| dc.description.abstract | This study set out to assess the extent of commercialization of microfinance
institutions (MFls) in Kenya and to establish if the MFI's that are adopting
commercial practices have attained client outreach. Social owners who include
social entrepreneurs, foundations and donors exclusively own majority (77%) of
MFls, indicating a low level of commercialization in MFls. Majority (59%) of MFls'
activities are funded from both market and non-market based sources of funds.
While 14% of MFI's exclusively use funds from market-based sources which include
commercial loans; savings and shareholder capital representing a relatively higher
level of commercialization. 27% MFI's exclusively use funds from non-market based
sources which are basically grants and subsidized loans. This is an indication of low
level of commercialization in MFls in relation to sources of funds.
Majority (59%) of MFIs have developed and implemented diversified financial
services delivery systems, which include decentralized credit decisions, payments
and collections through retail outlets among others. This indicated a higher level of
commercialization in MFls.
Majority (82%) of MFIs indicated that the important financial objective is operational
self-sufficiency, which shows a realization that a commercial approach will allow
MFls greater opportunity and control to fulfill their social objectives of providing the
poor with increased access to an array of demand-driven microfinance products and
services. Majority (41 %) of MFls offer one product, which is the group lending
product, 9% of MFls offer more than four products while the rest offer between two
and four products. This indicates a low level of commercialization in MFls. The MFls
that are operating as formal financial institutions offer more than four products. This
means that the policy and legal and regulatory framework are not conducive to the
commercialization of MFls in terms of product development. Consequently, majority
of MFIs would like to transform to formal financial institutions in the next five years
Majority (50%) of MFls have between 1-10 branches and outlets, these MFls
accounted for majority (43%) of total clients in 1998 and 61% of total clients in 2002.
The MFIs that have between 1-10 and 41-50 branches and outlets show a growth in
market share will the rest show a decline in market share in the five year period
(1998-2002).
The MFIs that indicate.d...bigh level of commercialization also achieved the highest
growth in client outreach. | en |
