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

alternative forms of employment. Public opinion and policy makers have thus started to view the
jua kali sector as a valuable opportunity for unemployed youth to enter the (informal) labor market
and contribute to domestic product generation (Otieno Okumu (1999)).

Jua kali workers may have formal education, but they often receive informal training on the job,
for which they may have to pay their employer (Ng’ethe and Ndua (1985)). In addition to training
costs, people who want to start their own business need start up capital which, though limited
compared to licensed businesses, may be far beyond the possibilities of a typical slum dweller. For
this reason it is becoming increasingly common among the urban poor to join resources and form the
so called “self-help” groups, which operate in the informal sector with income generating activities
similar to those of individual jua kali workers, but are organized approximately as a production
cooperative. The degree of formalization of these groups, as well as their stability and the scope of
their activities, vary a lot. It seems therefore valuable to undertake a first step towards a quantitative
assessment of the economic potential of these groups and of the determinants of their economic
performance.

3.2 The data

The data used in the empirical analysis below was collected by the author in the months of July
and August 1999 in five among the most populated informal settlements of Nairobi: Dandora,
Gikomba, Kayole, Korogocho, and Mathare Valley. In consultation with local community workers,
a list of the self-help groups active in these areas was prepared and twenty groups were selected to
be interviewed, based on their location, type of activity, size, age and sex of the members.⁵ Akey
requirement was that the group had some type of income generating activity (though not necessarily
the only activity of the group). Income generating activities in the sample span as different fields
as crafts-making (wood carving, basket weaving, etc.), tailoring, garbage recycling, education and
health services, informal lending, etc. Preliminary meetings were set up with the chairperson and
secretary of each group, and a list of all active members was obtained. Based on this list, individual
⁵ The criterion was to have some degree of diversification among the groups in terms of size, productive activities
and location, as well as age and gender of their members.

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