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Kahira Henry Njenga - Master of Business Administration, Jomo Kenyatta University of Agriculture and Technology, Kenya

Dr. Hazel Gachunga - Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya


Microfinance institutions in Kenya are associations of people who have come together with common goals geared at improving their livelihood economically. They are an important part of the financial sector in Kenya, providing savings, credit and insurance services to a large portion of the population. Microfinance institutions have played an important role in the development of the Kenyan economy which has led to the uplifting of the standards of living of the people. Through their Microfinance registration members are able to access quality education for themselves and their children; borrow funds for enterprise development, home purchase or construction and many other financial benefits. The study used descriptive research design because it sought to investigate in-depth management of Microfinance institutions. Rafiki Microfinance was the case study and the 47 staff members were the target population. A structured questionnaire was administered to the target population using drop and pick method, allowing one week for the exercise. Descriptive data analysis was used to process the collected data and presentation was by tables, pie charts and bar graphs. The study concluded that tight budget control, use of ICT in operations, effective organizational policies and staff training were strategies used by Rafiki Microfinance to manage operational costs. The staffs working at the Microfinance are quite aware of the aspects of budget control which is a connotation that this strategy could easily be applied in the microfinance to influence the operational costs. There is a very effective ICT framework in managing microfinance operational costs. Staff training in the Microfinance increases competitiveness, enhances innovativeness, increases flexibility, improves processes and procedures which contributes to improved operations, cost reductions and hence business performance. Focus is another a strategy adopted in managing operational cost in microfinance institutions. Budgeting techniques should be used effectively to achieve organizational coordination which can be positive tools. For the MFI should reconsider investing in advanced IT infrastructure to enhance effective ICT framework in managing microfinance operational costs enabled faster response time to customer demands/ complains, decrease in operating costs, increased productivity and achieve timely delivery of services to clients. Staff training approaches such as workshops, seminars or short courses need to be offered to the MFI personnel so as improve their knowledge and skills. There is need to relook at the organizational policy in place support to enhance the management of operational costs. 

Full Length Research (PDF Format)