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

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  • Eliana La Ferrara

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. It uses a unique data set collected by the author in 1999 surveying all individual group members from several informal settlements in 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 labour, choice of compensation schemes, sanctioning technology and recruitment criteria is also described. Copyright 2002, Oxford University Press.

Suggested Citation

  • Eliana La Ferrara, 2002. "Self-help Groups and Income Generation in the Informal Settlements of Nairobi," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 11(1), pages 61-89, March.
  • Handle: RePEc:oup:jafrec:v:11:y:2002:i:1:p:61-89
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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.
    2. Narayan, Deepa & Pritchett, Lant, 1999. "Cents and Sociability: Household Income and Social Capital in Rural Tanzania," Economic Development and Cultural Change, University of Chicago Press, vol. 47(4), pages 871-897, July.
    3. Jonathan Isham, 2002. "The Effect of Social Capital on Fertiliser Adoption: Evidence from Rural Tanzania," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 11(1), pages 39-60, March.
    4. Wydick, Bruce, 1999. "Can Social Cohesion Be Harnessed to Repair Market Failures? Evidence from Group Lending in Guatemala," Economic Journal, Royal Economic Society, vol. 109(457), pages 463-475, July.
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    Citations

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    Cited by:

    1. Jonas Hjort, 2013. "Ethnic Divisions and Production in Firms," CESifo Working Paper Series 4449, CESifo Group Munich.
    2. 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.
    3. Alberto Alesina & Eliana La Ferrara, 2003. "Ethnic Diversity and Economic Performance," Harvard Institute of Economic Research Working Papers 2028, Harvard - Institute of Economic Research.
    4. 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.
    5. 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.
    6. repec:bla:annpce:v:90:y:2019:i:1:p:187-215 is not listed on IDEAS
    7. 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.
    8. Pande, Rohini, 2008. "Understanding Political Corruption in Low Income Countries," Handbook of Development Economics, Elsevier.
    9. Abay, Kibrom A. & Koru, Bethlehem & Abate, Gashaw T. & Berhane, Guush, 2017. "How should rural financial cooperatives be best organized? Evidence from Ethiopia," ESSP working papers 100, International Food Policy Research Institute (IFPRI).
    10. 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.
    11. repec:kap:sbusec:v:48:y:2017:i:3:d:10.1007_s11187-016-9796-8 is not listed on IDEAS
    12. Sara Balestri & Stefania G. Meda, 2016. "Income Generating Activities (IGAs) and women empowerment. A pilot experience from CĂ´te d?Ivoire," DISEIS - Quaderni del Dipartimento di Economia internazionale, delle istituzioni e dello sviluppo dis1604, UniversitĂ  Cattolica del Sacro Cuore, Dipartimento di Economia internazionale, delle istituzioni e dello sviluppo (DISEIS).
    13. 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).
    14. repec:bla:ecorec:v:93:y:2017:i:300:p:112-141 is not listed on IDEAS
    15. 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).
    16. repec:bla:intmig:v:50:y:2016:i:4:p:1046-1075 is not listed on IDEAS

    More about this item

    JEL classification:

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

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