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

Abstract

Most microfinance institutions in Kenya seek to transform mostly to deposit taking microfinance institutions with a view of accessing deposits for the purposes of lending. In this context, Mureithi (2012) notes that MFIs often seek to transform to the deposit taking MFIs as a platform to access cheap deposit funds hence creating platform to further improve on their ability to lend larger loans with longer repayment period. These aspects influence their financial performance positively. Other advantages associated with transformation include improved governance structure, customer service and products offered to customers (Tripathi, 2014).Despite the advantages associated with transformation of MFIs into deposit taking MFIs, there are diverse challenges that may occur during transformation. These challenges include struggles with redefinition of identity, redrawing the boundaries of the firm and issues of legitimacy. This is due to 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. The descriptive research design was adopted for this study because the researcher is interested in describing the factors influencing organizational transformation projects amongst Kenyan Micro Finance Institutions in Nakuru town. The target population of this study is the 105 staff working in Microfinance institutions in Nakuru town that is Faulu, Kenya Women Finance Trust, SMEP and Rafiki microfinance banks. The study concluded that change management practices positively influence the success of transformation of MFIs to DTMs on their own. Branding aspects have greater influence on the success of transformation of MFIs to DTMs than other metrics due to the high mean.The study recommends that the MFIs should place an emphasis on branding aspects have greater influence on the success of transformation of MFIs to DTMs than other metrics due to the high mean.