Financing Practices on Sustainability of Microfinance Institutions in Nakuru County, Kenya

Abstract

The study aimed at financing practices on the sustainability of microfinance institutions in Nakuru County. A Census of microfinance institutions in Nakuru County was carried out. The objectives of this research were:

• To establish the effect of group financing on the sustainability of microfinance institutions in Nakuru County; to evaluate the effect of debt financing on the sustainability of Microfinance in Nakuru County,
• To evaluate the effect of financial securities on the sustainability of microfinance institutions in Nakuru County, and
• To determine the effect of loan performance on the financial sustainability of Microfinance institutions in Nakuru County

It analyzed how financing practices lead to the sustainability of microfinance institutions in the county. A sampling design was used because it is the most efficient for this kind of study. The target population was the microfinance institutions that practice financing services and lead to the sustainability of Microfinance institutions in Kenya. The research study used judgmental sampling because the population under study was large, and the sample size was Finance respondents in 5 registered Microfinance institutions in Nakuru County in Kenya. The data collection instruments were questionnaires for the respondents to fill in primary data and micro-financial reports, including published financial statements in collecting secondary data. The coded data were entered into the Statistical Package for Social Sciences (SPSS) Version 24 analytical tool for analysis. Descriptive statistics were done using mean, percentages, and standard deviation. Inferential statistics involved correlation and regression. Correlation results showed a weak to moderate relationship between the independent and dependent variables. The study thus recommends that the MFIs consider and improve group financing, debt financing, financial securities, and loan performance to increase their sustainability. The findings of the study are essential for policymakers and institutions, especially those in the microfinance industry, to develop a policy framework that will take care of issues like improving service delivery to end users by microfinance institutions in Kenya.