Role Of Microfinance Institutions On The Growth Of Small .
http://www.ijssit.comVol II Issue VI, August 2016ISSN 2412-0294ROLE OF MICROFINANCE INSTITUTIONS ON THE GROWTH OF SMALL ANDMEDIUM ENTERPRISES IN KISII TOWN, KENYA1Innocent Nyarang’o NyabendeKenyatta Universitynyarangoi@yahoo.com2Dr. Wallace AtamboLecturer, Jomo Kenyatta University of Agriculture and Technologyatambowa@yahoo.comAbstractThe study sought to assess the role of microfinance institutions on the growth of small andmedium enterprises in Kisii town. The study specifically assessed how provision of finance bymicrofinance institutions influences the growth of small and medium enterprises in Kisii town,weather advisory services offered by microfinance institution affects the growth of small andmedium enterprises in Kisii town and how training programmes provided by microfinanceinstitutions affects the growth of small and medium enterprises in Kisii town. Descriptive surveyresearch design was adopted to analyze the data. The collected data was analysed by use ofweighted average and percentages. It will be then presented in form of charts and frequencytables. From the findings, Finance provided by MFIs in Kisii town increase the growth of SMEsin the town. Additionally microfinance institutions in the town find loan processing speed as themost challenging loan accessibility policy. MFI staffs in Kisii town agreed that advisory servicesoffered by their institution have strong effects on the growth of SMEs in Kisii town. Trainingprogrammes offered by microfinance institutions in the town facilitates the increase inprofitability of small and medium enterprises in the town. There is therefore impact ofmicrofinance services in predicting the growth of small and medium enterprises. The researcherrecommended that, Government should implement policies that promote the growth of small andmedium entrepreneurs through creating a conducive business environment and providingaccessibility to credit and collaborating with MFIs in providing training and advisory services.There is need for each and every SME operators to seek more education to improve theirmanagement skillsKeywords: Microfinance institutions, small and medium enterprises Nyarang’o, AtamboISSN 2412-0294656
1. Background to the StudyMicrofinance encompasses the provision of financial services and the management of smallamounts of money through a range of products and a system of intermediary functions that aretargeted at low income clients (Asiama, 2007). The services provided by nonfinancial MFIsare marketing and technology services, business training, production training and subsectoranalysis and interventions. Ledgerwood (1999). Enterprise development services can be sortedout into two categories. The first is enterprise formation which is the offering of training topersons to acquire skills in a specific sector such as weaving as well as persons who want to startup their businesses. The second category of enterprise development services rendered to itsclients is the enterprises transform action program which is the provision of technicalassistance training and technology in order to enable existing SMEs to advance in terms ofproduction and marketing (Yunus, 2007).The jump-in investment was a reflection of an increasing number of sustainable MFIsworldwide. Surveys conducted in Asia, South America, Caribbean region, and in Africaindicated that microfinance institutions have contributed a great deal in poverty eradication. Thepoor people have significantly been able to access friendly micro-credit loans and have venturedin entrepreneurial activities (Ogbor, 2009). In Uganda and Kenya, agriculture forms thebackbone of the economy microfinance institutions have played pivotal roles in entrepreneurialgrowth. The MFIs have been of great importance in East African nations especially for womenengaged in the coffee sector by providing financial services and boosting their earnings andempowering the women in the rather patriarchal society (Basu et al, 2009).Rural finance in East Africa had been quite scarce and the presence of micro-finance institutionsin these nations had filled the void that was left by commercial banks by providing small loans atlowest interest rate in 1980s and 90s. In this context, microfinance institutions have emerged asthe viable solution to poverty and empowerment by providing credit and savings services to themultitude of small and medium enterprises and entrepreneurs to make up the entrepreneurialsectors in East Africa (Matebu & Abiye, 2010). Two decades ago, many rural areas in Kenyawere not developed because the inhabitants of these areas are poor and could not raise enoughcapital to startup businesses; and the commercial banks were adamant to give credit to poorpeople because it was seen as foolish. The development of MFIs in Kisii County has not been Nyarang’o, AtamboISSN 2412-0294657
left behind for they have significantly changed the way people in this County view micro creditloans and borrowing for small scale enterprises.Statement of the ProblemDue to the fact that most of Kenya’s population lives below poverty level, they still struggle andget involved in self-employment as their source of income. Most of this self-employment is inform of small and medium enterprises which are in the most cases operated by the owners.However, a number people find it very difficult in investing in small and medium businessenterprises because in one way or another they lack the capital, financial management skills, orthe suitable ideas on the viable business. This is also a problem that faces the people from KisiiCounty. Many people lack the know-how to manage finances necessary for entrepreneurialbusinesses so that they can sustain gradual growth. The problem of lack of micro-credit loansbefore the penetration of micro-finance institutions in the area in fact contributed to theinability of the small and medium enterprises to grow while other enterprising people can not doso for they lacked the capital to put up small enterprises. Previous studies and surveys conductedin the town shows that, the problem of slow growth of small scale enterprises has persistedsome years back because of lack of capital for investment among the aspiring small scaleentrepreneurs. Coopper (2012) studied that, the growth of small scale enterprises has continuallyincreased because of the increase of microfinance institutions in the towns within Kenya. Thismade it necessary for the researcher to investigate the role of microfinance institutions on thegrowth of small and medium enterprises in Kisii town.Game Theory of MicrofinanceThe microfinance games theory also supports the idea of group lending among microfinance institutions. Many of the new mechanisms rely on groups of borrowers to jointly monitorand enforce contracts themselves. It is based on Grameen lending model of microfinance whichis based on group peer pressure whereby loans are made to individual groups of four to seven.Group members collectively guarantee loan repayments and access to subsequent loans isdependent on successful repayment by all group members. Payment is usually made weekly. Thegroups have proved effective in deterring defaults as evidenced by loan repayment rates attainedby organizations such as Grameen Bank (Bangladesh) that use this type of microfinancemodel. The model has also contributed to broader social benefits because of their mutual trustarrangement at the heart of group guarantee system and the group itself often becomes thebuilding block to a broader social network. Ledgewood (1999). However, group based Nyarang’o, AtamboISSN 2412-0294658
mechanisms tend to be vulnerable to free riding and collusion. Inefficiencies are well known toemerge in similar contexts (Gruber, 2005).Financial Sustainability TheoryLong-term survival and sustainability is critical for an MFI in being able to reach its targetclientele and cover administrative and other costs. While social goals of reaching the poorest andpoverty alleviation are valid, sustainable standing on one’s own feet is as true for low incomehouseholds receiving microfinance as for microfinance itself. Sustainability for the microfinancehas internal and external implications. Internal in terms of deposit and savings mobilization,financial performance, staff motivation, loan administrative costs etc. while external in terms ofavailability of funds for loan disbursement, grant for community organizing etc. Morduch(2002).Women Empowerment TheoryCheston and Kuhn (2002) talk about the theory of empowerment. The theory indicates thatwomen account for nearly 74% of the 19.3 million of the world’s poorest people now beingserved by microfinance institutions. Most of these women have access to credit to invest inbusinesses that they own and operate themselves. The vast majority of them have excellentpayment records in spite of the daily hardships they face. Contrary to conventional wisdom,they have shown that it is a very good idea to lend to the poor and to women. Financial selfsustainability paradigm: The main consideration in programme design is provision of financiallyself-sustainable microfinance services to large numbers of people particularly micro and smallentrepreneurs. The focus is on setting of interest rates right to cover costs, to separatemicrofinance from other interventions, to enhance separate accounting, to expand programmesso as to capture economies of scale to use group to decrease cost of delivery. Gender lobbiesargue that targeting women on grounds of high women repayment rate, it is assumed thatincreasing women access to microfinance services will in itself lead to individual economicempowerment, well-being and social and political empowerment.Poverty alleviation paradigm: The main considerations are poverty reduction among the poorest,increased well-being and community development. The focus is on small savings and loans,provision for consumption and production, group formation, etc. This paradigm justifies somelevel of subsidy for programmes working with particular clients group or in particular context.Some programmes have developed effective methodologies for poverty targeting and oroperating in remote areas. Gender lobbies in this context have argued for that targeting woman Nyarang’o, AtamboISSN 2412-0294659
because of women’s responsibility for households well-being. Poverty alleviation and womenempowerment are seen as two sides of the same coin. The assumption is that increasing women’saccess to microfinance will in itself increase household income which will then translateinto improved well being and enable women to bring about wider change in gender inequality.Feminist empowerment paradigm: The underlying concern is gender equality and women’shuman rights. Microfinance is promoted as an entry point in the context of a wider strategy forwomen’s economic and social political empowerment. The focus here is gender awareness andfeminist organization. Khan (2008).Conceptual FrameworkFigure 1: Conceptual frameworkThe independent variables are the role of microfinance institutions on the growth of small andmedium enterprises which includes provision of finance, advisory services, and provision oftraining. These are the objectives that the researcher will assess to measure growth of small andmedium enterprises which is the dependent variable. In order to increase the number of smalland medium enterprises in Kisii town, first microfinance institutions have to improve their wayof providing finance in terms of easy access to microcredit, encouraging savings and depositssecondly, improve advisory services and lastly improve their provision of training throughcreating awareness on credit accessibility policy. Nyarang’o, AtamboISSN 2412-0294660
Research DesignThe study adopted descriptive survey design to assess the role of microfinance institution on thegrowth of small and medium enterprises. Survey research design was chosen because thesampled elements and the variables that were being studied were simply observed as they arewithout making any attempt to control or manipulate them.Target PopulationThe study targeted population of 200 respondents. This comprised of 50 employees from MFIand 150 small businesses in Kisii town. The small businesses included: mobiles and M-pesaoperators, boutiques, small scale shops, small scale saloons and small scale hotels.Sample SizeThe sample size of the study was 60 respondents derived from 30% criterion which comprised of15 employees from MFIs and 45 small businesses.Table 1 Target Population Sample SizeCategoryTarget populationSample sizeSmall and medium enterprises15045MFIs staffs5015Total20060Data Collection InstrumentThe researchers administered the use of questionnaire as a method of data collection to theidentified set of respondents. Closed ended questionnaire was preferred because it enabled theresearcher to get the feedback according to the research objectives. The questionnaire wasphysically dropped and picked after two weeks.Data AnalysisThe refined data was analyzed using descriptive statistics involving percentages and weightedaverage. Frequency tables and pie-charts was used to organize and give a summary of the dataand display in a meaningful and understandable manner so as to aid in describing andinterpreting the outcome of the research. This gave the distribution of responses in thequestionnaire in frequencies and percentages form that was presented in terms of table and piecharts in the course of discussing the findings. The analytical model that was used was in theform of a multiple regression model. The effect of microfinance services was determined by theequation below: Nyarang’o, AtamboISSN 2412-0294661
Y α β1X1 β2X2 β3X3 εResponse RateDuring the data collection period, the study had a sample population of 60 potential respondentsidentified for the questionnaires. After collecting data, the study managed to get only 58respondents who took part in answering questionnaire. Two respondents did not return theirquestionnaire. There was no response with contradicting and inconsistent data therefore the studydid not further eliminate any questionnaire from analysis of the study data therefore 58respondents were considered valid, with 45 respondents as the small scale respondents and 13respondents from MFIs staff were analyzed in the study. This brought the rate of response to96.67% which was a positive percentage for the data analysis.Table 2: Response RateCategory of ResponseFrequencyPercentagesNon ResponseResponseSmall and medium enterprises4575.00%0.00%MFIs staff1321.67%3.33%Total5896.67%3.33%Influence of Finance Provided by MFIs on the Growth of SMEsThe aim of the researcher was to find out how provision of finance by microfinance institutionsinfluences the growth of small and medium enterprises in Kisii town. The collected data wasanalyzed majorly show the relationship between finance services provided by microfinanceinstitutions and the growth of SMEs in Kisii town. The responses are presented as shown in tablebelow;Table 3: Source of Startup CapitalFinancial institutionsFrequencyPercentagesPersonal savings817.8Loan from microfinance bank2044.4Loan from Sacco24.4Loan from commercial banks511.1Borrowing from friends1022.2Total45100 Nyarang’o, AtamboISSN 2412-0294662
Table 3 above, indicates sources of startup capital by small and medium enterprises in Kisiitown. According to the responses, 44.4% of the respondents took loan from microfinance bankfor their startup capital, 22.2% of the respondents borrowed from friends, 17.8% of therespondents using personal savings, 11.1% of the respondents took loan from commercial banksand 4.4% of the respondents took loan from Saccos. From the responses it evident that majorityof the SMEs operators in Kisii town borrows loan from microfinance bank to finance their startup. Therefore microfinance institutions in Kisii town provide most of SMEs with microcredit.Table 4: MFIs loan ServicesExcellentVeryGoodPoor Very poor fi fiwi figoodLoaninterest 14 s charged 10121058451463.2Loan repayment 1510875451583.5ratesLoan processing 13chargesLoan processing 17speedperiodTable 4 above, shows how respondents have rated microfinance institutions loan services thatthey receive when accessing credit from the institution. From the responses, it shows that themost excellence loan service offered by MFIs in Kisii town is loan processing charges givenweight of 3.7, loan processing speed given weight of 3.6, loan repayment period given weight of3.7, loan interest rate given weight of 3.4, and penalties charged given weight of 3.2. This showsthat, most of SMEs operators in Kisii town find loan processing charges as the most excellenceloan services offered by microfinance institutions. This because microfinance institutions in Kisiitown offers favorable loan processing charges that encourages borrowing therefore enablingmost of SMEs in the town to be able to access microcredit. Nyarang’o, AtamboISSN 2412-0294663
Table 5: Influence of Finance Provided by MFIs on the Growth of SMEsVeryHighNeutralLowVery low fi fiwi fihighIncreases growth fiwi1315872451653.7Facilitates start up al 11for expansionFinancial security1210875451433.4Provides insurance1271286451463.2Table 5 above, shows how finance provided by microfinance intuitions influence the growth ofsmall and medium enterprises in Kisii town. From the responses, it shows that the increase ingrowth was given more weight of 3.7, facilitating startup capital given weight of 3.5, financialsecurity given weight of 3.4, increases capital expansion given weight of 3.3, and providinginsurance given weight of 3.2. This shows that, finance services provided by MFIs in Kisii townincrease the growth of SMEs in the town.Table 6: MFI Efforts in Increasing Loan AccessibilityFrequencyPercentagesCharging favorable interest rate538.5.Creating awareness of loan323.1.Providing financial education215.4Increasing loan processing speed323.1Total13100Table 6 above, shows the efforts made by microfinance institutions in Kisii town in increasingloan accessibility to small and medium enterprises in the town. From the responses, 38.5% of therespondents agree that their microfinance institution is charging favorable interest rates toincrease loan accessibility, 23.1% of the respondents agreed that their Microfinance intuitionscreate awareness of loan to increase loan accessibility, 15.4% of the respondents, agreed thattheir microfinance institutions is providing financial education to increase loan accessibility and Nyarang’o, AtamboISSN 2412-0294664
23.1% of the respondents agreed that their microfinance institution is increase loan processingspeed to increase loan accessibility. This indicates that most of microfinance institutions in Kisiitown increase loan accessibility to small and medium enterprises in the town by chargingfavorable interest rates.Table 7: Most challenging microcredit accessibility ngingchalle-challengingingng fi fiwi fiwi fi2Interest rates5233013483.7Processing0034613231.8Processing speed10300013624.8Penalties iodTable 7 above, shows the most challenging microcredit accessibility policy to small and mediumenterprises in Kisii town. From the responses, it shows that the loan processing speed was givenmore weight of 4.8, loan penalties charged given weight of 4.5, loan repayment period givenweight of 4.2, loan interest rates given weight of 3.7, and loan processing charges given weightof 1.8. This shows that, microfinance institutions in Kisii town find loan processing speed as themost challenging loan accessibility policy and loan processing charges least challenging as mostof this microfinance has minimal loan processing charges.Influence of Service Advisory Offered by MFIs on the Growth of SMEsThe aim of the researcher was to identify how advisory services offered by microfinanceinstitutions affect the growth of small and medium enterprises in Kisii town. This was to find outhow various services offered by microfinance institutions in Kisii town facilitates the growth ofsmall and medium enterprises in the town. The findings are presented as shown in the followingtable; Nyarang’o, AtamboISSN 2412-0294665
Table 8: Advisory Services Offered by MFIAdvisory servicesExcellent VeryGoodPoorgoodManagementof 13Very fi fiwi fiwi 5451583.59766451603.6financeSavings14Changing from one 10business to anotherVenturing into new 15businessSecuring loans17Table 8 above, shows advisory services offered by microfinance institutions in Kisii town andhow they affect the growth of small and medium enterprises in the town. The advisory servicesidentified includes: management of finance, savings, changing from one business to another,venturing into new business and securing loans. From the responses, management of finances isthe most excellence services offered by MFIs given more weight of 3.7, securing loan givenweight of 3.6, venturing into new business given weight of 3.5, savings given weight of 3.4 andchanging from one business to another was given weight of 3.2. This shows that, small andmedium enterprises in Kisii town, finds management of finance as the most excellence advisoryservices offered by MFI in the town.Table 9: Rating effects of advisory services on growth of SMEFrequencyPercentagesVery strong1076.9Strong323.1.Not strong00Not influential00Total13100Table 9 above, shows how microfinance institutions staffs rated advisory services offered bytheir institution. From the responses, it shows that, 76.9% of the respondents agreed that advisory Nyarang’o, AtamboISSN 2412-0294666
services offered by MFI is very strongly affect growth of SMEs in Kisii town, 23.1% of therespondents agreed that the services strongly affect the growth of SMEs in Kisii town and norespondents agreed on not strong and not influential. This shows that, the advisory servicesoffered by microfinance institutions in Kisii town strongly affect the growth of SMEs in thetown.Table 10: Most Effective Advisory Services Offered by ement of 9EffectiveLessNot fi fiwi fiwi fieffective effective310013604.62412413372.8Changing from e business toanotherVenturinginto 6new businessSecuring loans7Table 10 above, shows the most effective advisory services offered by microfinance institutionsin Kisii town to small and medium enterprises in the town. From the responses, microfinanceinstitutions staff finds management of finances as the most effective services offered by MFIswhich was given more weight of 4.6, venturing into new business given weight of 4.3, securingloan given weight of 4.2, savings given weight of 2.8 and changing from one business to anotherwas given weight of 1.7. This shows that, the most effective advisory services offered by MFI inKisii town town to small and medium enterprises in the town is management of finance. This isvery important to the survival of the enterprises therefore the service has led to survival of manysmall and medium enterprises in the town.Effects of Training Provided by MFIs on the Growth of SMEsThe aim of the researcher was to determine how training programmes provided by microfinanceinstitutions affects the growth of small and medium enterprises in Kisii town. This was to find Nyarang’o, AtamboISSN 2412-0294667
out how various training progammes offered by MFIs in Kisii town facilitates the growth ofsmall and medium enterprises in the town. The findings are presented as shown in tables below;Table 11: Rating Training ProgrammeFrequencyPercentagesMost effective3458.6Effective2034.4Less effective46.9Not effective00Total58100Table 11 above, shows how both microfinance institutions staff and small and mediumenterprises in town rated training programmes offered by MFIs in the town. From the responses,58.6% of the respondents agreed that training program offered by MFI is most effective, 34.4%of the respondents agreed that it is effective, 27.6% of the respondents agreed that it is lesseffective and no respondents agreed on not effective. This shows that both SMEs and MFIs staffin Kisii town finds training programmes offered by MFI in the town is most effective.Table 12: Effect of Training Programmes Offered by MFI on the growth of SMEsEffectoftraining VeryprogrammesHighModerateLowhighFinance Management 20Very fi fiwi fiwi 41521581272.2161278581973.4skillsIncreasein 17ProfitabilityEffective Investment 7decisionsIdentificationof 2creative business ideaBusinesssurvival 15techniques Nyarang’o, AtamboISSN 2412-0294668
Table 12 above, shows the responses of both microfinance staff and small and mediumenterprises operators on the extent to which training programmes provided by microfinanceinstitutions in Kisii town contributes to the growth of small and medium enterprises in the town.According to the response, increase in profitability was rated very high with weight of 3.6,finance management skills given weight of 3.5, business survival techniques given weight of 3.4,effective investment decisions given weight of 2.5 and identification of creative business idearated very low with weight of 2.2. This shows that, training programmes offered by microfinanceinstitutions in Kisii town majorly facilitates the increase in profitability of small and mediumenterprises in the town.Summary of FindingsThe aim of the study was to evaluate the role of microfinance institutions on the growth of smalland medium enterprises in Kisii town. The first objective of the study was to find out howprovision of finance by microfinance institutions influences the growth of small and mediumenterprises in Kisii townwhere the study found out that, most of the SMEs operators in Kisiitown borrow loan from microfinance bank to finance their start up, they finds loan processingcharges as the most excellence loan services offered by microfinance institutions because theinstitutions offers favorable loan processing charges that encourages borrowing thereforeenabling most of SMEs in the town to be able to access microcredit. Finance provided by MFIsin Kisii town increase the growth of SMEs in Kisii town and most of microfinance institutions inKisii town increase loan accessibility to small and medium enterprises in the town by chargingfavorable interest rates. Additionally microfinance institutions in Kisii town find loan processingspeed as the most challenging loan accessibility policy and loan processing charges leastchallenging as most of this microfinance has minimal loan processing charges.The second objective of the study was to find out the influence of advisory services offered bymicrofinance institution affects the growth of small and medium enterprises in Kisii town whereit was found that, SMEs finds management of finance as the most excellence advisory servicesoffered by MFI in Kisii town and MFI staffs in Kisii town agreed that advisory services offeredby their institution have strong effects on the growth of SMEs in Kisii town therefore the mosteffective advisory services offered by MFI in Kisii town to small and medium enterprises in thetown is management of finance. This is very important to the survival of the enterprises thereforethe service has led to survival of many small and medium enterprises in the town. Nyarang’o, AtamboISSN 2412-0294669
The third objective of the study was to determine how training programmes provided bymicrofinance institutions affects the growth of small and medium enterprises in Kisii town whereit was found that, SMEs and MFIs staff in Kisii town finds training offered by MFIs mosteffective therefore this training programmes offered by microfinance institutions in the townmajorly facilitates the increase in profitability of small and medium enterprises in the town.The ANOVA findings show that there is variation between the predictors variables and responsevariables therefore this implies that there is significant impact of microfinance services inpredicting the growth of small and medium enterprises.ConclusionFrom the findings, it can be concluded that, most of the SMEs operators borrow loan frommicrofinance bank to finance their start up, they finds loan processing charges as the mostexcellence loan services offered by microfinance institutions because the institutions offersfavorable loan processing charges that encourages borrowing therefore enabling most of them tobe able to access microcredit. Finance provided by MFIs increases the growth of SMEs and mostof microfinance institutions in increase loan accessibility to small and medium enterprisescharging favorable interest rates. Loan processing speed is the most challenging creditaccessibility policy in MFIs and loan processing charges least challenging as most of thismicrofinance has minimal loan processing charges.Secondly, it can be concluded that, management of finance is most excellence advisory servicesoffered by MFI to SMEs and advisory services offered by their institution have strong effects onthe growth of SMEs therefore the most effective advisory services offered by MFI in Kisii townto small and medium enterprises is management of finance. This is very important to the survivalof the enterprises therefore the service has led to survival of many small and medium enterprises.Thirdly, training offered by MFIs is most effective therefore this training programmes offered bymicrofinance institutions facilitates the increase in profitability of small and medium enterprises.The study further concluded that, there is significant impact of microfinance services inpredicting the growth of small and medium en
and 150 small businesses in Kisii town. The small businesses included: mobiles and M-pesa operators, boutiques, small scale shops, small scale saloons and small scale hotels. Sample Size The sample size of the study was 60 respondents derived from 30% criterion which comprised of 15 employees from MFIs and 45 small businesses.
Pocket Guide to the Microfinance Financial Reporting Standards Measuring Financial Performance of Microfinance Institutions This document is a condensed version of the Microfinance Financial Reporting Standards (MFRS): Measuring Financial Performance of Microfinance Institutions that will be published by The SEEP Network in 2011.
3.2.1Differences between microfinance and conventional lending 10 3.2.2Types of microfinance lending methodologies 11 3.3Types of institutions providing microfinance 13 3.4Decentralized operations and internal controls 15 3.5Fraud issues 15 Chapter 4 Planning the Audit 19 4.1Gaining knowledge of the business 19 4.1.1Meetings 19 4.1.2Visits 21
informalisation of the economy. Formal microfinance institutions have been facing competition from the informal microfinance institutions, the banking sector, and the mobile network operators. In light of these developments the current study evaluated competition in the microfinance industry in Zimbabwe.
1,335 microfinance institutions between 2005 and 2009, jointly serving 80.1 million borrowers, to calculate the costs of microfinance and other elements of the microfinance business model. It calculates that on average, subsidies amounted to 132 per borrower, but the distribution i
very late. Microfinance is often credited with putting an end to the interest rate debate for the poor. A host of players have entered microfinance space, each having a reason of its own. It is believed that, Microfinance, unlike other developmental efforts, gives quick and tangible results (Srinivasan et al., 2006).
The “Operational Risk Management for Microfinance Institutions” course is one of the four courses in the Operational Management Curriculum, along with “Business Planning,” “Information Systems,” and “Product Development.” This four-day course helps microfinance institutions develop and improve the
collateral, the quality of the portfolio is absolutely crucial. Fortunately, many microfinance institutions have learned how to maintain loan portfolios of very high quality. In fact, leading microfinance institutions typically better at maintaining a higher portfolio quality than their commercial bank peers in many countries. 1
Freedom from Hunger’s microfinance and health program To address the burden of health costs among the poor, Freedom from Hunger, a U.S.-based international development organization, partnered with microfinance institutions (MFIs) to offer integrated financial and health-related services in a four-yea
