Assessing The Influence of Village Savings and Loan Associations on Financial Inclusion of Women in Samburu West Sub-County, Samburu County, Kenya

Abstract

This study assessed the influence of VSLAs on the financial inclusion of women in Samburu West Sub County, Samburu County. The study addressed four research objectives: assessment of the prevalence of poor women participating in VSLAs in Samburu West Sub County, to evaluate the extent to which VSLAs in, evaluation of the extent to which VSLAs provide access to financial services for their members, identification and analysis of the challenges faced by women in accessing formal financial services through VSLAs, and to measure how VSLAs have enhanced the financial inclusion of women in Samburu West Sub County through their access to formal financial products and services. Anchored on the system theory of financial inclusion, this study adopted the descriptive research design to achieve this aim. Mixed methods research was used to collect both qualitative and quantitative data. Quantitative data was collected from a sample of 308 randomly selected respondents. For the qualitative study, 12 key informant interviews were conducted and 2 focus group discussion. Findings indicate that the prevalence of poor women in VSLAs in Samburu West Sub County is high. The majority of women reported medium to high access to VSLA loans and social funds. Further, the study has unearthed significant social-cultural, economic, environmental, and structural barriers to women accessing formal financial services. The study established that VSLAs have negative effects on financial inclusion. Specifically, VSLA credit services and VSLA savings services have a negative influence on VSLAs’ ability to bridge the gap between informal financial access and access to regulated financial services. This study concludes that the isolated informal financial ecosystem has limited VSLA members from exposure to formal financial services. Women’s heavy reliance on VSLAs points out an indifference to transitioning to formal financial services. This is further exacerbated by the complexities that women have to undergo to open and operate accounts in regulated financial institutions considering the lack of documentation, taxing processes, and collateral, among others, all of which may be lacking for most women. Also, VSLAs may unintentionally reinforce women’s dependence on informal networks that are not affected by these constraints. Inadvertently, women in VSLAs may be comfortable in the VSLAs and fall short of meeting the demands of regulated financial services. This study recommends that VSLAs should partner with NGOs, financial institutions, and government agencies and introduces formal financial literacy programs for their members. There should be policy reforms to reduce barriers to financial inclusion. Social protection policymakers, including government agencies such as the State Department of Social Protection and NGOs, should collaborate in prioritising policies and interventions that reduce the cost of financial services for poor women, streamline banking processes, and enhance rural infrastructure in underserved areas like Samburu West Sub County. Finally, policymakers can mitigate the challenge of geographic constraints by advancing policies that encourage the penetration of Fintech and mobile banking services in Samburu West Sub County.