RESEARCH INTERNATIONAL EAST AFRICA LTD: KENYA OFFICE

CASE STUDY: 1st view oct 01 

RESEARCH INTERNATIONAL EAST AFRICA LTD: KENYA OFFICE 

(carried out an Exploratory Study based on Case Studies of Clients of 

six Micro-finance Programmes in Kenya, entitled: "Financial Services 

for the Poor" (FSP)) 

Contact Details: 

Charles Marwa 

Research Assistant 

P O Box 72951 

Commercial Street 

Nairobi, Kenya 

Tel: +254-2-530536/532993/532994 Fax: 530537 

e-mail: CMarwa@rieal.com 

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This note is derived from documents provided by Research International - 

Kenya, and one interview in July 2001 with Charles Marwa, RI's Research 

Assistant who carried out the exploratory study for DFID. 

______________________________________________________________ 

OVERVIEW: 

This exploratory study was commissioned by DFID (East Africa) in late 1999. 

It was based on structured interviews with 15 clients from each of 6 Kenyan 

micro-finance programmes. The study was commissioned to obtain a deeper 

understanding of some of the dynamics inherent in the use of financial 

services, and their impact on businesses and households. The main source 

of data was a questionnaire that allowed both structured and semi-structured 

responses. Attribution of impact relied upon qualitative interpretation of 

evidence rather than statistical inference: it is clearly stated that the research 

is intended to be exploratory and indicative, rather than conclusive and 

specific. 

The attachments, supplied by Research International - Kenya, include a copy 

of the questionnaire and the instructions to the interviewer. A sample of a 

completed case study is also attached. 

This note summarises the lessons learnt from the methodology used in the 

study, rather than the specific findings of the study. 

______________________________________________________________


1 BACKGROUND TO THE STUDYACKGROUND OF THE STUDY 

The British Aid to Small Enterprise (BASE) programme in Kenya has, since its 

inception, been strongly involved in the development of the micro-finance 

sector. In October 1997, following the review of earlier activities, a new fiveyear 

strategy for the programme was developed. One of the five outputs 

planned for the BASE Kenya programme over the five years 1997-2002 was 

“increased capacity of private sector providers to deliver financial services to 

micro-enterprises, particularly those owned by women and those in the rural 

areas, on a sustainable and replicable basis.” In support of this output, 

implementation of existing micro-finance projects continued and support was 

extended to further micro-finance activities. Consistent with both simplifying 

management arrangements and recognizing the need for a broader sectoral 

focus, all micro-finance support activities under BASE were incorporated into 

a new, larger umbrella project: Financial Services for the Poor (FSP) 

A number of BASE micro-finance projects, which were eventually subsumed 

within the FSP umbrella project, were time-tabled for mid-term output to 

purpose review in 1999. In order to both increase the efficiency of the review 

process itself and benefit from cross-project and sectoral learning a combined 

review of these projects was undertaken. Assessment of the impact of the 

FSP projects formed a key element of review. 

The overall purpose of the FSP review was to assess the progress of each of 

the DfID projects against the stated purpose and offer guidance for the 

implementation of the remaining elements of each project. In combining these 

project reviews, the aim was to draw lessons where appropriate from the 

comparative performance of each project and from examining the BASE 

micro-finance programme as a whole. This could be used both as a basis for 

assessing DfID’s broader involvement in the development of the micro-finance 

sector in Kenya and to guide future work. Clearly in drawing comparisons 

between projects it was essential to take account of the significant differences 

between them. 

A Research, Monitoring and Evaluation Project (REME) was established in 

1997 to assess the impact of BASE at both programme and individual project 

level. Although REME produced some outputs relating to projects falling 

under the FSP umbrella, as there was insufficient data at that time to attempt 

an assessment of the impact on target beneficiaries of these FSP projects. 

Furthermore, it was felt that there was insufficient understanding of the 

mechanisms by which FSP services make and impact, to be able to design a 

successful impact study. 

As such, this study was commissioned to obtain a deeper understanding of 

some of the dynamics inherent in use of financial services, and their impact 

on businesses and households. This report is a compendium of individual 

case studies. Each case study includes a narrative giving an overview of the 

story of the respondent and their use of services, an analysis against 

hypothesis, and key figures. The nature of the study is, however, to provide


the ‘raw’ information which can be used in further analysis and which can 

perhaps be expanded or followed up on as part of a longitudinal study. 

2 OBJECTIVES: 

The aims of the exploratory study were to: - 

Understand how different types of micro-finance services affect individual 

clients, their businesses and households. 

Provide information on impact and reaction to services of direct use to the 

Micro-Finance Institutions (MFIs) themselves. 

In terms of output the objective was to provide a number of in-depth case 

studies, which will form a platform for further analysis, expansion and followup 

over time. 

3 METHOD 

3.1 Background on method 

It is well established that the impact of access to micro-financial services 

cannot readily be understood by examining either the client or the business 

(for which a loan may ostensibly have been granted) in isolation. Rather 

clients are a part of a wider household and the business may be one of a 

number of income generating activities in which the household is engaged. 

The impact of access to financial services must be understood in terms of the 

effect on the wider household and livelihoods. 

In this study, attribution of impact relied upon qualitative interpretation of 

evidence, rather than statistical inference. Attribution of impact depends on 

understanding, from the client perspective, how each loan or use of a savings 

facility has impacted on aspects of their livelihoods. This research is 

essentially exploratory and is indicative of how various financial services can 

impact on livelihoods rather than conclusive regarding the specific aggregate 

impact of the various projects. 

3.2 Basic Approach 

Because of the complexity of the situation of the business and household, a 

qualitative, in-depth method of understanding was considered most 

appropriate. The study comprised in-depth interviews with selected clients 

using a research guideline incorporating both structured and unstructured 

questioning.


3.3 Sample selection 

Six MFIs were selected for the study. These were: K REP Bank 

• Faulu 

• WEDCO 

• KWFT: Kenyan Women's Finance Trust 

• Co-operative Bank (MSE unit) 

• K-REP NGO FSA: (Financial Services Association) 

All operate from Nairobi, except K-REP FSA and CARE-WEDCO whose 

operations are based in the remote parts of Taita-Taveta, Machakos, 

Marsabit, and Bomet Districts; and the Nyanza and Western regions of Kenya 

respectively. 

Between December 1997 and February 1998, the Institute of Development 

Studies (IDS), University of Nairobi, conducted a previous impact study, called 

REME. Under this REME study, four MFIs’ clients had been included; K-REP 

Bank, KWFT, Faulu, and WEDCO. The respondents interviewed within this 

FSP Exploratory Study, for these MFIs, were selected from the 300 who had 

been previously interviewed. The idea of selecting clients covered under 

REME was to allow for the possibility to assess and compare their perception 

in-terms of impact on their livelihood as a result of their interactions with the 

MFIs and how the loans were actually utilized over time. 

Since the K-REP FSA, and the Co-operative Bank had not taken part in the 

earlier REME study, fresh sampling had to be conducted to select their clients 

for the study. In this case, respondents were randomly selected from the 

current client list. 

Follow up of REME respondents was problematic. It was very difficult to track 

down these clients after such a long time. Some were completely untraceable, 

having changed their businesses and careers, migrated or even died. There 

were some who had married, and changed their names from the ones 

appearing on the list. 

3.4 Sample Structure 

Coast Mt Kenya Nairobi Machakos Western/Nyanza Total 

FAULU - 6 9 - - 15 

K-REP - - 15 - - 15 

WEDCO - - - - 16 15 

KWFT 4 5 6 - - 15 

K-REP 8 - - 7 - 15 

FSA 

Co-op bank 

MSE 

- 15 - - - 15


3.5 Field team 

To ensure that quality work was achieved, Research International (RI) 

selected a team of interviewers who were considered to be both 

knowledgeable and experienced enough, to be able to understand the job 

requirements. Most of the team members were University graduates with 

backgrounds as relevant as possible to the research subjects. Most were 

already experienced in field interviewing, and were selected from our Nairobi 

or Kisumu teams. 

3.6 Training 

Training of the interviewers took place within the premises in Nairobi and 

comprised four parts: 

 

 

 

 

In-depth interviewing skills for one day (trained by one of RI's Senior 

Qualitative Research Officers) 

Background on the area of Financial Services provision and impact, 

covering the sustainable livelihood framework (trained by the officer in 

charge of the project at DfID) – one day 

Application of the questionnaire – two days 

Following piloting, the interviewers underwent a further training session on 

the new questionnaire. 

The idea was to ensure that the team understood possible ways in which the 

financial services could impact on the poverty and vulnerability of clients and 

their households, to ensure in-depth probing and follow-up in relevant areas. 

They were also trained extensively on how to approach respondents and build 

up rapport that would lead to openness in response.


4 PILOTING 

After the training, the team was sent to the field for pre-test purposes. During 

this first trial, interviewers were paired together; one to be the facilitator and 

the other the note taker. From the experiences of this trial, the interview 

guideline was subsequently revised and strengthened. James Copestake, a 

financial sector consultant for DfID, joined the team for a few days and further 

worked towards improving the research tool. The teams wrote out their case 

studies and these were later sent to DfID for input and comment. 

5 FIELDWORK 

Nairobi, being the headquarters for most of the MFIs, had the highest 

concentration of respondents who were scattered in different parts of the city 

and conducted a variety of businesses. Thus the research started in Nairobi 

and lasted about eight days. Nyanza and Western regions were covered by 

the Kisumu based FSP team. From Nairobi, one half of the Nairobi based 

team went to the Coast whilst the other half went to cover the FSA in 

Machakos. Mt. Kenya region was the last to be reached. 

FSP field activities started on the 1 st of December 1999 and were concluded 

on the 14 th January 2000. 

The major problems encountered in the field were too long periods of time 

taken to locate some clients and delays occasioned by the rescheduling of the 

appointed interviews because the clients were very busy in their businesses. 

Other problems included clients who did not divulge correct information about 

their wealth status or other details. Some MFIs listings their projects as being 

in Nairobi, covered districts further away, including Machakos, Kitui and Thika. 

Tracking of sampled clients also had to be extended to such places. This cost 

considerable time. 

6 THE QUESTIONNAIRE 

The final interview guide / questionnaire is attached. This was designed in 

such a way as to allow respondents to express issues they felt important, and 

to collect basic facts and figures on households and business. As such it 

comprised a series of unstructured and structured questions. Interviewers 

were encouraged to probe throughout the questionnaire, even where an issue 

arose during a structured question, and to insert this additional information 

into the open sections.


7 ANALYSIS 

7.1 Case Study Structure 

The process of analysis of the case studies involved summarizing the life 

story of the respondent as told by them. This was constructed into a 

summarized, not verbatim, narrative. Following completion of the narrative, a 

separate analysis of each case was completed against the hypotheses 

agreed with DfID. The third part of each case comprises a table of key data. 

Information from the structured section of the questionnaire has been entered 

into an excel spreadsheet, which can be used for further analysis (see 

appendix). 

7.2 Analysis against Hypotheses 

RI agreed with DfID a set of hypotheses about the impact of financial 

services, against which each case study was `tested’. Looking at each 

interview, comparing qualitative and quantitative sections, observations and 

key data and then making a conclusion against each hypothesis was the 

methodology employed. This is in bullet form at the end of each narrative 

case history. 

The main hypotheses that this research will seek to explore are as follows: 

i) Impact on the poor 

Micro-finance services have been taken up by a highly diverse 

range of clients including many who are poor and many women. 

ii) 

Business Improvement 

Loans have helped some clients to diversify their business 

activities, to increase the capital invested in their businesses, to 

increase paid business employment, to increase business 

profitability and generally to decrease the vulnerability of the 

business to shocks. 

iii) 

Household livelihood Improvement 

The income of some clients has gone up enabling them to increase 

expenditure on food, health services, education, shelter and 

household assets and to cope with livelihood shocks. 

iv) 

Reduced household vulnerability 

The vulnerability of clients and clients’ households has been 

reduced by the increased security of incomes from business


activities or the creation of accessible financial assets to protect 

against risks and to cope with livelihood shocks. 

v) Increase in paid employment 

Loans have facilitated the expansion of some micro enterprises 

(which may be owned by non-poor clients) increasing the paid 

employment for the poor people. 

vi) 

Enhancing women’s status and livelihood 

Access to micro finance services has helped to strengthen the 

status and livelihood of women 

vii) Improved impact on the poor through developing the range 

and terms of financial services available. 

Impacts, particularly on the poor and on women can be improved 

through further developments of the range and terms of financial 

services on offer. 

A sample case study, including narrative and analysis against the above 

hypotheses is attached. 

8 SOME PROBLEMS FOUND WITH THE RESEARCH: 

When they came to be analysed, responses (sometimes contradictory, other 

times non-existent for some questions) revealed several problems with the 

research methodology, both the in the format of the questionnaire, and the 

way interviews were conducted. These included: 

• it was possible for interviewers to 'lead' the client towards certain answers 

• some interviewers did not know enough about business to draw out 

answers, and calculate business income 

• there was not enough cross-checking of answers 

• sources of income were confusing, sometimes contradictory, and often not 

totalled 

• there were problems in classifying the type of business; also the number 

and pay of employees (for example, due to misunderstanding or varied 

interpretations of 'paid' and 'employee') 

• one interviewer noted that one woman was reluctant to answer because 

her husband was present 

• in completion of the 'before' financial sections of the questionnaire there 

was strong reliance on memory 

• some had received loans from elsewhere so there was confusion about 

which loan had achieved the impact


At the start of the analysis the Research Assistant had to try to deal with the 

anomalies he found by checking and cross-checking with the client and the 

interviewer; he admittted, however, that inevitably some assumptions had to 

be made from the responses, and that writing up the case studies was 

sometimes difficult due to the contradictions in the data. 

9 VIEWS OF THE RESEARCH BY THE SIX INSTITUTIONS: 

The Research Assistant commented that at first some of the institutions had 

'glanced over' the 'improvements in services' suggested by some clients, but 

over the duration of the analysis period the institutions came to realise it was 

critical to take the 'improvements' seriously as this was part of the learning 

process. He had found one of the six institutions was wary of the study and 

its outcomes at the start of the research, but the other five all co-operated 

fully. 

10 PLANS FOR FUTURE RESEARCH: 

If further research is undertaken, efforts will be made to overcome the 

problems found in the 1999/2000 study, but since these were not found to 

have had a major outcome on the overall conclusions of the study, the 

methodology will remain basically the same. The following methods are 

therefore proposed for the next Study which will take place in 2003 at the end 

of BASE's 5-year programme: 

• some of the case studies will be selected for follow up, by type of business 

and geographical region: it is recognised that it will be hard to follow up all 

clients used in the first study as some will have moved. Most did seem to 

be established businesses, however, and it should therefore be possible to 

find sufficient to enable a meaningful follow-up study 

• will use a similar format of questionnaire, except the wording will be 

clarified to minimise misunderstanding / variable interpretation of some 

questions.

RESEARCH INTERNATIONAL EAST AFRICA LTD: KENYA OFFICE

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