Factors affecting sustainability of Rafiki deposit taking micro finance in Kenya
Microfinance institutions (MFIs) play a vital role in the economic development of many developing countries. Microfinance has a dual goal, that of attaining financial sustainability and reducing poverty, simultaneously. The aspect of sustainability is crucial in poverty alleviation because in order to have a long term impact, microfinance services need to be provided on a continuous basis (Innovations in Microfinance, 2010). Majority of the previous studies have concentrated on impact of MFIs on poverty alleviation in the society. This has resulted in little or no research on factors affecting sustainability of microfinance institution in Kenya. It is against this background that this study was conducted to establish strategic factors affecting sustainability of micro finance institutions in Kenya with special focus on Rafiki Deposit Taking Microfinance. The study sought to establish factors affecting sustainability of micro finance institutions in Kenya with special focus on Rafiki Deposit Taking Microfinance. A case study research design was adopted. The study hence considered case study design suitable since data was gathered from a single source; Rafiki DTM and used to represent, strategic factors affecting sustainability of micro finance institutions in Kenya with special focus on Rafiki Deposit Taking Microfinance. The study employed face to face interview as a primary data collection method. Content analysis was used to test data that was qualitative in nature or aspect of the data collected from the open ended questions. The study revealed that sustainability of microfinance institution is affected by various factors including subsidies, breadth and depth of outreach, capital structure, capital constraint, interest rates, government regulation as well as donor support. Some of these factors contribute positively to the sustainability of the microfinance institution while others contribute negatively. As the commercialization and securitization of microfinance is in practice along with towering credit need from a large number of low income population, the sector seems to be expanding with promising outreach. The study found that microfinance institution is operationally self-sufficient but still depends on subsidies, which in the long run result in crowding out. The study recommends that to hold the pace of outreach in a sustainable way, microfinance institutions have to be very careful on its operation.