Abstract
Purpose: The purpose of this study was to establish how strategic risk management strategies contribute to growth of MFI sector in KenyaMethodology: The study adopted a correlation survey research design. The population of this study was fifty seven (57) MFIs. The sampling frame was the list of MFIs provided in the AMFI website www.amfikenya.com. A sample of thirteen (17) MFIs was selected using the random sampling approach. A questionnaire and an interview schedule were the main data collection tools. Qualitative data was analyzed using content analysis whereas the quantitative data was analysed using Statistical Package for Social Sciences (SPSS) where descriptive and regression analysis were conducted to determine the relationship between enterprise risk management strategies and growth of MFIs.Findings: The findings indicated that there were several strategic management measures that had been put in place by MFI to promote growth. These included the existence of a board with the skills and ability to lead the MFI strategically. In addition, the board members roles extended beyond governance and into management of the MFI and the board had policies stipulating term limits and rotation for its members. Results further indicated that the board had adequate independent directors who agreed on the MFIs mission and strategic direction. The results revealed that the MFI had guidelines for preventing conflicts of interest among board members and the MFI guidelines prohibited related-party (insider) lending, required full disclosure of all conflicts of interest, and required arm’s length business transactions. Findings further indicated that the MFI’s organizational structure ensured staff accountability and enhanced MFI’s efficiency and productivity. Overall, regression results indicated that there was a positive relationship between strategic risk management strategies and MFI growth.Unique contribution to theory, practice and policy: Following the study results, it was recommended that the MFIs need to enhance effectiveness of strategic risk management practices such as adherence to best practices on corporate governance. In addition, the MFIs need to enhance the skills of the board members as doing so would improve the level of strategic risk management practice. The study recommended that those MFIs that had not implemented the guidelines for preventing conflicts of interest among board members are advised to do so as this may have an impact on the level of growth. It is recommended that MFIs need to put in place guidelines prohibiting related party (insider trading) and also require full disclosure of all conflicts of interest as doing so would improve the growth of the MFI. Furthermore, MFIs need to increase the number of independent directors in their boards as doing so would improve the growth of the MFIs.