The Regulatory and Supervision Framework of Microfinance in Kenya

Abstract

Microfinance is one of the essential branches of lending that is used to mitigate the negative impact of the increasing incidence of poverty and unemployment in Kenya. This highlights the important need for an effective regulatory and supervisory framework for Microfinance Institutions (MFIs) in this country. This research attempts to investigate the performance of the Kenyan microfinance regulatory and supervisory framework through extracting and analyzing secondary data sources. Kenya has not unified the regulatory and supervisory framework for the microfinance sector based on the results of the logical descriptive analysis. The involvement of different bodies, which are include associations, clubs and churches, in regulation might have weakened the effectiveness of outreach and represents more challenges for the microfinance sector in Kenya. However, these results have strong implications for the regulators and the governments when they tried to regulate MFIs.