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This research study focused on the factors affecting sustainability of micro-credit groups
in Kalama Ward- Machakos County in Kenya. The research report sought to establish the
importance for Microcredit groups to be self sustaining in order to enable their members
achieve Income generation, Asset building, Enhance livelihood, Self esteem and
Empowerment. In this regard, the main objective of this study was therefore to find out
the factors affecting the sustainability of microfinance programs operating in Kenya rural
areas. Specific objectives focused on how availability of lending funds, client exit and
retention, client capacity building, competition among service providers and policy
affected sustainability of rural based microfinance programs. The study adopted a
descriptive research design. It focused on Business Initiative and Management Assistance
Services (BIMAS) – The leading Microfinance institution with Microcredit and savings
groups operating in Kalama County Ward- Machakos Constituency. Out of the 2287
clients in Machakos region, comprised of 183 active groups and 40 inactive groups. 330
clients from Kalama Ward and 12 Staff were considered and applied Stratified Random
sampling totaling to 52 Respondents. Data was collected mainly by use of questionnaires
had both closed and open ended questions, Observation Schedule and Interview guide.
The data was analyzed by use of descriptive statistics which included frequency tables,
percentages, and mean. The researcher applied computer packages or tools especially
SPSS to analyze data quantitatively and qualitatively. At the end of the study, the
researcher has established that availability of lending funds, client exit/retention, client
capacity building, client participation, competition among service providers and policy
affects sustainability of rural based microfinance programs. The researcher
recommended that Retained Clients provide repeat borrowing. A rich product portfolio
helps to address the diversified needs of the clients it also provides an opportunity to
harness diverse business opportunities in local environment. Similarly, it also goes a
long way even to address non business oriented but important needs which compliment
the clients’ business aspirations. Policy and internal control are the foundations of strong
groups and forms the basis of partnership with service providers. Well articulated
constitution and credit policy facilitate client appraisal and set the basis of vetting criteria
when evaluating prospecting loan applicants.