descriptive survey

Stratified random sampling was used to generate the required

sample size.

A list of all groups (strata’s) in each of the microfinance

(DOREP, KWFT and Jamii Bora) -generated from which a

random sample from each (Microfinance) stratum was taken

A sample size proportional to the stratum's size when

compared to the population was selected

Sample size comprised of 78 respondents drawn from 780

groups.

Both primary and secondary data was collected for the

purposes of this study.

Desktop study gave the secondary data sourced from written

materials including books and journals articles.

Use of pre-designed questionnaires to capture information

RESEARCH FINDINGS

Elective leadership: 48% of the groups studies did not

have leaders elected in a democratic way while 38% were

elected democratically.

It was also found that elected leaders where never changed

except in a few groups only after the members demanded

Such a practice could have impacted on the leadership

dynamics in the group in terms of performance in

management of group projects.

Frequency of meetings: that 29 (37%) of the respondents

held meetings when necessary, 14 (18%) conducted once

a week, while 32 (41%) met once a month.

Meeting once a month was a good practice however

37% is a significant percentage that did not have a

structured system of meeting exposing the group to

risk of poor management, fund misuse and failure to

achieve its goals.

Majority 64 (82.1%) of the respondents said that the

group officials make the most important decision,

4(5.1%) by the chairperson while 10 (12.8%) of the

respondents indicated decisions are made by group

consensus.

This implies that the members were not fully

involved in decision making concerning the group

exposing the group further to poor management of

funds .

Majority 57 (73.1%) of the group members indicated

that the ways finances were being managed should be

improved, 9 (11.5%) said that decision making process

needed to be improved while 8 (10.3%) indicated that

the way meetings were conducted should be improved.

This finding shows that the respondents were not

satisfied with these aspects thus a reason for poor

performance of the groups

Setting group goals and objectives

Decision maker Frequency Percent

Members 6 7.7

All the officials 14 17.9

Microfinance officer 2 2.6

Chairperson 38 48.7

N/A 18 23.1

Total 78 100.0

Most of the goals and objectives were highly influenced by

the Leaders as indicated by 38 (48.7%) while 14 (17.9%)

indicated that the decisions were made by all the members.

These findings confirm the previous findings that the groups

were not democratic hence this affected the performance in

management of micro economic projects by the groups.

Review of group goals

Response Frequency Percent

Every three months4 5.1

Every six months15 19.2

Every year10 12.8

Never49 62.8

Total78 100.0

62% of groups interviewed still had never reviewed

their goals and objectives.

The report given by the respondents showed that the

goals and objectives of groups were not reviewed

periodically which could affect the performance of

these groups

Reasons for not achieving group objectives

Response Frequency Percent

Poor leadership16 20.5

Lack of knowledge25 32.1

lack of funding4 5.1

Lack of common focus27 34.7

N/A6 7.7

Total78 100.0

Among the Reasons for lack of achievement of goals and objectives were;

lack of common focus

inadequate knowledge

poor leadership in order of significance as rated by the

group members

CONCLUSIONS AND RECOMMENDATIONS

Majority of groups were not strong enough to successfully

manage microfinance funds

For groups to successfully manage microfinance funds – two

factors must be addressed – group leadership clarity of goals This can be achieved where there is democracy in election and

change of leaders Important decisions need to be done by consensus and not

mainly by officials

Specific training very important – finance management and

group dynamics and leadership skills

Group focus, goals and objectives well understood by the

leaders – need to have this shared among the group

members- The groups that had goals did not review them

periodically and relied on outsiders to guide them on what

to do (microfinance officers)

Most of groups - the goals and objectives not achieved

due to lack of common focus, inadequate knowledge and

poor leadership.

Advancing of loans to self-help group is not a solution as

most of the group perform poorly

Concerned parties (microfinance institutions, government

and NGOs) should assist the groups have proper leadership

structures which will facilitate management of small projects

funded through micro finance funds

Groups needs to be nurtured and mentored – both

governance and operations to ensure successful

implementation of projects/ventures funded through

microfinance