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MICRO FINANCE INSTITUTIONS IN KENYA (MFI’S) Introduction: Microfinance a term used to describe the financial services offered to the

lower income earners or those without easier access to typical banking services e.g. the rural areas and less developed areas. Examples of Micro Finance Institutions in Kenya are; 1) Kenya Women Finance Trust, Equity Bank, FAULU, FINA, Jamii Bora, K-Rep (CGAP, 2011) Microfinance builds credibility and gives capability to the low income individuals pulling them up financially from the poverty levels through providing financial services and advice. For instance a young women’s group in the rural Taita Taveta district will accesses finances with advice on how to start an enterprising business.
“Microfinance is an important element of the financial sector and must be treated as such. It makes a huge difference when poor people have access to a broad range of financial services, whereby they can invest in income-producing activities and meet their vital needs, such as health, education and nutrition”.” (United Nations, 2005)1

FUNCTIONS OF THE MICROFINANCE INSTITUTIONS Information Representation; Yet another reason for lack of access to the markets to the poor is the fact that lenders and service providers have very little or no information of the potential consumers of their services. The larger formal financial sectors found it very difficult to lend to the small borrowers due to the lack of information. Therefore, the Micro finance institution was created to capture, collect and know this its consumers of the low income brackets. Information Dissemination; Working in Small Household Groups (SHGs), Performance monitoring and benchmarking;


CGAP. (2011, June 08). CGAP. Retrieved June 2011, 2011, from

United Nations. (2005). Microfinance and the Millennium Development Goals. A reader’s guide to the Millennium Project Reports and other UN documents , 5.

Increasing the technical capacity of its members Credit Bureaus. Streamlining the registration of Self Help Groups (SHGs).org) However. Micro finance Institutions needs strong foundations and strict rules/policies to avoid management failures which are core of the industry. the micro finance Institutions dealing with the groups require legal advice and appropriate measures to be taken to control the lenders and borrowers. and mutual insurance societies that have a tendency to be erratic and insecure. rotating savings and credit associations. and you won't make much money holding savings accounts with very little funds in them. Banks can make more money if they only provide financial services to those who already have money. Bridge the world. Empower can make a lot more money on a large loan than a small loan. Being Credit is available from informal commercial and noncommerical money-lenders but usually at a very high cost to borrowers. (http://cgap. the majority of formal banks do not provide microfinance products as microfinance is an expensive enterprise . . a commercial bank in Bolivia. Savings services are available through a variety of informal relationships like savings clubs. Affecting the development of enabling policy and legal instruments for the promotion of microfinance Capacity Building. is also a bank which provides microfinance services for the poor of Bolivia." Grameen Bank in Bangladesh was formed out of a project providing small loans to women in the village of Jobra. Bancosol.Policy Advocacy. Access to credit allows the poor people to take advantage of the economic development opportunity.

Microfinance and the Millennium Development Goals. from http://cgap. 2011.References: CGAP. (2005). Retrieved June 2011. A reader’s guide to the Millennium Project Reports and other UN documents . 5. CGAP. . (2011. June 08).org United Nations.