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Factors Affecting Mfis in Kenya

In: Business and Management

Submitted By akihalan
Words 15123
Pages 61
CHAPTER 1 1.0 INTRODUCTION
The concept of micro finance is not new in the world, sub-Sahara Africa and in Kenya. Savings and credit groups have operated for centuries all over the world. They include the Chit Funds of India, Tandas in Mexico, and Arisan in Indonesia. In Africa such groups consist the “Susu” of Ghana, BOSCA of Botswana, ADESSI of Burkina Faso, ACCORD of Uganda, Zusa of Zambia among others. In Kenya on the other hand Micro Finance Institutions (MFIs) include Faulu Kenya, Kenya Women Finance Trust (KWFT), KUSCCO (Kenya Union of Savings and Credit Cooperatives), Economical Locus Fund (ECLOF), Small and Medium Enterprise Programme (SMEP), Kenya Small Traders and Entrepreneurs Society (KSTES), the Kenya Post Savings Bank (KPSOB) and Vintage Management (Jitegemee Trust).

Microfinance is the provision of financial services to low income households and micro and Small Enterprises (MSEs). The sector provides an enormous support to the economic activities of the poor thus contributing to poverty alleviation. Micro finance is usually understood to entail the provision of financial services to micro entrepreneurs and small businesses, which lack access to banking and related services due to the high transaction costs associated with serving these clients’ categories. The two main mechanisms for the delivery of financial services to such clients are relationship based banking for individual entrepreneurs and small businesses; and group based models, where several entrepreneurs come together to apply for loans and other services as a group.

For some people , Micro finance is a movement whose object is “a world in which as many poor and near-poor households as possible have permanent access to appropriate range of high quality financial services; including not just credit but also savings, insurance, and fund transfers”1. The sector promotes...

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