International Journal of Innovative Research and Development

Abstract

Studies indicate that most people living in the informal settlements are usually poor and financially excluded. As such, they tend to rely on informal finance groups for their financial upkeep. Given that there exist several informal finance groups and for different purposes, this study sought to establish the challenges facing informal finance groups by men and women. The study was conducted in an informal settlement, namely Gachagi in Thika Sub-County, Kenya. The study adopted a qualitative descriptive design, and was guided by behavioral life cycle hypothesis advanced by Thaler (1954). The target population was 20 informal finance groups comprising 10 Rotating Saving and Credit Associations (ROSCAs), 5 welfare/clan groups, 3 Accumulating Savings and Credit Associations (ASCAs) and 2 investment groups. Out of the 20 informal finance groups, a sample size of 11 informal finance groups comprising 5 ROSCAs, 3 welfare/clan groups, 2 ASCAs and 1 investment group were selected forming a sample of 55%. The main respondents of the study were men and women members of the selected informal finance groups including group officials. Key study informants included the Divisional Social Services Officer (DSSO), the Chief and two elders from the informal settlement. Data collection tools were Focus Group Discussion guides for men and women in informal finance groups and interview guides for key informants. Data collected was cross-tabulated for qualitative analysis. Findings indicated that there were challenges which hindered smooth running of informal finance groups and therefore discouraged the participation and the rate of saving among men and women. These included poor governance, low attendance of group meetings, defaulting by members and burdensome gender roles among others.

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