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Self-Help Groups and Income Generation in the Informal Settlements of Nairobi

Author

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  • Eliana La Ferrara

    (Bocconi University; IGIER)

Abstract

The aim of this paper is to understand the functioning and the scope of self-help groups in the informal settlements of urban areas as a means of generating income for poor households. The paper uses a unique dataset collected by the author in 1999 surveying all individual group members from several informal settlements of Nairobi. It studies the individual determinants of earnings within groups and relates group composition to various indicators of group functioning. Sex, age and ethnic identity are among the most important determinants of individual reliance on group income and of access to group loans. Heterogeneity in earnings among members is shown to reduce their ability to borrow from the group as a whole but not from each other. The impact of ethnic and other forms of heterogeneity on the division of labor, choice of compensation schemes, sanctioning technology and recruitment criteria is also described.

Suggested Citation

  • Eliana La Ferrara, 2002. "Self-Help Groups and Income Generation in the Informal Settlements of Nairobi," Development Working Papers 163, Centro Studi Luca d'Agliano, University of Milano.
    • Handle: RePEc:csl:devewp:163
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    References listed on IDEAS

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    1. Ghatak, Maitreesh & Guinnane, Timothy W., 1999. "The economics of lending with joint liability: theory and practice," Journal of Development Economics, Elsevier, vol. 60(1), pages 195-228, October.
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    Cited by:

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    2. Jonas Hjort, 2013. "Ethnic Divisions and Production in Firms," CESifo Working Paper Series 4449, CESifo.
    3. Francesco Strobbe & Claudia Olivetti & Mireille Jacobson, 2010. "Breaking the Net: Family Structure and Street Children in Zambia," Global Development Institute Working Paper Series 11110, GDI, The University of Manchester.
    4. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.
    5. Boken, Johannes & Gadenne, Lucie & Nandi, Tushar & Santamaria. Marta, 2022. "Community Networks and Trade," The Warwick Economics Research Paper Series (TWERPS) 1442, University of Warwick, Department of Economics.
    6. Aga, B.K. & Tesfay, G.B., 2018. "How Should Rural Financial Cooperatives Be Best Organized? Evidence from Ethiopia," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277735, International Association of Agricultural Economists.
    7. Kibrom A. ABAY & Bethelhem KORU & Gashaw Tadesse ABATE & Guush BERHANE, 2019. "How Should Rural Financial Cooperatives Be Best Organized? Evidence From Ethiopia," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 90(1), pages 187-215, March.
    8. Lisa D. Cook & Linguère Mously Mbaye & Janet Gerson & Anthony Simpasa, 2021. "Working Paper 358 - The Colonial Origins of Banking Crisis in Africa," Working Paper Series 2484, African Development Bank.
    9. Place, Frank & Kariuki, Gatarwa & Wangila, Justine & Kristjanson, Patricia & Makauki, Adolf & Ndubi, Jessica, 2004. "Assessing the factors underlying differences in achievements of farmer groups: methodological issues and empirical findings from the highlands of Central Kenya," Agricultural Systems, Elsevier, vol. 82(3), pages 257-272, December.
    10. Pande, Rohini, 2008. "Understanding Political Corruption in Low Income Countries," Handbook of Development Economics, in: T. Paul Schultz & John A. Strauss (ed.), Handbook of Development Economics, edition 1, volume 4, chapter 50, pages 3155-3184, Elsevier.
    11. Johnston, Richard & Banting, Keith & Kymlicka, Will & Soroka, Stuart, 2010. "National Identity and Support for the Welfare State," SULCIS Working Papers 2010:11, Stockholm University, Linnaeus Center for Integration Studies - SULCIS.
    12. Nancy McCarthy & Talip Kilic, 2015. "The nexus between gender, collective action for public goods and agriculture: evidence from Malawi," Agricultural Economics, International Association of Agricultural Economists, vol. 46(3), pages 375-402, May.
    13. Sefa Awaworyi Churchill, 2017. "Fractionalization, entrepreneurship, and the institutional environment for entrepreneurship," Small Business Economics, Springer, vol. 48(3), pages 577-597, March.
    14. Sara Balestri & Stefania G. Meda, 2016. "Income Generating Activities (IGAs) and women empowerment. A pilot experience from Côte d?Ivoire," DISEIS - Quaderni del Dipartimento di Economia internazionale, delle istituzioni e dello sviluppo dis1604, Università Cattolica del Sacro Cuore, Dipartimento di Economia internazionale, delle istituzioni e dello sviluppo (DISEIS).
    15. Place, Frank & Kariuki, Gatarwa & Wangila, Justine & Kristjanson, Patti & Makauki, Adolf & Ndubi, Jessica, 2002. "Assessing the factors underlying differences in group performance: methodological issues and empirical findings from the highlands of Central Kenya," CAPRi working papers 25, International Food Policy Research Institute (IFPRI).
    16. Sefa Awaworyi Churchill, 2017. "Microfinance and Ethnic Diversity," The Economic Record, The Economic Society of Australia, vol. 93(300), pages 112-141, March.
    17. Platteau, Jean-Philippe & Guirkinger, Catherine, 2019. "The dynamics of family systems: lessons from past and present times," CEPR Discussion Papers 13570, C.E.P.R. Discussion Papers.
    18. Fumagalli, Laura & Martin, Thomas, 2023. "Child labor among farm households in Mozambique and the role of reciprocal adult labor," World Development, Elsevier, vol. 161(C).
    19. Macours, Karen, 2014. "Ethnic divisions, contract choice, and search costs in the Guatemalan land rental market," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 1-18.
    20. Obare, Gideon A. & Mwakubo, Samuel M. & Ouma, Emily Awuor & Mohammed, Lutta & Omiti, John M., 2004. "Social Capital and Soil Erosion Control in Agriculturally Marginal Areas of Kenya: The Case of Machakos and Taita-Taveta Districts," 2004 Inaugural Symposium, December 6-8, 2004, Nairobi, Kenya 9532, African Association of Agricultural Economists (AAAE).
    21. Nyangena, Wilfred & Sterner, Thomas, 2008. "Social Capital and Institutions in Rural Kenya: Is Machakos Unique?," RFF Working Paper Series dp-08-01-efd, Resources for the Future.
    22. R. Isil Yavuz & Berrak Bahadir, 2022. "Remittances, ethnic diversity, and entrepreneurship in developing countries," Small Business Economics, Springer, vol. 58(4), pages 1931-1952, April.
    23. Cristina Cattaneo, 2016. "Opting in to Opt out? Emigration and Group Participation in Albania," International Migration Review, Wiley Blackwell, vol. 50(4), pages 1046-1075, December.

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    More about this item

    Keywords

    self-help groups; cooperative; participation; social capital;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • P13 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Cooperative Enterprises
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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