Poverty is a major challenge in most developing countries. Key challenges of the government are to alleviate poverty and propel citizens toward wealth creation through development of enterprises across all sectors and to address the problem of unemployment. In Kenya, the SME sector comprises of about 99% of private sector enterprises and is prolific in employment and wealth creation. Despite this critical role played by SMEs in growing the economy, they remain outside the formal banking sector, especially in Africa. Although the number of MFOs since the 1980s has increased, the demand for financial services is largely unmet. However, MFOs are increasingly experiencing competition from new entrants and commercial banks that have developed financial models to target SMEs. MFOs are required to formulate and implement competitive strategies to enable them achieve sustainable growth and compete with commercial banks. However, strategy implementation is generally accepted as a challenge across organisations and it is often easier to formulate strategies than implementing it. Despite the need to address strategy implementation challenges across organisations, there is a greater focus by practitioners and researchers regarding strategy formulation than implementation. Consequently, this study aimed at assessing the level of strategy implementation in MFOs and factors that affect strategy implementation in MFOs. The ultimate objective was to develop a hypothetical model that could be used to improve strategy implementation in microfinance organisations in Kenya. This quantitative study used purposive sampling to select MFOs that are members of the Association of Microfinance Institutions (AMFI) in Kenya, completing a selfadministered structured questionnaire. In total, 135 MFOs were involved in this study and a total sample size of 300 managers was used in this study. This study considered fourteen factors to have an influence on the level of strategy implementation of MFOs in Kenya and hence fourteen null-hypotheses were formulated and tested. The content factors included stakeholder involvement in strategy development and the quality of strategies. The context factors included organisational structure and culture, strategic leadership and alignment of strategy to market conditions. The operational process factors included operational planning, monitoring and review of progress, teamwork, resources allocation, people-strategy fit, effective communication, strategic and management control systems and information resources. It is assumed that if all these critical strategy implementation factors are addressed, MFOs should be able improve their level of strategy implementation, ultimately leading to improved performance. The outcome factors considered were improved financial sustainability and outreach of MFOs. Advanced statistical analyses were used to analyse the data, such as factor analysis, regression and correlation analysis to assess the hypothesised relationship between the dependent and independent variables of this study. The empirical results revealed that the level of strategy implementation in MFOs in Kenya is moderate to high and content, context and operational factors do have an influence on the level of strategy implementation. However, operational factors have a more significant positive linear relationship with level of strategy implementation than the other two factors. There is also a positive relationship between the level of strategy implementation and financial sustainability and outreach by MFOs. This study has contributed to the existing body of knowledge by developing a hypothetical model that can be utilised by MFOs as well as other organisations to improve the level of strategy implementation resulting in better performance. The findings of the study can also inform strategy formulation and implementation of MFOs in Kenya, but also in other developing countries, to become more competitive. This study could also help MFOs and other organisations to put in place structures, systems, people and other resources required to attain a high level of strategy implementation. This study provides useful and practical guidelines in dealing with content, context and operational factors affecting strategy implementation in any organisational setting.

In Kenya, like in many developing countries, Micro and Small Enterprises (MSEs) have become the main focus for achieving the much-needed social and economic development and alleviating poverty. However, their development has been hampered by lack of access to appropriate financial and related services. Micro financing has been seen as a viable alternative to providing financial services to entrepreneurs in the MSE sector. The focus of this study was to explore the role of MFIs in the development of MSEs and to see if there are ways in which this role can be enhanced to better support the growth of MSEs. Such enhancement would contribute greatly towards government efforts to foster social-economic development. The results of the research indicate that generally, MFIs appear to have positively influenced the growth of MSE in Kenya and have potential to further influence MSE growth. There were however a number areas that if paid attention to could enhance this influence. These include the need for MFIs to offer supportive services as opposed to merely credit facilities to MSEs and the need for government intervention by putting in place a suitable Act to regulate the operations of MFIs.

Thesis (MDF)--University of Stellenbosch, 2010. / Regulating microfinance activities has been an important policy concern in improving financial inclusion and extending financial services to all. However, introducing a regulatory framework of any kind pushes targeted institutions to change. In this case, microfinance regulatory framework that came to effect in 2008 has created three tiers of microfinance institutions: prudentially regulated deposit-taking institutions, credit only and unregulated informal groups. Those undertaking deposit-taking business were required by this regulation to transform their operations to comply with the requirements. Though many institutions wanted to be allowed to mobilise public deposits, only three institutions had managed to obtain at least a provisional license two years after the regulation became operational. The purpose of this research is to establish the factors affecting this microfinance transformation process in Kenya. Experiences around the world indicate that microfinance regulatory frameworks are dogged with a myriad of challenges that, at times, has limited the enjoyment of benefits of regulation. These challenges affect both the regulator and institutions being regulated. This study identifies several important factors affecting the transformation process of microfinance institutions in Kenya. These include the ability to meet capital requirements, restructuring existing ownership and getting new shareholders, ability to raise funds for transformation, acquiring suitable information systems, motivation to be regulated, governance issues and managerial inertia. These factors explain why certain institutions have moved faster than others in the transformation process and why some have opted to remain credit only.