Management Information Systems, Competition, Government Regulations and Sustainability of Micro Finance Institutions in Kenya

A Research Project Report by Kelvin Musyoka Nzomo, Submitted to the School of Business in Partial Fulfilment of the Requirement for the Degree of Masters of Business Administration (MBA).The general objective of this study is to establish how management information systems, competition and government regulations affect sustainability of micro finance institutions in Kenya. The specific objectives of the study were; to establish the effects of management information systems on sustainability of micro finance institutions in Kenya, to determine the effect of competition on sustainability of micro finance institutions in Kenya and to examine the effects of government regulation on sustainability of micro finance institutions in Kenya. The study was conducted through a descriptive study. The study targeted a population of 31 Microfinance Institutions (MFI) Nairobi County. The targeted population provided an adequate population for the study by representing all MFIs in Kenya as the headquarters are all situated in Nairobi County. Purposive Sampling was used to select 3 senior managers from each MFI thus a sample of 93 respondents were issued with the questionnaire. Data was collected using a survey questionnaire for respondents from various MFIs in Nairobi County. The research was conducted during the months of March to June 2015. The study administered the questionnaire individually to all respondents of the study. The data collected from the questionnaires was checked for completeness and accuracy. A method known as content analysis was used to analyze the qualitative data while the mean score, median, frequency, standard deviations and percentages were used to analyze the quantitative data. Data was also analyzed using correlation and regression analysis Tables and figures were used to represent the data graphically. Management information systems and competition had significant impact on sustainability of micro finance institutions in Kenya. Government regulations had a negative relationship with MFI sustainability. The study concludes that adoption of information management systems, implementation of policies that lay fair market competition field and proper regulation of micro finance institutions all favored the sustainability of MFIs. From the findings the study also recommends the adoption of appropriate technologies by microfinance institutions to enhance growth and sustainability. There is need to promote an open and competitive microfinance environment. This can be facilitated by having unjustified restrictions on entry, ownership or exit, resulting either from the rules to be applied or from enforcement practices. There is need to ensure that there is proper separation between the enforcement of prudential regulation and of the general competition rules. The Study also recommends that the government should involve the private sector in formulating poverty reduction strategies and explicitly recognize its leading role in financial sector development including the microfinance industry. The study recommends for further research on product development and processes used by MFIs. Also the study recommends on further research on the effect of government regulations on sustainability of MFIs