Factors influencing microcredit accessibility by small and medium enterprise operators in Kenya: the case of microfinance institutions in Kasarani district, Nairobi county
This study investigated factors influencing microfinance credit accessibility in Kenya. From the literature review, microfinance is designed to improve the wellbeing of the poor and vulnerable populations through better access to financial services but a number of factors continue to frustrate the development of vibrant MFls and SMEs in the rural and urban areas of most countries. In Kasarani district there has been a rapid increase of the number of MFIs licensed to operate from 2 in 2008 to 12 in 2010, most reporting increasing default rates, irregular loan repayments, client stagnation, pullout and an increase in number of loan applicants against a lower percentage of loan payments. Micro-credit has been found to have a limited application, being more relevant to the moderately poor than the destitute. Cross-sectional data was collected from a representative sample size of 46 respondents. This was sampled from 10 MFls currently operating in Kasarani district of Kenya which was the area of study. The respondents were selected through simple random sampling procedure to represent the population. Data gathered from this study was analyzed using Microsoft excel. The finding shows that most MFls considers only growth oriented businesses or enterprises that have the . potential to grow, therefore agreeing with the argument that it's beneficial to a few and not the majority poor who are left with the choice of dependence on informal sources like relatives friends and community. The findings of the study will enable MFls management review their management approach in view of the main principles that led to their creation. The study recommends that MFls should arrange a mechanism of sharing their experiences and infonnation with each other to reduce duplication of products, MFls should invest much in research to understand the needs of their clients, Microfinance institutions should not compete with one another to reduce the problem of multi funding among the clients and reduce high debt, default rates and increase profitability. They should increase their outreach than concentrating in one area serving the same people with similar products as observed by the researcher, MFls should strive to continuously improve their structures, practices and processes to ensure efficiency in service delivery and finally the study recommends Government policies that will improve business conditions to boost the capacity of SMEs and reduce their vulnerability.