Factors Affecting the Perfomance of Micro Finance Institutions in the Eradication of Poverty in Migwani Sub-county of Kitui, Kenya

Abstract

The general objective of this study was to identify and understand factors that affect the performance of micro finance institutions in eradication of poverty in Migwani Sub-county of Kitui County. The objectives of the study were to identify development projects among the women in Migwani Sub County which have been funded by Loans procured from microfinance institutions, to establish the level of management knowledge and training among the women who utilize loans from microfinance institutions in Migwani sub-county, to establish the role played by Microfinance institutions in the eradication of poverty among the women in Migwani Sub County and to examine factors related to the performance of MFI funded projects among women in Migwani Sub-County. Lottery method was used to determine the groups that were to be involved in the study where three groups were selected through that. Then systematic sampling was used to select the appropriate individuals to include in the study, Data was collected through the questionnaire administered to 95 women who were selected from these three groups and interview guide administered to the Loan officers and the Managers of Micro finance institutions within Migwani Sub County. Data collected was analyzed using the SPSS and excel programs and the use of thematic or content analysis. Themes that relate to the factors that affect the performance of microfinance institutions were analyzed. The analyzed data was presented using both descriptive and inferential statistics namely tables, pie charts, frequencies, percentages, cross tabulations. The important factors that affect the performance of Microfinance institutions were identified from the microfinance beneficiaries and also the loan officers and managers of the microfinance institutions within Migwani Sub-County. Lack of knowledge and training among the loan beneficiaries, little involvement of the MFIs to the loan beneficiaries, improper steps taken to the loan defaulters by the Microfinance institutions are the major factors that were found to immensely affect the performance of MFIs in poverty eradication. The study proposed that the microfinance institutions should train the beneficiaries before entrusting them with loans, Microfinance institutions to venture in the field of research in order to carry out the study on the challenges that face the MFI borrowers. The researcher points out that the government has a role in instilling the policies on the operations of the microfinance institutions in order to help the poor come out of poverty. The research proposed further research on the applicability of the information technology in the field of the Microfinance.