ROLE OF STRATEGIC PLANNING ON THE PERFORMANCE OF MICROFINANCE INSTITUTIONS IN KENYA: A CASE OF MICROFINANCE INSTITUTIONS IN NAIROBI
Abstract
Interest in microfinance has grown over the years due to the sector’s ability to improve the livelihood of the poor through provision of loan facilities at low interest rates. However, even with the growth in the microfinance sector, most MFIs still find challenges in coping with increased customer needs in a dynamic financial environment that require establishment of viable strategies. The main limitation facing MFIs has been performance in terms of operations, management and strategic issues. The objective of this study was to investigate the role of strategic planning process on the performance of Microfinance Institutions (MFIs) in Kenya. The researcher used descriptive research design. The Central Bank of Kenya estimated the number of legally constituted microfinance service providers at 3,460, consisting of 3,397 SACCOs, 56 MFIs, 4 Commercial Banks, 2 Building Societies, and the Kenya Post Office Savings Bank. The current number of AMFI registered members are 50 paid up members consisting of 5 Banks, 9 Microfinance Banks, 30 Retails, 4 Wholesalers, 1 Sacco and 1 Development Partner. The study was conducted in Nairobi County. This study used Association of Microfinance Institutions (AMFI) membership list as the sample frame. The study conducted a census of the total forty-three (43) MFIs located in Nairobi. Structured questionnaires were used for data collection. The study revealed that strategic planning had a bearing on the performance of MFIs in Kenya. The researcher recommends that MFIs in Kenya should take cognizance of the fact that strategic planning has an impact on their performance. Future research should identify more variables associated with organization performance like threats, opportunities, competition, regulatory regime, employee commitment and remuneration. This research study will contribute to the study of strategic management by giving relevant information on the influence of strategic planning process on organization performance. The researcher hopes that information presented in this report will help managers understand the importance of strategic planning process in realization of organizational goals.
Key Words: Environmental Scanning, Strategy Formulation, Strategy Implementation, Strategy Evaluation
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DOI: http://dx.doi.org/10.61426/sjbcm.v3i3.290
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