THE EMERGENCE OF MICRO FINANCIAL INSTITUTIONS IN GHANA, OPPORTUNITIES AND CHALLENGES THESIS SUBMITED FOR THE AWARD OF COMMONWEALTH EXECUTIVE MASTERS OF BUSINESS ADMINISTRATION (CEMBA) AMPRATWUM LYDIA (PG4088110 (original) (raw)
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2015
Microfinance is defined as the provision of financial services such as loans to low-income households, the poor and microenterprises. Over the past decade, microfinance institutions (MFIs) have sprang up rapidly in the Madina area of Greater Accra region of Ghana. It is therefore critical to examine the actual aims of these MFIs. The impulse of this research is to assess the development of microfinance in the Madina area. The study conveniently sampled twelve microfinance institutions. The instrument used for data collection was questionnaire. The managers of these MFIs were purposively selected to respond to the questionnaires. The study revealed that the development of microfinance in the past five years has been with the sole purpose of, providing income to low-income households who operate their own businesses. In addition, the success factors are provision of services which were appropriate and consistent with customers ’ situation and needs, character-based lending, frequent v...
Lingering Challenges of Microfinance Institutions (MFIs) and the Way Forward
International Journal of Academic Research in Economics and Management Sciences, 2015
The microfinance institutions (MFIs) are the agencies that attract global concern due to their importance in ensuring financial inclusion as well as helping poor in addressing poverty. There are parts of specialised financial institutions. Therefore the aim of this paper is to implore the lingering challenges of MFIs and proposed way forward to address them. In order to attain the objectives, review of some related literature were embark upon. Among the findings of the study are the challenges that bedevilling MFIs. The challenges include low outreach, criteria used in granting micro credits, regulatory problems, inappropriate human resources, delay in loan repayment , high transaction cost, infrastructure etc. Lastly the paper has suggested way forward to address the challenges.
Investigating the Challenges Faced by Microfinance Institutions in Ghana: Evidence from Takoradi
Research on Humanities and Social Sciences, 2019
Micro Finance Institutions (MFIs) contribute immensely to the economy of every nation. Particularly, within the informal sector, MFIs constitute the pivot around which many financially disadvantaged individuals rely on in terms of access to finance for their businesses. MFIs play a tremendous role in the poverty reduction and employment creation agenda of many nations including Ghana. Notwithstanding the immense role MFIs play in the economies of nations, there is a wide recognition of the fact that the institutions can perform better if they are able to overcome the challenges they face in their operations. However, in order for MFIs to effectively tackle the challenges they encounter, it is important for them to first identify and appreciate these challenges and the threats they pose to the effectiveness of their operations. Within this context, this study sought to explore the challenges MFIs in Ghana face, with particular emphasis on those operating in Takoradi. The study was quantitative, with descriptive survey as the design. Managers and employees of MFIs located in the city licensed by the Bank of Ghana were involved in the study. Simple random sampling method was used to select 114 respondents for the study and questionnaire was relied upon for data collection. The researchers used frequencies, percentages, an independent samples t-test and ANOVA as tools for data analysis. The study observed that increased competition in the industry, low repayment rates, higher cost of information technology, low level knowledge of operators, inadequate and expensive infrastructure base, high capital requirements, unfavourable regulation and supervision, inadequate employee incentives, and erosion of public confidence in MFIs were ranked as major challenges in the industry. A significant difference existed in the perception of male and female respondents on the challenges MFIs in the city faced. However, there was no statistically significant difference in educational qualifications of respondents and their views on the challenges MFIs in Takoradi faced. It is recommended that MFIs in the city should invest in staff development for all levels, from senior level to junior level. Also, Managements of MFIs should put in place adequate measures to educate their clients on the need to pay their loans and also institute appropriate sanctions to deal with loan defaulters. This will also require MFI to ensure credit worthiness of clients before granting them loans. Again, the Managements of MFIs should come out with appropriate measures to incentivize their employees so as to avoid possible cases of poaching.
11.The Role of Micro credit and Micro Finance Institutions (MFIs)
This study is about micro credit and its contribution to the improvement and poverty reduction for millions of the poorest people of Bangladesh. Micro credit has a huge impact on the lives of millions of poor people particularly to women. Numerous scholars and NGOs have been working with micro credit to reach poor people, who are still not benefited by the conventional financial system. In this study, it has been tried to present evidence of the important contributions made by micro credit in the eradication of poverty by increasing the income generating activities, empowerment of poor people to access development services such as health and education, and reduction in vulnerability. Micro credit is now being considered as one of the most important and an effective mechanism for poverty reduction. Present study describes about micro credit activities and helps to investigate the impact of micro credit on the poor people of the society with the main focus on target people of the study area. Researcher mainly concise this study through client's (the poor people, who borrowed loan from micro credit institutions) perspective and build up this research based on questionnaire survey and field observation. Therefore, the objective of this study is to show how micro credit works to improve the quality of poor targeted groups and reducing poverty and how it affects the living standard (income, saving & health etc.) of the poor people in study area. Several micro credit institutions are working in the study area. Grameen Bank, BRAC, ASA and PROSHIKA are some of the prominent of them. These institutions are working tremendously to the empowerment, poverty reduction and improvement of living standards for the poor people in the study area.
Sound credit risk management practices in the MFIs industry enables to control an institution's exposure to losses and protect the value of its assets by improving the loan collection. So, the objective of this study was to identify effect of credit risk management practice on loan collection of MFIs in Sidama regional state, Ethiopia. To this end, the researcher employed quantitative approach with explanatory research design where the effect caused by the independent variables on the dependent variable is observed through regression analysis. The purposive sampling techniques has been employed by researcher in order to select 115 sample size from five MFIs in the study area. The primary data was collected using structured questionnaire. Then, both descriptive and inferential statistics analyses have been done through SPSS version 21.0 in order to get the reliable research findings. Accordingly, the result of multiple liner regression showed that five variables such as use of collateral, credit risk identification, credit monitoring, credit policy and credit analysis have positive and statistically significant effect loan collection. Based on the findings of the study, the researcher forwarded possible recommendations for the MFIs in the study area to work on statistically significant variables due to fact that they have significant influence in improving loan collection. For instance, increase on the use of collateral increase in loan collection. This implies that more the institutions ask for collateral before lending money for borrowers contributes to the effectiveness loan collection practice. So, that it is recommended to Sidama Chalala should work on collateral to improve loan collection that enables to advance the capacity of MFIs to deliver different financial services to the lower income people.
THE EFFECTS OF LOAN DEFAULTS ON THE OPERATIONS OF MICROFINANCE INSTITUTIONS (MFIs)
2012
Microfinance as pioneered in Bangladesh by Mohammed Yunus was to assist low-income women and men through micro-enterprises for their economic development. Growing concerns about poverty stands out in political agendas all over the world, as stubbornness of poverty even in the richest nations is being met with increasing impatience (Mwangi et al, 1998). Governments and international aid donors have been subsidizing credit to small farmers in rural areas of many developing countries. These subsidized credit from donor Non-Governmental Organizations (NGOs) made it possible for large numbers of low-income people to have access to financial services. According to Consultative Group to Assist the Poor (CGAP, 2001) report, nearly three billion (3bn) poor people lack access to the basic financial services essential for them to manage their businesses and it is estimated that about 35% of people in developing countries live below the poverty line subrata. In Ghana, it has been estimated that...
2017
S Microfinance (MFIs) in Ghana may be considered a risky business. Threats emanate from an unstable macroeconomic environment, the state of security in the country, liquidity challenges, corruption and fraud, political and religious interference, and so on. However, there has been no attempt to systematically map the risks that the sector faces and understand the extent to which they pose a threat to a vibrant and healthy microfinance sector. This is a survey that seeks to assess the risks that are of concern in Ghana's microfinance sector as seen by practitioners in the face of the changing business and macroeconomic environment, as well as keeping in mind the new initiatives and developments in the micro finance sector. The study begins by examining the practitioners understanding of risks within micro finance sector in Ghana then continue to address the issues of the significant risks affecting the microfinance that are of concern to the microfinance sector for the next five ...
Journal of Engineering, Applied Science and Humanities (JEASH), 2017
The concept of Micro Finance found its genesis from a driving force towards poverty alleviation. It provides alternative source of savings and credit availability for people who, otherwise; cannot get access to those services from the mainstream financial intermediaries. Despite its relatively long history, lack of homogeneity in its structure coupled with the nature of the clientele that it targets makes it vulnerable to various challenges that threaten its sustainability. Several challenges are associated with the non-recovery of credit to Small and Medium Enterprises (SMEs). Through a mixed method exploratory research, the researchers examined these challenges and the impact on MFIs. Framed against the background of an institutionist perspective, the study sought to determine the challenges faced by Micro Finance Institutions in their recovery of credit from SMEs and to closely examine the part that managers of Micro Finance Institutions and SMEs owners could play in mitigating these challenges. Seventy five percent of MFI managers reported challenges in the recovery of credit. Approximately 87 % of SMEs faced challenges in the repayment of credit. The study provides clear indication that there are several challenging factors that pose a threat to the sustainability of MFIs in the Ashanti Region of Ghana. This is irrespective of one's perspective or occupied position on what the researchers here have chosen to call the institutionist-welfarist continuum. There will always be tradeoffs between self-sufficiency and charitable social benefits.