Harnessing Microcredit for Sustainable Poverty Alleviation in the Arid Regions of Kitui County, Kenya

Abstract

Arid and semi-arid lands (ASALs) face low access to formal financial services, food insecurity and low rainfall which collectively hinder economic resilience and development. These has continued over the years irrespective of policy frameworks such as Bottom-Up Economic Transformation Agenda and Vision 2030. This study explores the role of microcredit as an enabler for sustainable livelihoods in the arid regions of Kitui County, Kenya. Grounded on the theory of Sustainable Livelihoods and Financial Inclusion, the study examines how access to microcredit enhances Income Growth Rate, Livelihood Diversification Score, Savings and Financial Resilience Index, Social Empowerment Score and Household Welfare Improvement Ratio. Using a mixed-methods approach and convergent parallel design the study combines quantitative data collected from 3500 microcredit beneficiaries and qualitative interviews with key stakeholders, including microfinance institutions, local leaders and community-based organizations. The sample size was 357 obtained via Yamane (1967) formula and purposive sampling technique was used to collect views from stakeholders. Findings reveal that access to microcredit significantly enhances asset acquisition, boosts microenterprise development and strengthens food security at the household level. Furthermore, microcredit was found to promote social inclusion by empowering marginalized groups who are often excluded from conventional banking systems. The research concludes that when effectively structured and accompanied by enabling policies, microcredit can be a vital instrument in achieving inclusive and sustainable development in arid regions.