Formal microfinance organizations have difficulty extending their services to remote rural areas in Kenya, as elsewhere in Africa. This article proposes to map the frontiers of microfinance in Kenya based on poverty incidence and population density. It then presents a spectrum of centralized and decentralized models, from banks to MFIs, SACCOs, ASCAs and ROSCAs. The more decentralized models, which involve greater user-ownership and management, have the potential to provide services to poorer people and in rural areas due to inherently lower cost structures and key characteristics of their services, despite many challenges to their long-term effectiveness and sustainability. Five organizations in Kenya that are reaching into rural areas are analysed to explore where the frontiers lie. It concludes by discussing potential strategies for the improvement of decentralized services as the 'bottom up' spike of a two-pronged approach which complements centralized service delivery.
The continuing failure of MFIs to reach remote and rural areas, especially in Africa, has renewed interest in finding alternative models of service delivery that can achieve this goal. The Village Saving and Loan Association model promoted by CARE is an accumulating savings and credit association that is timebound, with a periodic action audit at which all the funds are paid out. The approach was implemented in Zanzibar in 2001–2002 and CARE then left the area. This article reports findings from a follow-up study to assess the performance of the groups. The number of groups had grown and overall outreach had expanded to some 4,500 members. The financial performance of the groups was strong with returns on savings of 53 per cent. The context for this strong performance is a relatively well-off and well-educated population that is likely to have favoured strong group governance.