Effects of Non-financial and capacity building services on the Welfare of Households: Evidence from Homabay Sub-County Town, Homabay County Kenya

Abstract

Microfinance play a greater role in the social economic development of the households in terms of providing employment and the general contribution in an economy through the output of goods and services. The socio-economic development and growth of Homabay majorly depend on farming and small scale enterprise. A large number of those working in these sectors are those with low income who do not qualify for financial assistance from the commercial banks and thus their main source of credit facilities is the microfinance institutions. In this study, the researcher sought to find out the effects of non-financial and capacity building services on the welfare of the households in Homabay town. The study was majored on the customers who got their services from the selected microfinance institutions within Homabay. Using a sample data set of 321, a survey was conducted using questionnaires to collect data from the respondents. The study revealed that the nonfinancial packages and capacity building it clearly show such services play a greater role on the improvement of households welfare. More emphasis should be made on the importance of capacity building and how it can help the households to improve their skills in the management of the resources they receive from the microfinance institutions. Through capacity building services default cases shall reduce as the households will properly utilize the amount borrowed in the best way which in return will boost their income and ensure repayments are done as agreed between the households and the financial institutions. Secondly for those households who may not be able to handle financial services well the best way out is to enhance provision of non-financial services. Thus rigorous training in the form capacity building among households should be maintained so that residents can maximize their potentials within the microcredit facilities.