Critical Analysis of Microfinancing on Youth Empowerment in Developing Countries

BUSINESS RESEARCH 1
CRITICAL ANALYSIS OF MICROFINANCING ON YOUTH EMPOWERMENT IN
DEVELOPING COUNTRIES: A CASE STUDY OF KENYA
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BUSINESS RESEARCH 2
Abstract
Over the past several decades, the youth population in developing countries has been faced by
the vicious challenge of unemployment. the impact of this challenge has ranged from
poor/inadequate housing, health problems, deviant behaviours and severe crimes, alcohol and
substance abuse, colossal drugs to lack of opportunities and limited participation. These impacts
have given rise to well organized illegal gangs comprising of the unemployed youths. As a
result, the unemployed masses of youth in the area have ganged up into a well-organized illegal
sect/gangs. Statistics over the number of youths joining these gangs have been changing over
time with an increasing trend over the years and the problems is continuing to worsen. There are
many past studies that have focused their research on the impacts of massive youth
unemployment. However, several but few scholars have immersed in the research of
investigating the means of empowering the youth. The aim of this study is to investigate on an
all-round sustainable and practical means of youth empowerment through micro-financing. This
study focuses on developing and implementing a micro-entrepreneurship model which is
sustainable by involving particular practice of “social-conscious-driven entrepreneurship” being
facilitated by micro-financing which is substantiable and does not bear detrimental externalities
on the beneficiaries or the environment. The generic objective of the study involves analyzing
critically the four facets of micro-financing including economic productivity, youth
entrepreneurial training through participation and micro-saving, micro-entrepreneurship and
micro-credit.

BUSINESS RESEARCH 3
Research topic
Critical analysis of microfinancing on youth empowerment in developing countries: A case study
of Kenya
Problem statement
The Youth in the Country accounts for about 20% of the population or approximately 10 Million.
This forms 50% of the total labour force out of which, 75% are unemployed. Statistics also
reveals that other than formal training, 92% of the youths who are unemployed y have no job
training. Enrolment in secondary schools is less than 25%. The country is marked by an annual
increment of approximately 10000 youths and the inhibiting growth rate is deficient in creating
enough productive opportunities to absorb the ever rising labour force. From this increasing
labour force, approximately 25% is absorbed by the economic growth while 75% is left to battle
with the menace of underemployment and unemployment and consequent poverty (Kenya
National Bureau of Statistics, 2010). Poverty, on the other hand, has lured youth into anti-social,
risky and deviant behaviours leading to high HIV/AIDS infection, immense drugs and substance
abuse and fatal crime. To survive the harsh environment, the unemployed, energetic and indolent
masses of youth in the vast country have ganged up into a well-organized illegal sect. The sect
survives through merciless extortions, undue coercion and brutal crime posing a colossal security
threat to the civilians, the county as well as the national government. This is evidenced by
regular cases of abduction, robbery with violence and brutal murder in specific area areas in the
country (Mugenda, 2008). Furthermore, businessmen and farmers pay a mandatory “security
fee” monthly to the illegal sect. This has kept off potential investors from investing in the area,
further deteriorating the situation. This is despite the fact that the country boasts some of the best
entrepreneurs in the world. The year 2012 Earnest & Young World Entrepreneur of the Year
Award winner hailed from the poor county (Robinson, 2011). The country, therefore, remains
underdeveloped, economically unexploited and insecure to work and live in despite its strategic
proximity to Kenya’s capital city. To mitigate the above challenges, massive jobs creation for the
vast, energetic and unemployed youth in the Country is more urgent than at any other time in the
county’s history and needs to be the focus of the new growth plan. It is at this milieu that this
study is conducted to critically analyse micro-financing as a strategy towards youth
empowerment in the vast county.

BUSINESS RESEARCH 4
Aim of the study
The aim of this study is to investigate on an all-round sustainable and practical means of youth
empowerment through micro-financing.
The objective of the study
To critically analyse micro-financing on youth empowerment in developing countries and
particular Kenya.
Sources of secondary data
The source of secondary data that is required to complete the research is the literature containing
the relevant information regarding the study. The literature may contain theoretical data or
empirical data. It is from the literature review where a research gap is developed. Other essential
data that will be used for this study is the theoretical and conceptual frameworks. The following
is a short literature review that forms part of the source of the secondary data. Ritherford (2010)
asserts that poverty reduction has been successful through micro-financing. Adamas (2011)
reasoned that there is need of improving the demand of goods and services through the
intervention of an external force at some point of the poverty cycle in order to break the “low
productivity-low income-low wealth” poverty cycle. This can be achieved through liquidity
injection(micro-credit) which will subsequently unleash the production of household labour
through sustainable micro-entrepreneurship (Brian & Janette, 2012). By unleashing the
production of labour, there will be a direct impact of generating income and consequent savings.
To enhance entrepreneurship, Yunus (2018) recommended entrepreneurial training that covers
the following vital components: personal development; business development and
entrepreneurial skills. Vrajlal (2016) concluded that microfinancing helps at initiating a renewed
virtuous spiral of self-sustaining and self-enforcing economic empowerment. By injecting
liquidity into the chain, micro-financing helps to eradicate the stricken poverty chain. The
consequent results are incremental savings and wealth which translates into increased well-being.
Increased well-being refers to better housing, better education, better healthcare and improved
nutrition among other social amenities.

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Methodology
In this section, an explanation of the different methods of research that will be utilized in the
study is covered. Specifically, the scope of methodology will cover research instruments,
research design, sample population, sampling procedures, target population, data analysis
technique and procedures, pilot testing, data collection methods and validity testing. Looking at
the research design, since the type of data being sought will be described without affecting the
ground profile, a descriptive type of research is highly preferred. The inclusivity of descriptive
research makes it to focus extensively and attentively to the objectives of the study, processing,
analyzing & report the findings, collecting data, selecting sample and designing data collection
methods. Descriptive research does not distort data as it determines and reports how the actual
things are. It is possible to describe characteristics, values, attitudes and possible behaviour in
descriptive research.
The population of the study will be comprised of managers from 82 MFIs registered in Kenya
and operating in the Country (Kenya National Bureau of Statistics, 2010). These will include
top-level managers who deal with policy formulation, credit managers who mostly deal with
credit approvals and allocations and lower-level managers who are responsible for the
implementation of various youth-oriented products.
Concerning the sample size, the study will consider an accessible population of 100 respondents
which will comprise 13% of 50 employees in top-level management, 15% of 150 employees in
middle-level management and 2% of 3500 employees in lower-level management. On the aspect
of research instruments required to carry out interviews and focus group discussions, the
researcher will use the interview schedule or topic guide. Additionally, the researcher will use
both structured/closed questionnaires where some control or guidance is given for the answer;
and unstructured/open-ended questionnaires that call for a free response in the respondent’s own
words. Pilot testing will be used to refine the questionnaire design and identify errors which may
only be apparent to the population concerned, for example, the meaning of words.

BUSINESS RESEARCH 6
To test the validity, the researcher will select a sample that is large enough to serve as an
adequate representation of the population of MFIs in the Country that he wishes to generalize
and also small enough to be selected economically in terms of subject availability, expense in
both time and resources and the complexity of the data analysis. Data collection methods will
include triangulation of secondary data collection, interviews and self-administered
questionnaire. Additionally, the researcher will use a five-point Likert scale in the survey
instrument to scale the collected data. The collected data will be analyzed using Statistical
procedures will include descriptive statistics.

BUSINESS RESEARCH 7
References
Adams, D. (2011) Microfinance: Building Domestic Markets in Developing Countries,
International Journal of Rural Development, 2 (2), 147-162
Brian, B., and Janette, K. (2012) Striking the Balance in Microfinance: a practical guide to
mobilizing savings. Washington: PACT Publications.
Brown, T. (2016), Confirmatory Factor Analysis for Applied Research. New York, NY: Guilford
Press
Kenya National Bureau of Statistics (2010) Ministry of Planning and National Development,
Economic survey 2010, Government printers: Nairobi
Mugenda, A. G., (2008). Social Science Research. Theory and Principles. Kenya: ARTs.
Robinson, M. (2011) The Microfinance Revolution. New York, NY: McGraw-Hill.
Rutherford, S. (2010). The Poor and Their Money. New Delhi: Oxford University Press.
Vrajlal, K. (2016) Micro Finance: The Pillar of a Tool to Socio-Economic Development.
London: Chapman and Hall.
Yunus, M. (2018) Creating a World Without Poverty: Social Business and the Future of
Capitalism. New York: Free Press