| dc.description.abstract | The main objective of this study is to fill the gap in the knowledge of what credit models
Mfls in Kenya are using and what is the level of outreach achieved by these Mf'Is.
Majority of the MFIs in Kenya use group-based lending to deliver financial services to
their clients and only a few especially those run by commercial banks use individual
lending approach. The group-based lenders are able to reach more people in low-income
brackets because they rely on group guarantees as opposed to the individual lenders who
mainly rely on tangible securities, which the poor can not afford. The clientele of Mfls is
usually made up of women from densely populated urban areas, in low-income bracket.
Voluntary savings are not common among the MfIs in Kenya. However, most of the
Mfls do mobilise compulsory savings to act as insurance for the money rendered. Loan
terms are short averaging about one year and the amount of loan advanced to clients are
quite small with frequent repayment and high interest rates but the effects of interest rate
on the number of borrowers is low.
In conclusion, the Mf'Is that use group-based lending, group-guarantees, high frequency
of repayment, relatively small loan size and short loan terms are able to achieve a greater scale of outreach and deeper depth of outreach than those using individual lending,
tangible collaterals, low frequency of repayment, big loan sizes and long loan terms. | en |
