Microfinance institutions

Chapter ONE

Introduction

1.0 Introduction

This chapter introduces the job statement which the research proposes, the aims that the research seeks to turn to, the inquiries that it seeks to reply and the range of the research every bit good as the significance of the survey.

1.1 Background of the Study

There are many types of microfinance establishments depending on construction, map or doctrine. In many cases, the microfinance market is segmented harmonizing to the clients involved i.e. micro-enterprises, adult females, agriculturists and so on. A chief end of many micro finance establishments is to supply sustainable micro finance installations to the hapless to ease income coevals and cut down poorness ( Baumann, 2001 ) . The generation of this is that the hapless deficiency entree to fiscal services, recognition and nest eggs installations.

The end of microfinance establishments as development organisations is besides to serve the fiscal demands of unserved markets as agencies of meeting development aims ( Ledgerwood, 1999 ) . The development objectives by and large include decrease of poorness, authorization of the hapless and other disadvantaged groups, employment creative activity, development of new concerns and assisting bing concerns to turn by diversifying their activities. In a universe bank survey of loaning for little and micro endeavor undertakings, three aims of microfinance establishments that were most often cited were, to make employment and income chances through the creative activity and enlargement of micro endeavors, increase the productiveness and incomes of vulnerable groups particularly the hapless and adult females, every bit good as cut down rural households dependance on drouth prone harvests through the variegation of their income generating activities ( Webster et al, 1996 ) .

The microfinance revolution was introduced into the development economic sciences arena somewhat more than two decennaries ago. However, the widespread acceptance of the microfinance theoretical account did non happen until the early 1990s. Since the mid 1990s, microfinance programmes and establishments have become an progressively of import constituent of schemes to advance micro-enterprise development in developing states and specifically to cut down poorness ( Colin, 2006 ) .

Microfinance was defined by the United State in 2005 as basic fiscal services, like recognition, nest eggs and insurance, which give people an chance to borrow, salvage, put and protect their households against hazard ( UN, 2005 ) . This definition was used in the context of microfinance and the Millennium Development Goals ( MDGs ) . It was hence ascertained that microfinance promotes non merely recognition, but besides inculcates nest eggs that accumulate assets for hapless people.

Besides the major properties of microfinance, viz. ; recognition and nest eggs, the construct of joint or shared liability has been highlighted by other research workers. Harmonizing to Harper ( 2003 ) , the construct of microfinance originated in Bangladesh, around 1976 through the pioneering experiment by Dr Muhammad Yunus, who was so a Professor of Economics. The primary difference between microfinance and the conventional recognition expense mechanism lies in the “ joint liability ” construct. Whereby a group of persons get together to organize an association of individuals called Self Help Groups ( SHG ) of which all the members undergo a preparation programme on the basic loan processs and adoption demands. Loans to persons within the Self aid groups are approved by the others members of the group, who are besides jointly responsible for its refund in instance of default. The members of the ego aid group save on a regular basis through monthly parts to the group ‘s fund.

Formal microfinance loaning has been in being in Kenya since the 1950s through the Joint Loan Board Scheme developed by the colonial authorities ( Hondo, 2001 ) . After independency in 1963, the Kenyan authorities went on to supply subsidised rural recognition plans as a development scheme. There are many organisations both informal and formal which besides offer these fiscal services. The informal channels are characterized by imparting household, friends and neighbors. Revolving nest eggs and recognition associations ( ROSCAs ) are besides really common. They hold regular meetings and each member contributes a fixed sum and an in agreement sum is given to one member at a clip ( CBS et al, 1999 ) .

Commercial Bankss traditionally lend to medium and big endeavors which are judged to be responsible and tend to avoid making concern with the hapless and the micro enterprises because the associated costs and hazards are considered to be comparatively high. Microfinance establishments ( MFIs ) have therefore become the chief beginning of support for micro endeavors in Africa and in other developing parts ( Anyanwu, 2004 ) .

Microfinance establishments have become an of import subscriber to the Kenyan economic system. The sector contributes to the national aim of making employment chances, preparation enterprisers, bring forthing income and supplying a beginning of support for the bulk of low income families by financing the concerns that they run. The authorities and its development spouses have spent considerable sum of resources in crafting policies and plans to construct the growing of micro finance establishments. However consequences to day of the month hold been mostly unsatisfactory ( Gichira, 1992 ) .

1.2 PROBLEM STATEMENT

Provision of microfinance services that can hold a sustainable impact on clients good being and decreased exposure is non an easy enterprise, microfinance establishments face many hazards that can adversely impact their long term growing, operational and fiscal sustainability ( Jeyanth, 2003 ) .

With respect to sustainability and growing, a survey conducted by Omondi ( 2005 ) revealed that few microfinance establishments had attained sustainability and growing and had sound fiscal cost control and good loan portfolios. A good figure of microfinance establishments had non attained fiscal stableness and growing and were trusting on subsidies from givers.

Growth in the microfinance industry may be characterized by an addition in the comprehensiveness and deepness of outreach of bing microfinance establishments, heightened competition among microfinance service suppliers, variegation of merchandise and service offerings, and the presence of private and commercial financess for microfinance activities.

There is small information on a standard design to demo us how to accomplish these features and to guarantee the growing of the microfinance industry. To a big extent, the growing should be market goaded and is yet to be achieved ( Amando, 2005 ) .

Tilman, ( 2006 ) highlighted that although microfinance activity has increased well in recent old ages, important growing was missing and microfinance establishments are still far from making a important part of the population that lacks entree to formal fiscal services.

Further, surveies conducted in Kenya have shown that even though the microfinance sector has been turning over the past few old ages, bulk of the single establishments have non experienced much growing. Furthermore much of growing of the microfinance establishments has been self-generated ( G.O.K 1997 ) . It is hence against this background that the purpose of the survey is to assess factors impacting the growing of micro-finance establishments in Kenya.

1.3 RESEARCH OBJECTIVE

1. To measure the factors impacting the growing of microfinance establishments in Kenya.

1.4 RESEARCH Question

This research seeks to reply the undermentioned inquiry ;

1. What are the factors impacting the growing of microfinance establishments in Kenya?

1.5 SIGNIFICANCE OF THE STUDY

This survey will profit a figure of groups among them directors of microfinance establishments who will utilize the survey to derive an penetration into factors that affect the growing of their concerns and how. This will in bend help them develop modes to extenuate those factors that adversely affect the concern and enhance those that promote growing of their microfinance establishments.

The authorities excessively will profit from this survey. The authorities will utilize the findings of this survey to craft appropriate policies that would advance the growing and stableness of the microfinance establishments.

Further the findings will assist the Kenya authorities ‘s development spouses, NGO ‘s, Donor communities and other stakeholders to efficaciously and expeditiously aim their aid to the microfinance sector.

Furthermore, microfinance strategians, policy shapers, draw a bead oning microfinance research workers, university and college pupils prosecuting a calling in entrepreneurship or microfinance domains will besides profit.

1.7 SCOPE OF THE STUDY

Microfinance establishments have a broad coverage in both rural and urban countries of the state. This survey focuses on microfinance establishments runing in Kenya. The survey therefore screens the registered establishments.

Chapter TWO

LIERATURE REVIEW

2.1 Introduction

This chapter presents a reappraisal of assorted literature stuffs related to the survey. It extensively looks at the factors that affect the growing of microfinance establishments. This reappraisal besides highlights past literature that relates to this survey, sum-up of spreads to be filled by the survey, old research findings, assorted documents and authorities publications on the topic.

2.2 Growth in the microfinance industry

Amando, ( 2005 ) observed that growing in the microfinance industry may be characterized by an addition in the comprehensiveness and deepness of outreach of bing microfinance establishments, heightened competition among microfinance service suppliers, variegation of merchandise and service offerings, and the presence of private and commercial financess for microfinance activities.

Outreach and sustainability are two critical aims for microfinance establishments ( MFIs ) . As defined by Christen et Al ( 1999 ) , outreach is the ability to supply quality fiscal services to big Numberss of people, particularly the really hapless. Outreach is besides an index of the establishment ‘s societal mission to scale up and supply services to as many people as possible. Sustainability, in contrast, requires runing at a degree of profitableness that allows sustained service bringing without dependance on subsidised inputs. This represents the establishment ‘s commercial scheme. For microfinance establishments growing is the procedure of equilibrating the aims of outreach and sustainability ; equilibrating the societal mission and the commercial scheme.

Despite the addition in figure of MFIs in operation, their growing is constrained, particularly in rural countries, because of their limited resource base and deficiency of institutional capacity to supply a broad scope of fiscal services. MFI outreach is preponderantly through group based programmes, which have limited absorbent capacity for fiscal resources. The focal point of most microfinance establishments is imparting to the informal economic system MSEs ( “Jua Kali ‘ ) and frequently adult females who are carry oning trade in little goods or supplying services ( Stevenson, 2007 ) .

Craig ( 1997 ) on the other manus observed that many microfinance establishments experience rhythms of growing followed by periods of consolidation where they are forced to work out operational challenges such as diminution in portfolio quality, client abandonment, untrained and burnt-out staff, and administrative challenges including loan processing and information systems. In add-on, many smaller recognition plans ne’er experience growing because they lack the resources ; proficient and or fiscal and a committedness to the fiscal systems attack.

In Tanzania, a study of 136 little houses found that 63 per cent of them consider troubles in accessing finance from larger fiscal establishments as the major restraint to their growing ( Satta, 2003 ) .

Even though micro finance organic structures are meant to function those who have been left out of the formal banking system, there is a turning concern that many Kenyans still miss recognition installations. Statisticss from Association of Microfinance Institutions ( AMFI ) indicate that over 60 per centum of Kenyans lack entree to formal banking services. This is because most micro-credit companies are concentrated in metropoliss and towns. Most of the people who lack recognition are in rural countries. The inquiry now is how to ease growing of microfinance establishments to cover all countries ( Tilman, 2006 ) .

2.2.1 Constraints confronting micro finance establishments.

The microfinance sector in Kenya has faced a figure of restraints that need to be addressed to enable them to better outreach and sustainability and grow. The major hindrance to the development of microfinance concern in Kenya has been until late hapless statute law and set of ordinances to steer the operations of the microfinance sub-sector. This has contributed to a big extent to the hapless public presentation and eventual death microfinance establishments because of a deficiency of appropriate regulative inadvertence. This has besides had a bearing on a figure of other restraints faced by the industry, viz. : broad diverseness in institutional signifier, unequal administration and direction capacity, limited outreach, unhealthy competition, limited entree to financess, unfavourable image and deficiency of public presentation criterions, Poverty decrease scheme paper ( PRSP 1999 ) .

Supplying fiscal services to hapless people is dearly-won, in portion, because they have little sums of money, frequently live in urban slums and remote rural apparatuss, and seldom have documented recognition histories. During the past decennary, microfinance establishments ( MFIs ) started turn toing this job by developing techniques that permit safe loaning in the absence of borrowers ‘ recognition history. Still, MFIs normally charge comparatively high involvement rates to cover the administrative costs of managing little minutess for spread populations ( Gaulum, 2006 ) .

Mutua et Al ( 1996 ) highlighted that a job confronting NGO ‘s running microfinance establishments is the ability to equilibrate traditional public assistance aims with the ends of keeping sustainable recognition programmes. This is because when recognition policies are based on human-centered instead than fiscal considerations, inefficiency and ineffectualness can follow which shackles sustainability and growing of microfinance establishments.

A survey by Anyanwu ( 2004 ) , on Microfinance establishments policy pattern and potencies in Nigeria revealed that the bomber sector in Africa faces a figure of challenges which include the pressing entree to medium to long term sustainable beginnings of support.

2.2.2 Importance of the microfinance sector

The first property that distinguishes microfinance establishments from others is what has come to be called its double mission of equilibrating a societal docket or societal impact with its fiscal aims. Most microfinance establishments ( MFIs ) are establishments that combine a societal development mission ; proviso of fiscal services to the lowest income population possible with a fiscal aim that drives the establishment to accomplish ego sufficiency and thereby accomplish sustained service bringing without dependance on subsidies ( Humphrey, 2006 ) .

The authorities appreciates the importance of microfinance establishments in the development of SMEs. In G.O.K ( 2005 ) policy paper the authorities sates “ deficiency of entree to recognition is a major restraint suppressing the growing of the enterprisers ” . The same paper further provinces that “ the authorities recognizes that entree to recognition and fiscal services is cardinal to the growing and development of any endeavor and more so the SMEs ” The authorities therefore has its ain programmes and undertakings aiming the sector. Some of them are the Kenya Industrial Estates, the Joint Loan board both under the Ministry of Trade and Industry and the late established Kshs. cubic decimeter billion young person fund under the Ministry of Youth Affairs in the office of the Vice President.

Harmonizing to an rating survey on microfinance programmes in Kenya Supported through the Dutch co-financing programme, ( Hospes 2002 ) concludes that the impact of the fiscal service proviso by Kenya Women Finance Trust ( KWFT ) at the endeavor degree is positive in many respects: Enterprise size and employment coevals, both the quantitative and qualitative appraisal show that the proviso of loans by KWFT has helped adult females to maintain them traveling even in the most hard times, every bit good as contribute to supplying continued employment to the adult females and their households, and to increase the figure of employees in their concern, either on impermanent or lasting footing.

It is now widely acknowledged that the MFIs, with their advanced plan packaging, have enlarged the fiscal market, increased the volume of family fiscal nest eggs and induced fiscal independency among rural households ( Sajjad et al 1999 ) .

Harmonizing to the Poverty Reduction Strategy Paper ( PRSP ) of 1999, a big figure of Kenyans derive their support from little and micro-enterprises. Therefore, development of this sector represents an of import agencies of making employment, advancing growing, and cut downing poorness in the long term. However, in malice of the importance of this sector, experience shows that proviso and bringing of recognition and other fiscal services to the sector by formal recognition establishments, such as microfinance establishments has been below outlook. This means that it is hard for the hapless to mount out of poorness due to miss of finance for their productive activities. Therefore, new, advanced and pro-poor manners of funding low income families and SMEs based on sound runing rules need to be developed.

The United Nations acknowledges microfinance as a cardinal instrument to accomplishing Millennium development Goals ( MDGs ) , which seeks to cut down poorness by 2015. They include cut downing child mortality by two tierces, eliminating utmost poorness and hungriness, accomplishing cosmopolitan primary instruction, advancing gender equality and authorising adult females, every bit good as battling HIV/AIDS, malaria and other diseases ( UN, 2005 ) .

As microfinance establishments in Kenya continue to increase in Numberss, their endurance in the market economic system will greatly be influenced by the impact their merchandises and services have to their receivers. This will include ; the authorization of household, coevals of income and betterment of public assistance, the addition in concern public presentation, preparation and concern accomplishments provided to clients, footings and conditions for loan refund and service among others.

Microfinance establishments are critical to Africa ‘s quest for solutions to the continent ‘s development challenge. The country of their greatest possible impact, rural Africa, is non merely place to the majority of the continent ‘s population, but besides the huge bulk of Africa ‘s hapless. MFIs with illustrations from Zambia, Kenya, South Africa, Mali and Zimbabwe, set up a nexus between MFIs and both poverty obliteration and the authorization and equality of adult females, two of the major Millennium Development Goals ( Kaoma, 2001 ) .

Anywanu, ( 2004 ) observes that microfinance establishments aim to better the socio-economic conditions of adult females, particularly those in the rural countries through the proviso of loan aid, skills acquisition, generative wellness attention service, grownup literacy and miss kid instruction. They besides aim to construct community capacities for wealth creative activity among enterprising hapless people and to advance sustainable support by beef uping rural antiphonal banking methodological analysis every bit good as eradicate poorness through the proviso of microfinance and skill acquisition development for income coevals.

2.2.3 Promotion of Microfinance establishments growing.

As an endeavor grows, different demands arise to match with every phase of its development. The degree of edification of cognition, accomplishment and attitude alteration, inputs will change with this every phase. It should nevertheless reflect that the demands are demand driven because they can be correlated with the jobs and chances that micro moneymans face in pull offing the concern ( Murumbutsa, 1998 ) .

Oikocredit International, a societal investor progressively engaged in microfinance, expressed that imparting commercial capital to microfinance establishments is cardinal in set uping the conditions for sustainability and for the scaling-up of microfinance establishments. Commercial capital pushes microfinance establishments to hold more strict fiscal subject and direction ( Amando, 2005 ) .

Microfinance establishments in Kenya need to follow and subscribe to public presentation criterions in their operations so as to mensurate and guarantee growing. In the Philippines the Central Bank as a member of the National Credit Council worked really hard in finalising a set of public presentation criterions that can be used by microfinance establishments across the banking, non-governmental and concerted sectors to ease appraisal and rating of their public presentation. The criterions travel by the acronym P.E.S.O, which stands for Portfolio Quality, Efficiency, Sustainability and Outreach.

MFI growing includes variegation, such as the debut of new fiscal merchandises, developing demands to be designed to bit by bit supply staff with new accomplishments, therefore increasing their flexibleness and productiveness. Credit agency are utile in cut downing hazards in loaning and in promoting a more responsible attitude towards recognition by borrowers which will finally take down delinquency and beef up the recognition and fiscal system. In add-on, the presence of recognition agency will further imparting to the antecedently neglected sector such as the micro, little and average endeavors due to less trust on collateral based recognition determinations. The other necessary status is the presence of a comprehensive recognition information system. With more and more participants engaged in microfinance, the job of recognition pollution and multiple adoptions is besides increasing. The sharing and disseminating of recognition related information will be able to turn to this job ( Kitabu, 2007 ) .

To be successful an organisation should hold particular characteristics over and above being new and little in an industry. If any developments have to take topographic point among microfinance establishments so the rate of their growing would depend on accretion of physical and human capital. This nevertheless would necessitate an effectual allotment of resources and ability to get and use modern engineering ( Biggs et al, 1996 )

Growth of the microfinance sector nevertheless, is really much dependant on a host of factors among them, the policy and regulative environment, which consists of wide, high degree policies that affect the economic and regulative conditions in which micro finance establishments have to run. Such are macro-policies for the stabilisation and growing of the economic system. Other factors include proviso of technological capablenesss and accomplishments upgrading, competition. These factors promote higher concern productiveness and growing through improved techniques, and the related debut of better quality merchandises and services that yield the establishments high added value and larger markets. The proviso of fiscal services, engineering upgrading, complements the good effects of a truly enabling policy environment ( Ronge, et Al, 2002 )

The authorities is fighting to thrust the state into a province of economic recovery by incorporating the microfinance sector into the national economic grid, by earnestly looking at the potency of the microfinance establishments sectors for driving SMEs, making employment and economic growing, farther the Kenya authorities has taken major stairss in the development of this sector by go throughing a regulative model in the signifier of the micro-finance measure which will enable their enrollment and ordinance of micro finance establishments ( Munguti, 2005 ) .

For a turning concern to go on turning, it has to be a learning organisation that monitors the market and scans the skyline looking for hints or tendencies. It needs to be proactive by on a regular basis analysing how it can make better. There may be a inclination in mature MFI ‘s to presume that, because their current fiscal merchandises are so successful, they should go on to run the manner they are and merely increase the graduated table of their operations. Successful houses are invariably introducing and upgrading, and they spend a important per centum of their budget on research and development. Donor organisations should see how their resources may fund the imaginativeness of microfinance establishments to heighten their growing ( Tomasko, 1996 ) .

Businesss need to hold an effectual direction information system in topographic point prior to an explosive growing stage to enable it to pull off growing. Most rising houses get into problem because the direction squad either does non hold the information it needs to do the right determinations or chooses to disregard the information that is available. For microfinance, information is even more of import than in most concerns. It is the lifeblood of an MFI. Microfinance relies an information based loaning engineering, as opposed to commercial Bankss that use a collateral-based attack. Microfinance information must concentrate on fiscal every bit good as non-financial indexs, such as productiveness, efficiency, mean loan size, and client keeping. The direction information system should supply information about factors and forces that need to be monitored closely every bit good as penetrations into what should be changed. This early warning system can scan the skyline for tendencies, and place menaces and chances ( Craig, 1997 ) .

2.3 Summary and Gap

From literature reviewed the information available indicates that the figure of micro finance establishments in Kenya is bit by bit increasing and dominant market participants are turning, most microfinance establishments nevertheless register slow growing and farther the grounds for this with regard to Kenya are non conclusive.

Despite their success so far microfinance establishments merely reach a fraction of the estimated implicit in demand. There is immense latent demand for micro-credit around the state. Even though micro-finance organic structures are meant to function those who have been left out of the formal banking system, there is a turning concern that many Kenyans still miss recognition installations. This is because despite the turning figure of microfinance establishments in Kenya, their outreach is constrained particularly in rural countries, the survey hence seeks to set up the factors impacting their growing.

Most surveies have focused on the little and micro endeavors growing to demo how successful they have been after having micro-credit, few have tried to analyse the factors impacting the growing of microfinance establishments themselves.

Although microfinance activity has grown well in recent old ages, it is still far from making a important part of the population that lacks entree to formal fiscal services. Microfinance establishments despite their success over the past few old ages, have merely grown to make a fraction of the estimated implicit in demand, extended survey is yet to be done on factors impacting their growing.

RESEARCH METHODOLOGY

3.0 Introduction

This chapter discusses the research method that was applied in transporting out the survey. It covers the undermentioned countries ; Research design, mark population, trying design, informations aggregation process and information analysis.

3.1 Research Design

This survey adapted a descriptive research design. The research aimed to roll up informations on the factors impacting the growing of microfinance establishments in Kenya. Descriptive research design is used when informations collected describes individuals, organisations, scenes or phenomena. This attack was appropriate because the informations collected chiefly involved descriptions of the variables in the survey. This descriptive research design enabled the research gaining control quantitative informations to supply in depth information about the factors impacting the growing of microfinance establishments in Kenya.

3.2 Target Population

The mark population in this research were microfinance establishments registered and runing in Kenya. There are 56 registered microfinance establishments, this was the group of involvement. Questionnaires were administered to finance directors of these microfinance establishments.

3.3 Sample Design

The nose count method was used in this survey. In this method of survey, all registered microfinance establishments were surveyed. For the intents of this survey all 56 registered microfinance establishments.

3.4 Data aggregation methods

Data was collected from microfinance establishments utilizing structured questionnaire.

Primary information was collected by usage of questionnaire method in this survey. Primary informations are those which are collected fresh and for the first clip and therefore go on to be original in character ( Kothari, 2004 ) . In this survey, the research made usage of a questionnaire to beg thoughts related to the research job from respondents. The inquiries sought to turn to the research aim and inquiry related to the survey.

A bead and pick method was used in disposal of the questionnaire.

3.5 Data Analysis and Presentation

The consequences obtained from informations collected were summarized under common subjects and presented in signifier of frequence tabular arraies, per centums and pie charts. Harmonizing to Cochran ( 1989 ) consequences from research findings are frequently presented in these signifiers. Data was analyzed by frequence distribution and per centums to demo the frequence of establishments mentioning common factors and the per centum of them placing similar factors impacting their growing. Written accounts are provided to construe informations, to pull decisions and do recommendations. The intent was to mensurate and supply information on factors impacting the growing of microfinance establishments.

Chapter FOUR

DATA ANALYSIS AND PRESENTATION OF RESULTS

4.1 Introduction

This chapter deals with the consequences and findings of the survey. It presents and descriptively analyzes the informations gathered from respondents and summarizes the major findings from the respondents. These responses were analyzed utilizing excel computing machine bundle and the consequences summarized in signifier of tabular arraies, saloon graphs and pie charts as appropriate.

4.2 Consequences and Data Analysis

The primary aim of the survey was to measure the factors impacting the growing of microfinance establishments in Kenya. A nose count was undertaken where all 56 registered microfinance establishments were presented with questionnaires, 34 of the 56 respondents returning their duly filled up questionnaires. This represented a 60.7 % response rate which was deemed sufficient for derivations of decisions covering the full population under the survey.

4.3 General Findings.

4.3.1 Old ages of operation

On the figure of old ages that the organisations have been in operation, the consequences showed that bulk ( 55.9 % ) were between 10 and 15 old ages old since they started runing. 14.7 % of the organisations were the oldest being over 15 old ages old, while 11.8 % of the population being the youngest holding being in operation for less than 5 old ages. The staying 17.6 % of the respondent organisations were between 5 and 10 old ages.

Table 4.1: Age of the organisation

Age

Frequency

Percentage

0 – 5 old ages

4

11.8 %

5 – 10 old ages

6

17.6 %

10 – 15 old ages

19

55.9 %

Over 15 old ages

5

14.7 %

Entire

34

100 %

Beginning: Research informations, 2009

4.3.2 Customer sections.

In response to the inquiry sing to which client segments the organisations provide microfinance installations to, 5.9 % said they provide services to adult females, 11.8 % indicated micro endeavors, 79.4 % provide services to all sections, while 2.9 % said the cater for agriculturists.

Table 4.2: Customer sections

Customer Segment

Frequency

Percentage

Womans

2

5.9 %

Agriculturists

1

2.9 %

Micro endeavors

4

11.8 %

All sections

27

79.4 %

Entire

34

100 %

Beginning: Research informations, 2009

4.3.3 Client base

From this survey it was established that 50 % of the organisations that responded had a client base of over 10,000 clients. 32.4 % of the microfinance establishments had between 5,000 and 10,000 clients and 17.6 % of the respondents indicated holding a client base of less than 5,000 clients.

4.3.4 Branch webs

From the survey it was established that bulk ( 52.9 % ) of the respondents had less than 5 subdivisions countrywide. 20.6 % of the microfinance organisations indicated they had between 5 and 10 subdivisions, while 26.5 % responded to holding over 10 subdivisions countrywide.

4.4 Research Findingss

4.4.1 Section 1

This subdivision represents consequences on the responses to statements refering factors impacting the growing of microfinance establishments in Kenya.

Table 4.3 below summarizes the consequences of the responses to the statement that entree to financess for on loaning is a factor that affects the growing of microfinance establishments in Kenya. Majority ( 79.4 % ) of the respondents indicated that entree to financess for on loaning greatly affects the growing of microfinance establishments, while 5.9 % indicated that entree to financess for on imparting merely somewhat affects the growing of microfinance establishments in Kenya.

Table 4.3: Entree to financess for on loaning

Responses

Frequency

Percentage

Greatly affects

27

79.4 %

Affects

5

14.7 %

Slightly affects

2

5.9 %

Does non impact

0

0 %

Not certain

0

0 %

Entire

34

100 %

Beginning: Research informations, 2009

Table 4.4 below summarizes the consequences of the responses to the statement that the scope of fiscal merchandises and services is a factor impacting the growing of microfinance establishments in Kenya. Over half ( 61.8 % ) of the respondents indicated that the scope of fiscal merchandises and services offered by a microfinance establishment greatly affects its growing. 32.3 % responded it affects, while the balance ( 5.9 % ) indicated that the scope of fiscal merchandises and services offered by microfinance establishments somewhat affects their growing.

Table 4.4: Scope of fiscal merchandises and services

Responses

Frequency

Percentage

Greatly affects

21

61.8 %

Affects

11

32.3 %

Slightly affects

2

5.9 %

Does non impact

0

0 %

Not certain

0

0 %

Entire

34

100 %

Beginning: Research informations, 2009

The consequences from table 4.5 below show that 67.6 % of the respondents indicated that competition affects the growing of microfinance establishments in Kenya. Representing a bulk of the houses believe that competition affects their growing.

Table 4.5: Consequence of competition on growing

Responses

Frequency

Percentage

Greatly affects

7

20.6 %

Affects

23

67.6 %

Slightly affects

4

11.8 %

Does non impact

0

0 %

Not certain

0

0 %

Entire

34

100 %

Beginning, Research information, 2009

With respect to employee accomplishments and preparation as a factor impacting the growing of microfinance establishments in Kenya, 73.5 % responded it greatly affects, 20.6 % said it affects, while 5.9 % responded it somewhat affects.

Table 4.6: Employee accomplishments and preparation

Responses

Frequency

Percentage

Greatly affects

25

73.5 %

Affects

7

20.6 %

Slightly affects

2

5.9 %

Does non impact

0

0 %

Not certain

0

0 %

Entire

34

100 %

Beginning: Research informations, 2009

Further consequences from Table 4.7 show that with respect to engineering usage, 82.4 % of the respondents indicated that the usage of engineering greatly affects the growing of microfinance establishments in Kenya.

Table 4.7: Consequence of engineering on growing

Responses

Frequency

Percentage

Greatly affects

28

82.4 %

Affects

5

14.7 %

Slightly affects

1

2.9 %

Does non impact

0

0 %

Not certain

0

0 %

Entire

34

100 %

Beginning: Research informations, 2009

When asked to react on the consequence of internal control and corporate administration on the growing of microfinance establishments in Kenya, bulk ( 73.5 % ) of the respondents indicated that internal control and corporate administration greatly affects the growing of microfinance establishments in Kenya.

Table 4.8: Internal control and corporate administration

Responses

Frequency

Percentage

Greatly affects

25

73.5 %

Affects

6

17.6 %

Slightly affects

3

8.8 %

Does non impact

0

0 %

Not certain

0

0 %

Entire

34

100 %

Beginning: Research, 2009

The consequences from table 4.12 show that with respect to the consequence of statute law and regulative government, merely 5.9 % indicated that it greatly affects the growing of microfinance establishments in Kenya. 20.6 % indicated it affects, with the bulk ( 58.8 % ) of the respondents bespeaking it merely somewhat affects. 11.8 % indicated it does non impact growing, with 2.9 % non being certain.

With respect to corporate societal duty 47 % of the respondents indicated that corporate societal duty merely somewhat affects the growing of microfinance establishments in Kenya. 26.5 % responded it affects, 2.9 % bespeaking it greatly affects, while 14.7 % indicating that pattern of corporate societal duty does non impact the growing of microfinance establishments in Kenya. 8.8 % of those who responded were non certain.

4.4.2 Section 2

In this subdivision respondents were asked whether they agreed with certain statements in the questionnaire.

With respect to the statement that the distribution of microfinance merchandises and services affects the growing of microfinance establishments 67.6 % of the respondents indicated they strongly agree, 32.4 % of the respondents indicated they agree, none disagreed with the statement.

Table 4.9: Distribution of merchandises and services affects growing.

Responses

Frequency

Percentage

Strongly hold

23

67.6 %

Agree

11

32.4 %

Disagree

0

0 %

Strongly differ

0

0 %

Not certain

0

0 %

Entire

34

100 %

Beginning: Research informations, 2009

Consequences in 4.5 below show that bulk ( 55.9 % ) agree with the statement that the houses selling activities affect the growing of the microfinance establishments. 35.3 % indicated that they strongly agree, while 2.9 % indicated they disagree with the statement. 5.9 % of the respondents were non certain.

With respect to the statement that the accomplishments and degree of making of direction affects the growing of microfinance establishments, 67.6 % of the respondents indicated that they agree with the statement while merely 8.8 % disagreed.

Table 4.10: Skills and makings of direction

Responses

Frequency

Percentage

Strongly hold

8

23.5 %

Agree

23

67.6 %

Disagree

3

8.8 %

Strongly differ

0

0 %

Not certain

0

0 %

Entire

34

100 %

Beginning: Research informations, 2009

On the statement that the quality of merchandises and services offered by microfinance establishments affects its growing, none of the respondents disagreed. Majority ( 64.7 % ) of the respondents indicated they agree with the balance ( 35.3 % ) indicating they strongly agree every bit good.

Table 4.11: Quality of merchandises and services

Responses

Frequency

Percentage

Strongly hold

12

35.3 %

Agree

22

64.7 %

Disagree

0

0 %

Strongly differ

0

0 %

Not certain

0

0 %

Entire

34

100 %

Beginning: Research informations, 2009

When asked to bespeak how different factors contribute to growing of microfinance establishments in Kenya the undermentioned responses were obtained.

Table 4.12: Factors lending to growing

Contribution is Least

Contribution is minimum

Contribution is important

Contribution is Most

Does non Lend

Entire

Handiness of support

0

4

21

9

0

34

Percentage

0 %

11.8 %

61.8 %

26.5 %

0 %

100 %

Technology

0

3

19

12

0

34

Percentage

0 %

8.8 %

55.9 %

35.3 %

0 %

100 %

Competition.

2

14

10

5

3

34

Percentage

5.9 %

41.2 %

29.4 %

14.7 %

8.8 %

100 %

Employee accomplishments and preparation.

0

0

24

10

0

34

Percentage

0 %

0 %

70.6 %

29.4 %

0 %

100 %

Government ordinance

1

18

11

3

1

34

Percentage

2.9 %

52.9 %

32.4 %

8.8 %

2.9 %

100 %

Management leading.

0

3

13

18

0

34

Percentage

0 %

8.8 %

38.2 %

52.9 %

0 %

100 %

Product and service development

0

0

27

7

0

34

Percentage

0 %

0 %

79 %

21 %

0 %

100 %

Beginning: Research informations, 2009

When asked to bespeak concern aims in order of importance to the microfinance establishment, 21 % of the respondents indicated profitableness as the most of import concern aim, 8.8 % indicated competitory place, and 2.9 % responded endurance, while bulk ( 52.9 % ) of the respondents cited growing as their most of import concern aim. The balance ( 14.7 % ) indicated increased market portion.

Chapter FIVE

SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction

This chapter contains a sum-up of the findings, decisions and recommendations of this research undertaking whose chief intent was to measure the factors impacting the growing of microfinance establishments in Kenya. The chapter besides addresses the countries for farther research.

5.2 Summary of Findingss

The consequences of the survey indicate that employee accomplishments and developing contributes to the growing of microfinance establishments with 70.6 % of the respondents bespeaking that the part of employee accomplishments and developing to growing is important.

The consequences revealed that authorities statute law and the regulative government merely somewhat affects growing of microfinance establishments in Kenya harmonizing to a bulk of 58.8 % of the respondents. In footings of part to growing, among other factors authorities statute law besides was perceived to hold minimum or least part harmonizing to bulk ( 55.9 % ) of the respondents.

The survey besides indicated that the accomplishments and making of direction affects the growing of microfinance establishments in Kenya, this is harmonizing to 91.1 % of the respondents in the survey. This shows that direction competency in footings of accomplishments and makings in running the house greatly determines a house ‘s growing.

The survey showed that the degree of preparation and accomplishments of employees greatly affects the growing of microfinance establishments, a bulk of 73.5 % answering microfinance establishments bespeaking that employees accomplishments and developing greatly affect the growing of their organisation.

The consequences obtained from this survey besides revealed that the extent of part of competition to growing was perceived otherwise across the respondents in the survey. 41.2 % indicated that its part is minimum, 29.4 % position its part to be important, and while 14.7 % indicated it most contributes to growing. 8.8 % indicated competition does non lend to growing.

Findingss from the survey besides indicated that usage of engineering affects the growing of microfinance establishments with 82.4 % of the respondents bespeaking that engineering greatly affects their growing.

The consequences from the survey farther revealed that despite the legal model being a cardinal facet of any concern, a bulk ( 52.9 % ) of the respondents believe that the authorities ‘s part to the growing of microfinance establishments in Kenya is minimum.

The survey besides showed that entree to support is critical to the growing of microfinance establishments in Kenya, with 79.4 % of the respondents bespeaking that handiness of financess greatly affects their growing.

Findingss from the survey revealed that the accomplishments and making of direction affects the growing of microfinance establishments, with 91.1 % of the respondents bespeaking they agree. It was besides established that direction leading contributes the most to growing of microfinance establishments in Kenya as per 89.1 % of the respondents.

5.3 Decision

A figure of decisions can be drawn from the survey. Compared to consequences of other similar surveies carried elsewhere.

Technology usage is a important factor to growing of microfinance establishments. This concurs with literature reappraisal that the technological capablenesss of microfinance establishments, determines its growing. Findingss from the survey indicated that usage of engineering affects the growing of microfinance establishments with 82.4 % of the respondents bespeaking that engineering greatly affects their growing. This result is in harmoniousness with consequences obtained in a survey by Biggs and Srivaslova in 1996, which showed accretion of technological capableness, is of import to sustained microfinance growing and development.

Findingss from the survey reveal that the accomplishments and making of direction affects the growing of microfinance establishments. It was besides established that direction leading contributes the most to growing of microfinance establishments in Kenya as per 89.1 % of the respondents. These findings are in harmoniousness with the literature reappraisal that indicates managerial accomplishments, experience and making influences public presentation and leads to microfinance establishment growing.

From the survey it can be concluded that the quality of merchandises and services offered by microfinance establishments affects growing, this is consistent with the literature reappraisal that the quality and assortment of services offered by microfinance establishments affects its growing.

The survey besides revealed that entree to financess for on loaning non merely forms the footing for the microfinance establishments operations but besides determines the growing of the concern.

The survey showed that the degree of preparation and accomplishments of employees greatly affects the growing of microfinance establishments. A bulk of the respondents from the microfinance establishments indicated that employees ‘ accomplishments and developing greatly affect the growing of their organisations. This is consistent with findings by Kitabu, 2007 which revealed that preparation and accomplishments of employees increases their flexibleness, productiveness and promotes growing of the houses.

Besides from this survey, internal control and corporate administration, distribution and quality of merchandises and services, corporate societal duty and selling were besides established factors impacting microfinance establishment growing in Kenya.

5.4 Recommendations

The undermentioned recommendations are based on findings generated from the survey.

The survey recommends that to ease growing of the microfinance establishments employees should invariably have preparation in new accomplishments to better their expertness in the concern operations.

Microfinance establishments should be sensitized on the importance of corporate societal duty and its part to growing and behavior periodic studies among their clients and community members around with respect to the success of their corporate societal duty plans.

From the survey it came out clearly that the distribution of merchandise and services is critical to the growing of the microfinance establishments. The establishments hence need to develop uninterrupted supervising mechanisms to guarantee that clients are able to entree their services.

The authorities through its concern development offices should beef up the capacity of microfinance establishments by supplying entree to financess and legal and regulative environment that promotes just competition and promotes growing.

The chance exists to distinguish fiscal merchandises and services and therefore make a greater demand for their merchandises. Microfinance establishments should develop more merchandises and services to give its clients a assortment to take from.

Finally it is recommended that microfinance establishments in Kenya should to the full use and increase the acceptance of appropriate engineerings to heighten growing. It is besides recommended that the microfinance establishments invest in new information engineerings every bit good as invest in an incorporate system to link its subdivisions in order to supply effectual and efficient services.

5.5 Suggested countries of Study

Further research should be done to set up ways of assisting microfinance establishments survive and grow in a to the full liberalized economic system, this is in line with the coming of the increasing competition from Bankss.

In this survey different organisations cited different concern aims such as competitory place, endurance, market portion, profitableness, farther research should hence be done to set up how the different objectives a house pursues affects its growing.

A survey could be carried out to set up countries of chances that exist for microfinance establishments to consolidate and bask economic systems of graduated table through joint ventures, partnerships, amalgamations and so forth that can be utilized to heighten growing.

Mentions

Amando, M. 2005, Stimulating the growing of microfinance in the Philippines.Central Bank of Philippines.

Anyanwu, C. M 2004, Microfinance Institutions in Nigeria: Policy, Practice and Potentials. Central Bank of Nigeria, Abuja, Nigeria.

Barclay, O. 2006, Valuing micro finance establishments. Opportunity international. Savingss and development-NO. 3 – 2006

Baumann, T. 2001, Micro-finance and poorness relief in South Africa. Bay research and consultancy services Cape Town

Christopher, J. & A ; Colin, H. 2006, Finance for Small Enterprises Growth and Poverty Reduction in Developing Countries. Journal of International Development J. Int. Dev. 18, 1017-1030 ( 2006 )

Craig. F, 1997, Pull offing Growth: The Organizational Architecture of Microfinance Institutions. Accion International

Glenn, D. & A ; Washington, K. 1996, Kenya Rural Enterprise Program: Directing recognition to low income groups. Micro-Finance Series, AFTE1, Africa Region, Washington, D.C. : Findingss Africa part Vol.8

Government of Kenya 1997, The Economic Survey, 1997, Ministry of Planning and National Development, Government pressmans, Nairobi.

Harper, M 2003, Key Hagiographas on Microfinance, ITDG Publishing, Samskriti, New Delhi, India.

Hospes, R. 2002, An Evaluation of Micro-Finance Programmes in Kenya as Supported through the Dutch Co-Financing Programme. A survey commissioned by: Steering Committee for the Evaluation of the Netherlands Co-financing Programme

Humphrey, K. 2006, Growth of micro endeavors in Kenya: A instance of automotive garage operators in Kariobangi, Nairobi.

Jeyanth, K. 2003, Institutional Preparedness and Sustainability of Micro Finance Institutions During Post Disaster Scenario. Disaster Prevention and Management Vol. 16 No. 1, 2007

Kaoma, K, 2001, Towards best patterns for microfinance institutional battle in African rural countries. Selected instances and docket for action. The World Bank, Washington, DC, USA. International Journal of Social Economics Vol. 31 No. 1/2, 2004

Kitabu, B. 2007, An appraisal of the impact of recognition services on adult females micro enterprisers in Kenya: Case of KWFT recognition services in Nairobi.

Lincolin, A 2005, An appraisal of public presentation and sustainability of micro finance establishments: A instance survey of small town recognition establishments in Gianyar, Bali, Indonesia.

Munguti, K. 2005, Analysis of effects of micro funding on micro and little endeavors: A instance of K-rep Bank ‘s Juhudi and Katikati loan programmes.

Murumbutsa, W. 1998, Entrepreneurial factors act uponing the growing of Micro-enterprises in the fabrication sector. Institute of human resources development. J.K.U.A.T

Mutua et al 1996, The position from the field: Positions from directors of microfinance establishments. Journal of International Development: Vol. 8, No. 2,179-193

Omondi, G. 2005, Factors act uponing the constitution of micro finance strategies in Kenya.

PRSP, 1999, Poverty Reduction Strategy Paper ( PRSP ) of 1999 Government of Kenya.

Rusdy, H. 2007, Understanding the success factors of micro-finance establishment in a underdeveloped state. International Journal of Social Economics. Vol. 34 No. 6

Sajjad, Z. and Imran, M. 1999, Wider impacts of microfinance establishments: Issues and constructs. Bangladesh Institute of Development Studies, Bangladesh. Copyright 2004 John Wiley & A ; Sons, Ltd.

Satta, A. 2007, Performance rating of three little houses ‘ funding strategies in Tanzania. Leeds University Business School and Institute of Finance Management, Dar Es Salaam, Tanzania. Journal of Accounting & A ; Organizational Change Vol. 2 No. 2

Stevenson, L. 2007, Support for Growth-oriented Women Entrepreneurs in Kenya. Programme on hiking employment through little endeavor development.

Job Creation and Enterprise Department International Labour Office. Geneva. First published 2005

Tilman, E. 2006, Optimizing Capital Supply in Support of Microfinance Industry Growth.

United Nations 2005, Microfinance and the millenary development ends. hypertext transfer protocol: //www.unitednations.org

Webster, F & A ; Riopelle, 1996, Constraints to Growth in Sub Saharan Africa, Pretoria, South Africa.

APPENDIX II

QUESTIONAIRE

INSTRUCTIONS.

Thank you for taking clip to finish this questionnaire. Kindly answer the undermentioned inquiries. The responses will be used for academic intents merely, and will be treated with extreme assurance.

Section A: General

( The intent of this subdivision is to acquire background information about the establishment )

1. Kindly indicate the figure of old ages of operation of your organisation.

a ) 0-5 old ages [ ]

B ) 5-10 old ages [ ]

degree Celsiuss ) 10-15 old ages [ ]

vitamin D ) over 15 old ages [ ]

2. To which client sections does your house provide micro recognition installations to?

I ) Women [ ]

two ) Agriculturalists [ ]

three ) Micro enterprises [ ]

four ) All [ ]

V ) Others ( delight specify ) . .

3. What is the estimated figure of clients of the establishment?

I ) 0 – 5000 [ ]

two ) 5000-10,000 [ ]

three ) above 10,000 [ ]

4. How many subdivisions does your microfinance establishment have in the state?

I ) 0 – 5 [ ]

two ) 5 – 10 [ ]

three ) Over 10 [ ]

Section B.

( This subdivision aims to place the factors impacting the growing of microfinance establishments ) .

5. Below is a table please bespeak whether the factors listed affect the growing of your microfinance establishment. Whether it greatly affects, affects, non certain, somewhat affects or does non impact.

Factor

Greatly affects.

Affects.

Slightly affects.

Does non impact.

Not certain.

Entree to financess for on loaning.

Scope of fiscal services & A ; merchandises.

Competition.

Employee accomplishments and preparation.

Use of engineering.

Internal control and corporate administration.

Legislation and regulative government to concern operations.

Corporate societal duty.



6. On a graduated table of 1 to 5 indicate whether you agree with the undermentioned statements in relation to the growing of micro finance establishments.

Scale

5

Strongly hold

4

Agree

3

Disagree

2

Strongly differ

1

Not certain

Distribution of micro finance merchandises and services affects the growing of the microfinance establishment.

The houses selling activities affect the growing of the microfinance establishment.

The accomplishments and degree of making of direction affects the growing of the microfinance establishment.

Quality of merchandises and services offered affects the growing of the microfinance establishment.

7. Are you satisfied with the degree of growing of your microfinance establishment?

Yes [ ] No [ ]

8. Kindly rank the following five countries with regard to which contributes the most to the growing experienced. Where 1 is the most and 5 is the least.

a ) Competent Staff [ ]

B ) Increased quality of service [ ]

degree Celsius ) Increased selling [ ]

vitamin D ) New engineering [ ]

vitamin E ) Management leading [ ]

9. Please bespeak how the undermentioned factors contribute to the growing of your house. Ranging from most to least or no part. Please tick suitably.

Contribution is Least

Contribution is minimum

Contribution is important

Contribution is Most

Does non Lend

Handiness of funding e.g givers

Technology

Competition.

Employee accomplishments and preparation.

Government ordinance

Management leading.

Product and service development

10. The followers are some concern aims, Please bespeak the order of their importance to your house. Such that 1 is the most of import, 4 is the least of import, while 5 indicates non an aim.

( Click the appropriate box )

Business Aim

1

2

3

4

5

Profitableness

Competitive place

Survival

Growth

Increased market portion

Thank you for your clip