THE INFLUENCE OF BUSINESS REENGINEERING ON THE TRANSFORMATION OF MICRO FINANCE INSTITUTIONS (MFIS) INTO DEPOSIT TAKING MICROFINANCE INSTITUTIONS IN NAKURU COUNTY, KENYA

Abstract

Despite the successes associated with the transformation within the MFI sector, there have been challenges associated with the process. The transforming MFIs struggle with the redefinition of identity, redrawing the boundaries of the firm and issues of legitimacy. The challenges present in the transformation process amongst MFIs are associated with the hybrid nature of the institutions that is the social duties of MFIs which is poverty alleviation and the commercial need to be financially self-sustaining. Other challenges include licensing, rising of equity, and operational transition. Business reengineering is critical in reorientation of the new transformed organization’s processes, services and products from the old organization. The study concluded that corporate governance framework had greater influence on the success of transformation of MFIs to DTMs than other metrics due to its high mean and low standard deviation. The study recommends that the MFIs should place an emphasis on the corporate governance mechanism in order to ensure successful transformation of MFIs to DTMs.