Effects of internet connectivity on performance of microfinance deposit taking institutions in Kenya

Abstract

Purpose: There has been increased growth in diffusion of ICT in the operations of Microfinance institutions in Kenya in a bid to improve efficiency, accuracy, increasing outreach and reducing costs. However, empirical evidence shows that internet connectivity remains a challenge. The general objective of this research project was to find out the effects of internet connectivity on performance of microfinance deposit taking institutions.

Methodology: The study adopted a descriptive research design. The target population of the study was 95 staff from 9 deposit taking microfinance institutions in Kenya. The study applied a census approach since the population is small, thus the entire 95 staff from the nine deposit taking MFIs were considered for the study. The respondents were both the management and the general staff in ICT departments in the nine selected Deposit taking Microfinance Institutions. The study collected primary through a semi-structured questionnaire. A pilot study was conducted to test the reliability of the research instrument. Both descriptive statistics and inferential statistics were used to analyze the data. Descriptive statistics included distribution tables and measures of central tendency (the mean), measures of variability (standard deviation) and measures of relative frequencies while inferential statistics included a linear regression model which sought to determine the form of relationship between the dependent and the independent variables. The data analysis was aided by SPSS software. The analyzed data was presented using tables, charts and graphs.

Results: The study found out that infrastructure, bandwidth and WAN optimization affected internet connectivity to a great extent and subsequent performance of the MFIs. However, cost of applications affected internet connectivity and performance of MFIs to a moderate extent. The study concludes that there is a positive and significant association between performance of MFIs in Kenya and infrastructure, bandwidth, Wan optimization while the study also found a negative relationship and insignificant between cost of applications and performance of MFIs.

Unique contribution to theory, practice and policy: The study recommends that the management of MFIs in Kenya should improve on the existing IT infrastructure so as to improve internet connectivity in their firms. MFIs should also improve bandwidth to maximize the internet speed since it affects employees’ productivity due to data limitations.