Competitive strategies adopted by microfinance institutions in Nairobi, Kenya
This study was conducted in microfinance institutions operating in Nairobi, Kenya. The study aimed at establishing the competitive strategies that have been adopted by micro finance institutions to achieve the recent growth and expansion. Micro finance institutions serve the lowest segment of the society in Kenya. They are small scale financial services targeting the poor and are used as a tool to fight poverty around the world since its start in Bangladesh in 1970s. Their programmes have reversed conventional top down approach by creating livelihood opportunities for the poorest citizens. The Microfinance institutions are organizations or companies whose main activity is to provide the poor in the less developed countries with tools to work themselves out of poverty. The study found out that the microfinance organisations keep on renewing their strategies to achieve competitive advantage in the current ever-changing and turbulent environment. The main strategy used by the organisations is making the loans cheap and the processing is made quick and simple. A number of challenges were identified as facing the implementation of the strategies. These included the imitation of strategies by other organizations, high staff turnover and the technological advancements. Microfinance institutions have grown day by day. The members of the institutions are invited to open savings accounts and they can borrow twice or even thrice as much as they have saved depending on the policies of the different institutions. Some micro finance institutions also run numerous social programs such as counseling destitute people, alcohol rehabilitation, health and life insurances. A number have transformed to become deposit taking regulated micro finance, thus offering their members full banking services. The main purpose of the micro finance institutions in Nairobi is to enable poor people to engage in self-employment activities. They generate enough income, allowing them to improve the standard of living for themselves and their families. The economic effect experienced by the members is one of the most immediate effects which in turn have a strong impact on a wide range of poverty reduction targets such as income, health, nutrition and education.