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DETERMINANTS OF PERFORMANCE OF MICROFINANCE COMPANIES IN NAIROBI CITY COUNTY IN KENYA

 

 

Philip Ndeto Munyoki

College of Human Resource and Development,

Jomo Kenyatta University of Agriculture and Technology

P. O. Box 62000, 00200 Nairobi, Kenya

Corresponding Author email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

Dr. Kepha Ombui

College of Human Resource and Development,

Jomo Kenyatta University of Agriculture and Technology

P. O. Box 62000, 00200 Nairobi, Kenya

 

 

CITATION: Munyoki, P., N., & Ombui, K. (2018). Determinants of Performance of Microfinance Companies in Nairobi City County in Kenya. International Journal of Human Resources and Procurement. Vol. 7 (4) pp 165 – 184.


ABSTRACT

 

Microfinance companies are key contributors and engines of economic development in many nations of the world. Many of these companies are faced with a numerous challenges especially in developing countries. The Microfinance market outlook indicated low growth and development among Micro finance institutions in sub-Saharan Africa where growth in Sub Saharan Africa is 20% against a growth rate of 25% in North Africa, 30% in Pacific and 27% in Asia. Many Microfinance institutions have not been successful in achieving sustainability. Various reasons have been cited for this failure, although not conclusively. The performance of microfinance institutions is a necessary condition for institutional sustainability. The microfinance paradigms focus on reduction of poverty through improving access to finance and financial services. However, the positive impacts of microfinance institutions on the welfare of the poor can only be sustained if the institutions can achieve a good financial performance. There was hence a need to relook at why they are performing poorly. Specifically the study examined the influence of training, innovation, managerial skills and access to information on performance of MFIs. The target population for this study was employees in all levels of management positions from the 13 MFIs. A sample size of 96 was selected from this population. Using an ordinary least square regression model, it was established that training, innovation, managerial skills and access to information all positively and significantly influence performance of microfinance institutions in Nairobi County. The study recommends the microfinance institutions within Nairobi County to put in place proper training practices such as technology skills in order to improve their performance; improvement in innovation practices involving new products and services ; aim to have or improve the conceptual, technical and interpersonal skills of its employees in order to ensure effective management and put in place better platforms that enhance speedy access to accurate information by the employees of these institutions. Accordingly, it is imperative that the microfinance institutions invest in structures to improve access to information, employ mechanisms of accessing information on competitors, and train employees on how to access information on market trends, properly utilize the information accessed and train employees on how to access information using various technologies at their disposal.             

 

Key Words: Training, Innovation, Managerial Skills, Access to information, Performance of Micro Finance Institutions

 

 

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