| dc.description.abstract | The objective of the study is to examine the effectiveness of microfinance institutions
in implementing financial inclusion in Nairobi. Accordingly, characteristics of MFIs
which constitute effectiveness were assessed to determine the extent to which these
financial institutions contributed to financial inclusion with specific reference to MFIs
operating in Nairobi.
The study adopted the descriptive research method to examine the role of MFIs in
financial inclusion in Nairobi. Both quantitative and qualitative approaches to data
analysis were employed. The target population comprised the 47 registered MFIs
(AMFI-K, 2011) operating in Nairobi. The census survey method was applied and
primary data was collected using questionnaire. Data was analyzed using other
descriptive tools such as percentages and frequency distributions.
Findings from the research indicate that MFIs adopted various methods in promoting
financial inclusion in Nairobi such as the targeting of traders and farmers who make
up bulk of the population and often excluded financially by the formal sector, the use
of credits and savings as key financial products that are critical to empowerment as
the first step towards financial inclusion, balancing their operations as commercial,
NGOs or Government programs to meet the financial needs of people at different
levels, the use of savings as one of major sources of capital especially for those
operating on commercial basis to reduce dependence on borrowings, use of
cumulative savings and ability to pay as basis for lending to guard against the risk of
defaults, levying of reasonable and affordable interest rates as well as flexible
payment periods to ease constraints on those taking loans. The study further revealed
that the need for MFIs products vary from product to product with very strong need
for working capital on the credit side and very strong need for savings accounts on the
savings side. The outcome of the study was overwhelmingly favorable as 85% of
MFIs products meet customers’ expectations. This outcome is an indication of how
effective MFIs can be in promoting financial inclusion. The government, donors and
private investors should therefore increase their financial supports to MFIs since these
institutions possess the requisite ability and are well positioned to reach out to the
poor who are the prime target for financial inclusion. MFIs should also diversify their
of credits and savings as key financial products that are critical to empowerment as
the first step towards financial inclusion, balancing their operations as commercial,
NGOs or Government programs to meet the financial needs of people at different
levels, the use of savings as one of major sources of capital especially for those
operating on commercial basis to reduce dependence on borrowings, use of
cumulative savings and ability to pay as basis for lending to guard against the risk of
defaults, levying of reasonable and affordable interest rates as well as flexible
payment periods to ease constraints on those taking loans. The study further revealed
that the need for MFIs products vary from product to product with very strong need
for working capital on the credit side and very strong need for savings accounts on the
savings side. The outcome of the study was overwhelmingly favorable as 85% of
MFIs products meet customers’ expectations. This outcome is an indication of how
effective MFIs can be in promoting financial inclusion. The government, donors and
private investors should therefore increase their financial supports to MFIs since these
institutions possess the requisite ability and are well positioned to reach out to the
poor who are the prime target for financial inclusion. MFIs should also diversify their
of credits and savings as key financial products that are critical to empowerment as
the first step towards financial inclusion, balancing their operations as commercial,
NGOs or Government programs to meet the financial needs of people at different
levels, the use of savings as one of major sources of capital especially for those
operating on commercial basis to reduce dependence on borrowings, use of
cumulative savings and ability to pay as basis for lending to guard against the risk of
defaults, levying of reasonable and affordable interest rates as well as flexible
payment periods to ease constraints on those taking loans. The study further revealed
that the need for MFIs products vary from product to product with very strong need
for working capital on the credit side and very strong need for savings accounts on the
savings side. The outcome of the study was overwhelmingly favorable as 85% of
MFIs products meet customers’ expectations. This outcome is an indication of how
effective MFIs can be in promoting financial inclusion. The government, donors and
private investors should therefore increase their financial supports to MFIs since these
institutions possess the requisite ability and are well positioned to reach out to the
poor who are the prime target for financial inclusion. MFIs should also diversify their
credit products and further reduce borrowing constraints to ensure that they serve a
broader spectrum of clients as means of promoting greater inclusion in to the financial
system. | en |
