The Effect Of Outreach On The Growth Of Microfinance Institutions In Nakuru County
Kavoo, A M
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As the world economies struggle to drive economic growth by empowering its citizens through financial inclusion among other strategies, Kenya has made great strides in her efforts to reduce poverty and improve the living standards of her majority poor population. This has been made possible through provision of cheap credit through microfinance institutions alongside policies that ensure the financial system strives to include even the traditionally unbanked. The concept of microfinance has changed the banking sector in Kenya with the major commercial banks also providing micro loans to the low end market. The result has been a sporadic growth of microfinance institutions that has increased uptake of microloans by the traditionally unbanked. The objective of this study was to determine the effect of outreach on the growth of these microfinance institutions particularly in Nakuru county that have been integral in the economic growth witnessed in Kenya in recent years. This was informed by the research problem that despite the concerted efforts by the various stakeholders, outreach was still very low despite the huge demand in the country. There also lacked a comprehensive study on the effect of outreach on growth of microfinance institutions especially in Nakuru County, one of the key regions for the socioeconomic development of the country, even as the country strives to achieve its goals envisioned in Vision 2030. The study used primary data collected through questionnaires. The questionnaires were dropped at the respondents’ MFIs and picked later. The study population comprised of all seven microfinance institutions operating in Nakuru County as at the time of study. Responses were received from five microfinance institutions translating to 71.4% of the target population. The data collected was analyzed using descriptive statistics. The findings of the study revealed that number of clients greatly impacted on the growth of MFIs in Nakuru County and these MFIs placed strong strategies to increase customer numbers. The number of business units or outlets also increased growth by virtue of being able to reach a higher number of clients who would take up loans with the respective MFIs. Another aspect of outreach -value of liability savings/deposits helped the MFIs in the study to advance bigger loans which enhanced growth. These aspects of outreach greatly impacted on the growth of MFIs, that is, they contributed to the increase of assets by these institutions. In conclusion therefore it is apparent that the level of outreach determines to a great extend the rate of growth of any particular microfinance institution and there is therefore a dire need to put in strategies to grow customer numbers, have candid deposit mobilization campaigns as well as try to penetrate the majority rural unbanked population through opening of more branches and agencies. This will ensure financial deepening and inclusion, a key factor in societal emancipation that ensures economic growth. It is recommended that more research be undertaken in the field of microfinance growth and outreach and even in other parts of the country and about how to enhance this outreach so that poverty levels can be reduced. The same is true of empowering majority of unemployed Kenyans who live in abject poverty in this part of the Sahara.
CitationKavoo,A.M.;October,2013.The Effect Of Outreach On The Growth Of Microfinance Institutions In Nakuru County.
University of NairobiCollege of Humanities and Social Sciences