dc.description.abstract | In the present world nothing can be taken for granted. An organization's success is very
much determined by its ability to appropriately respond to the fast changing environment.
This study has focused on responses by Kenya's Agricultural Finance corporation to
environmental challenges.
The objectives of the study were to establish; strategic responses by AFC to
environmental challenges, and operational responses by AFC to environmental
challenges. AFC is a government owned and agriculture based development institution
established in 1963 as a statutory body. Since its inception, it has been government's
main conduit for delivery of agricultural credit, a role that it has performed well.
However, towards the end of 1980s the performance of AFC started experiencing
operational difficulties due to various factors. These included poor governance, frequent
adverse weather conditions, declined trade in agricultural produce and effects of
economic liberalization among others. The poor performance of AFC reached its lowest
level in 200112002 financial Year when it almost collapsed. This situation called for
urgent responses for the institution's survival.
This study was conducted through a case study to establish the strategic and operational
responses. Data was collected from both secondary and primary sources. Personal
interview was carried out with senior managers. The findings were analyzed through the
content analysis technique. The study established that AFC decided to undergo a
fundamental strategic change. It adopted a new business model providing three lines of
service: Retail lending; wholesale lending; and Apex lending. Some of the strategic
responses established were; going to the money market to raise funds for core-lending
program; use of market penetration strategies to increase the clientele base; development
of new products and restructuring of the organization. Operational responses touched on
reviewing of loan administration policies; opening of new branches; and reorganization
of the internal structures.
The responses have been effective that lending has resumed in all the branches, the
strategic plan 2005-2010 is in use and is serving as a roadmap to the institution's vision,
the repayment of loans increased to above 90% in 2004, and the corporation managed to
reach 410 clients in 2002/2003 financial Year up from 1 client the previous financial
Year. The study recommends that in the long run the corporation should become self sustaining
with a reliable source of finance. | en |