Financial Literacy and Economic Empowerment of Women in Self-Help Groups in Kibera Sub-County, Nairobi City County, Kenya

Modesta Temba, Daniel M. Kitonga and Aloys O. Ojore
Institute for Social Transformation
Tangaza University, Nairobi, Kenya
Email: modestatemba@ymail.com

Abstract: Self-help groups are the main vehicle through which low-income women in Kenya’s informal settlements save, borrow and run enterprises, yet the contribution of financial literacy to their economic empowerment has rarely been estimated statistically in urban informal settings. This study determined the impact of financial literacy on economic empowerment among women in self-help groups in Kibera Sub-County, Nairobi City County, Kenya. Anchored on Behavioral Finance Theory and Social Capital Theory, it adopted an explanatory cross-sectional survey design. Of 184 members selected from six women self-help groups (N = 342) through stratified proportionate sampling, 165 returned usable questionnaires (90 percent). The scales were reliable (α = .798 and .851). Data were analysed using descriptive statistics, Pearson correlation and regression analysis. Financial literacy was rated high (M = 3.65), with peer learning highest (M = 4.63) and use of formal financial services (M = 2.34) and application of training to financial decisions (M = 2.33) lowest. Financial literacy had a positive and significant impact on economic empowerment (R² = .672, β = .820, p < .001), which remained significant after controlling for marketing, customer relations, and communication and negotiation skills (β = .241, p = .005). The study concludes that financial literacy drives women’s economic empowerment in self-help groups, but knowledge gained from peers is not yet matched by its application in formal financial decisions. It recommends practice-based financial literacy embedded in group routines, linkage of members to suitable formal financial services, and assessment of members’ actual financial practices.