Notwithstanding the crucial roles played by microfinance institutions (MFIs) in the socio-economic development of developing countries, sustainability has been identified as one of the contemporary issues facing these institutions. The main objective of this study is to examine the factors that influence the sustainability of MFIs in Ghana. Primary and secondary data as well as other literature sources were employed for this study. Data gathering instruments used include structured questionnaires, interviews and personal observations during visits to the premises of the various MFIs. A list of all registered MFIs in Kumasi, Ghana’s second largest city, was obtained from the regional offices of Bank of Ghana in Kumasi, and simple random sampling was used to select 40 MFIs for this study. The study revealed that the products and services offered by the MFIs include personal loans, savings and current account services, business loans, agro loans, salary loans and micro-insurance services. The study also revealed that the MFIs employed three broad categories of delivery models which include individual, group and business entity. It was also realized that the concern for institutional sustainability influences the adoption of a particular delivery model. Out of a total of 40 MFIs sampled 27 of them, representing 73%, indicated that the concern of their institutional sustainability influences the adoption of a particular microfinance delivery model. The study further revealed that operational challenges faced by the MFIs include poor loan recovery rate, competition, inadequate IT infrastructure, high staff turnover and inadequate professional staff. Based on the findings of the study, it was recommended that the MFIs should charge reasonable interest rates in order to improve loan recovery rates. They should also pay attention to credit risk assessment to ensure that loans given out are recovered and also employ some well qualified staff to enhance their efficiency.
|Keywords:||Microfinance, Institutions, Sustainability, Micro-insurance, Delivery Models|
Lecturer, Department of Accounting and Finance, Kwame Nkrumah University of Science and Technology, Kumasi, Ashanti Region, Ghana
Assistant Lecturer, Department of Accounting and Finance, Kwame Nkrumah University of Science and Technology, Kumasi, Ashanti Region, Ghana
Pro Credit Savings and Loans Company Limited, Ghana