Strategic Planning and Financial Sustainability of Microfinance Institutions in Kenya: The Case of Kenya Women Microfinance Bank Plc

Abstract

In Kenya, microfinance institutions are crucial for advancing financial inclusion and economic growth. However, issues with profitability, operational efficiency, liquidity, and capital adequacy threaten the financial sustainability of microfinance. Despite the wealth of research, empirical evidence assessing whether strategic planning strengthens the financial sustainability of microfinance institutions in Kenya faces contextual, conceptual, and methodological gaps. This study addressed this research gap by examining the effect of strategic planning on the financial sustainability of Kenya Women Microfinance Bank PLC. The study aimed to investigate the impact of strategic planning on the financial sustainability of microfinance institutions in Kenya, focusing on Kenya Women Microfinance Bank PLC. The specific objectives were to assess the extent of strategic planning at Kenya Women Microfinance Bank PLC, determine the financial sustainability status of Kenya Women Microfinance Bank PLC, and establish the effect of strategic planning and financial sustainability of Kenya Women Microfinance Bank PLC. The ResourceBased View Theory, Institutional Theory, and Stakeholder Theory anchored the study. A combination of descriptive and correlational research designs was used, with a target population of 95 senior strategic management officers of Kenya Women Microfinance Bank PLC, where the census was used. A semi-questionnaire was used to collect data. The study used narrative analysis to analyse qualitative data, and quantitative data analysis yielded descriptive statistics, while correlation analysis produced inferential statistics. The outcomes were presented in frequency tables. The Statistical Package for Social Science (SPSSV25) assisted with the quantitative analysis. The study found significant reliance of microfinance institutions on strategic planning, a critical process that underpinned their capacity to navigate the complexities of their operational environment. Based on the findings, the financial sustainability of Kenyan microfinance institutions (MFIs) was moderate in terms of profitability, operational efficiency, liquidity, and capital adequacy. It was found that the effect of strategic planning was a positive and statistically significant relationship with the financial sustainability of Kenyan microfinance institutions (MFIs. The findings show that introducing government policies also affected the strength of the relationship between strategic planning and financial sustainability. The study concluded that there is considerable dependence of MFI on strategic planning; the financial sustainability of Kenyan MFIs is moderate, strategic planning has a solid positive significant effect on the financial sustainability of Kenyan MFIs, and Government policies intervene in the relationship between strategic planning and financial sustainability. The study recommends that Kenyan MFIs review their strategy implementation strategies, review their financial sustainability approaches, and ensure that strategic planning is aligned with their financial sustainability