Successful response to climate variability builds on the proper understanding of the local climatic context and existing strategies such as informal microfinance because the impacts are context specific. However, limited studies have analyzed the contribution of informal microfinance institutions to rural livelihoods climate variability resilience. Also, limited studies have analyzed the factors underlying the contribution of informal microfinance institutions to rural livelihoods climate variability resilience. This gap thus necessitated the research. The specific objectives of the study included to analyze climate variability and trends in Tharaka South Subcounty and assess the structures of informal microfinance institutions in relation to performance. Also, to analyze the effects of climate variability on informal microfinance institutions and analyze the contribution of informal microfinance institutions to rural livelihoods resilience to climate variability. The study used descriptive study design and mixed methods. The multistage sampling design was used to sample 385 respondents for the study. Qualitative data analysis was done using thematic analysis while quantitative data analysis employed descriptive statistics, tabulations, categorical statistics, and Kendall’s tau-b correlation. Climate variability was analyzed using descriptive statistics, coefficient of variation, precipitation concentration index, standardized anomaly, and descriptive statistics. Further, climate trends were analyzed using Mann-Kendall (Z) statistical test and the Sens slope estimator test. The analysis revealed that rainfall in the study area is highly variable with the median intra-annual variability being (127%) and inter-annual variability being (24%). The rainfall has a decreasing trend that is not significant (Z = -0.93, P>0.1). Temperature is also marked by variability and an increasing trend. Climate variability affects rural livelihoods through effect on household’s access to capital assets. Informal microfinance institutions were found to enhance households access to capital assets as shown by their positive and significant contribution to access to healthcare (τb = 0.372**, P<0.01), education (τb = 0.448**, P<0.01), inputs of crop production (τb = 0.447**, P<0.01), and inputs of livestock production (τb = 0.473**, P<0.01). Moreover, there was a positive and significant relationship between rural household’s climate variability resilience and contribution of informal microfinance institutions to the resilience (τb = 0.91**, P<0.01). However, climate variability affects the performance of informal microfinance institutions. This is shown by the significant negative relationship between vulnerability to climate variability and informal microfinance performance (τb = - 0.109**, P<0.01). The vulnerability of informal microfinance institutions to climate variability is a function of their characteristics and this could be leveraged to inform interventions to cushion them against climate risks. Informal microfinance institutions membership is mainly comprised of the women who constituted 79% of the members. Informal microfinance institutions thus play an important role in promoting gender equity and women empowerment which is key to rural livelihoods resilience to climate variability. Also, since women have been documented to be most vulnerable to climate variability effects, vulnerability to climate variability is thus directly associated with participation in informal microfinance institutions as shown by the significant positive relationship between climate variability and the number of people joining informal microfinance institutions (τb = 0.239**, P<0.01) per year from 1981 to 2018. The study also found that the structures of informal microfinance institutions determine their performance, and contribution to rural households to climate variability resilience. The characteristics of informal microfinance institutions could thus be leveraged to enhance their performance and contribution to rural livelihoods resilience to climate variability. Informal microfinance institutions are therefore a key strategy for building livelihoods resilience to climate variability in rural areas.

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