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The thesis examines factors that influence sustainability and success of microfinance institutions in Ghana. The topic is important, particularly in poverty stricken Africa, where microfinance institutions play a significant role in supporting governments¿ initiatives to reduce/alleviate poverty. The developed model is tested using data collected from 14 face-to-face interviews and 114 questionnaires. The data is analysed using different techniques- descriptive statistics, cross-tabulations and regression analysis. The research design and scale of the study are appropriate to both the problem addressed and doctoral level research. A number of factors in the model developed were found to be influencing the sustainability and success of microfinance institutions. A model was proposed that seeks to offer an explanation of sustainability and success of Microfinance Institutions in Ghana. The proposed model identified five categories being: institutional characteristics, agency costs, business strategy, environment/governance and success. Single factor analysis established positive relationships between sustainability and all the five factors but placed more emphasis on three out of the five factors namely; success, business strategy and environment/ governance. Multiple factor analysis established no significant differences in the sustainability with respect to the type of MFI, ownership and source of funding. Multiple Regression which allows for the testing of theories or models established a significant relationship between the Operational Self Sufficiency (OSS) and the predictors, especially the drop-out rate of clients and average loans. The Subsidy Dependence Index (SDI) was calculated for the various types of MFIs and the result was a high dependency ratio especially among the FNGOs. Though the dependency is on the decline, it is very slow indicating that most MFIs will depend on subsidies for a very long time to come. Finally it was observed that the relatively high interest rates charged by most of the MFIs tended to defeat the purpose for which the microfinance movement came about. Not only did the study confirm the research model, but it also revealed that most owners did not exhibit a deep sense of involvement and used general knowledge to practice in Ghana. The study concluded that success factors, business strategy, and environment/governance were the most critical of the sustainability factors in Ghana. It is therefore important that managers develop institutional capacities especially in managing the agency problem effectively if they have to be sustainable and successful.

This doctoral study examines whether MFIs in Ethiopia have developed the managerial readiness to face emerging threats and seize the opportunities within the context of unpredictable changes and turbulences. The interpretative phenomenological approach (IPA) has been used to collect, shape, and interpret the lived experiences, intuitions, and insights of 10 CEOs of MFIs. The data were interpreted using the double hermeneutic and analysed through the lenses of the theory of organisational agility and the Cynefin framework to make decisions. The premise of this study is that MFIs without agile organisational capability may fail to prepare and respond to changes in the external environment. The study results show multiple impediments that restrict MFIs from being adaptive towards achieving double bottom lines, i.e., the creation of social and financial value. MFIs in Ethiopia suffer from “pain points” such as inflation, illiquidity, and turbulences. The challenges include: the weak governance practice of nominal shareholders, outdated decision-making processes causing delays, staff turnover reducing enterprising capacity, and MFIs lacking sufficient digital and technological infrastructure. The study found most MFIs are incapable of responding quickly and innovatively to seize opportunities or to overcome adversities. The conclusion is that MFIs in Ethiopia have inadequate agile organisational capability to make strategic choices and execute operational processes during multiple and complex changes. The findings of the research are important, and pertinent for a better understanding of the organisational agility of social enterprises. The study has provided five recommendations to enhance policies and practical actions to build the agile organisational capabilities of social enterprises.

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Yes / Drawing from 645 microfinance institutions across 56 countries, this paper examines the deposit-borrowing dynamic of microfinance institutions’ source of capital. We find that deposits and borrowings are substitutes rather than complements. We further find that the degree of substitutability is more pronounced among microfinance institutions operating in a developed financial sector where the level of information asymmetry is lower. Our findings represent novel contribution in understanding microfinance institutions’ funding behaviour that supports its quest for further growth and long-term sustainability. / Research Development Fund Publication Prize Award winner, April 2023.

Thesis (MPhil (Sustainable Development Planning and Management))--University of Stellenbosch, 2004.

Thesis (MDF (Development Finance))--University of Stellenbosch, 2009. / ENGLISH ABSTRACT: This research is influenced by and starts from the work carried out by the IMF in Swaziland, wherein they comment about the significant growth in the use of savings and credit co-operatives compared with that of commercial banks. They also report the lack of growth of the financial sector resulting in sluggish economic growth. This report sets out to establish through a survey, the attitude of the Swazi public towards commercial banks, and to establish if indeed there is a deliberate move away from commercial banks to non-bank financial institutions in general. In the process the reasons for migrating from commercial banks are established. In addition, the ultimate use of funds borrowed in general, is also investigated. Specifically for those people who use non-bank financial institutions (NBFIs), the research further probes the uses of such funds, and whether or not such funds are likely to affect economic growth. The survey is augmented by results from questionnaires responded to by selected microfinance institutions (MFIs) as a means of cross-checking and validating results obtained from the public survey. Findings are that in Swaziland, while the growth of savings and credit co-operatives (SACCOs) is acknowledged, there does appear to be a tendency to still use commercial banks by the economically active population. Borrowing tends to be for school fees, followed by the purchase of building materials for constructing rural homes on ancestral land, as well as for personal use and business activities. It also appears that the majority of users of financial intermediaries are civil servants, which comes as no surprise as government is the largest employer. The conclusion is that Swaziland’s problems with sluggish economic growth appear to be from more than a shallow financial sector, but a myriad of other reasons that have not been explored in this study. / AFRIKAANSE OPSOMMING: Die navorsing is gebaseer op die uitkoms van die werk uitgevoer deur die Internasionale Monetêre Fonds (IMF) as vertrekpunt, waarin hulle meer beduidende groei in die gebruik van spaar en krediet-kooperatiewe gevind het in vergelyking met die trae groei in die gebruik van kommersiële banke. In dieselfde verslag haal hulle ook aan dat die gebrek aan voldoende groei in die finansiële sektor onderliggend is aan die stadige ekonomiese groei. Hierdie verslag bepaal deur middel van ‘n opname, die gesindheid van die Swazi-publiek teenoor kommersiële banke om vas te stel of daar ‘n opsetlike voorkeur vir nie-finansiële instellings is, bo kommersiële banke. Die studie ondersoek ook die spesifieke gebruik en toepassing van fondse verkry vanaf nie-finansiële kooperatiewe en of die gebruik daarvan ‘n negatiewe impak op ekonomiese groei het. Die uitkoms van hierdie ondersoek word bevestig deur die bevindinge van vraelyste wat deur geselekteerde mikro-finansiële instellings voltooi is, te vergelyk met die bevindinge van publieke opnames. Die bevindinge vir Swaziland is dat alhoewel daar groei is in die spaar-en krediet-kooperatiewe, daar steeds ‘n tendens onder die ekonomies aktiewe populasie is om gebruik te maak van kommersiële banke. Lenings word hoofsaaklik gebruik vir die befondsing van skoolgelde, daarnaas vir die aankoop van boumateriaal vir die konstruksie van landelike huise in voorvaderlike gebiede wat deur stamleiers toegeken word, sowel as vir persoonlike gebruik en besigheidsfinansiering. Dit wil ook voorkom asof die meerderheid van die leners staatsamptenare is. Dit is te verwagte, aangesien die regering die grootste werkgewer is. Die gevolgtrekking van die ondersoek is dat Swaziland se trae ekonomiese groei meer onderliggende beperkende oorsake het as bloot net die oppervlakkige uitwerking van die (kommersiële) finansiële sektor. Hierdie onderliggende redes word nie verder ondersoek as deel van hierdie studie nie.

Thesis (MDF)--Stellenbosch University, 2011. / The research report provides a credit risk assessment and evaluation of Accion Microfinance Bank Limited (AMFB) for the period 2006 to 2010, using Morgan Stanley’s methodology for analysing the credits and performance ratings of microfinance institutions (MFIs). Since MFIs are set up to provide credit and other financial services to the poor, financially underserviced segment of the society, and since the credit support granted to such micro businesses usually lacks collateral, it is imperative that the management of such credit services be sound in order to mitigate the high risks involved. Thus, credit risk management determines the success and survival of microfinance banks (MFBs): weak credit management leads to capital erosion and eventual failure, whereas sound credit risk management guarantees profitability and sustainability and, hence, the realisation of the objectives of their setup – enhancing the welfare of micro-entrepreneurs. The data for the research report were sourced from AMFB’s financial statements for the years 2006 to 2010 and from interviews that were conducted with principal officials of this MFB. The research found that good regulatory corporate governance and management practices, sound quantitative credit risk assessment and management, and quality and maturity of management lead to low credit risk accompanied by high profitability and sustainability for MFBs. As AMFB matured, the quality of portfolio, profitability, sustainability and operating efficiency were seen to increase. The quality of shareholders, board and management was found to be crucial for the sound management of the MFB. The research report, therefore, recommends regular and continuous credit risk identification, assessment and management, as well as sound corporate governance, if MFBs are to survive and grow and achieve their developmental objectives.

Thesis (MBA)--Stellenbosch University, 2009. / ENGLISH ABSTRACT: Globally microfinance is recognised as an important tool in addressing poverty and in building the assets of poor people. Housing microfinance is emerging as an important tool for assisting poor people to improve their housing conditions and to build their asset values. However, microfinancial institutions are perpetually dogged by small scale financially unviable operations. This study seeks to identify the factors that must be present to ensure that a microfinance initiative is able to scale up significantly, and further investigates the Kuyasa Fund as an example of a microfinance organisation that is scaling up. The McKinsey 7S model is used to evaluate the Kuyasa Fund’s plans for scaling up and the shared values, strategy, structure, skills, staffing requirements, style and systems of the Kuyasa Fund is examined in determining the scalability of the Kuyasa Fund. Overall Kuyasa have either already addressed the critical factors in determining its growth or it is in the process of addressing those factors. The biggest strengths of the Kuyasa Fund in its growth plans are the cohesive strategy and in the compelling strategic intent that represents its shared values. However in the medium and long term the greatest challenge is located in the long-term financing and transformation of the Kuyasa Fund from a non-profit to a for-profit entity that has equity shareholders. In achieving this transformation Kuyasa would be required to balance its development objectives with the requirements of equity holders, who will require prescribed rates of return. Preventing mission drifts and achieving scale will be the most important tensions to balance. To mitigate these risks and to set clear guidelines for its operations, the Kuyasa board developed clear criteria for the evaluation of equity partners and the board also set a trajectory for the transformation of Kuyasa to a company. The intention of these is to guide the Kuyasa operation towards the milestones that must be reached before conversion and to set the criteria to select partners. The Kuyasa Fund’s path to conversion from a small niche player limited to one province to a national role player, transformed into an equity holding company will present interesting material for learning about scaling up development efforts, and not just for microfinance. / AFRIKAANSE OPSOMMING: Mikrofinansiering word wêreldwyd erken as ‘n belangrike hulpmiddel in die stryd teen armoede en in die bou van bates vir arm mense. Behuising-mikrofinansiering is besig om as ‘n belangrike instrument na vore te tree om arm mense te help om hul behuisingsomstandighede te verbeter en hul batewaarde op te bou. Mikrofinansieringsinstansies word egter aanhoudend lastig geval deur kleinskaalse besighede wat nie finansieel lewensvatbaar is nie. Hierdie studie poog om die faktore te identifiseer wat teenwoordig moet wees om te verseker dat ‘n mikrofinasieringsinisiatief beduidend kan uitbrei en ondersoek verder die Kuyasa Fund as ‘n voorbeeld van ‘n mikrofinansieringsorganisasie wat tans uitbrei. Die McKinsey 7S-model word gebruik om die Kuyasa Fund se planne vir uitbreiding te evalueer. Die Kuyasa Fund se gedeelde waardes, strategie, struktuur, vaardighede, personeelvereistes, styl en stelsels word ondersoek om die uitbreidingsmoontlikhede van die fonds te bepaal. Oorhoofs het Kuyasa alreeds die kritiese faktore aangespreek wat hul groei bepaal of hulle is in die proses om hierdie faktore aan te spreek. Die grootste sterkpunte van die Kuyasa Fund se uitbreidingsplanne lê in die samehangende strategie en in die gebiedende strategiese rigting wat sy gedeelde waardes verteenwoordig. In die medium- tot langtermyn is die grootste uitdaging geleë in die langtermyn-finansiering en transformasie van die Kuyasa Fund van ‘n niewinsgewende tot ‘n winsgewende entiteit met ekwiteitsaandeelhouers. Ten einde hierdie transformasie deur te gaan, sal van Kuyasa vereis word om sy ontwikkelingsdoelwitte te balanseer met die vereistes van die aandeelhouers, wat hul eie opbrengskoerse sal vereis. Om koersvas hul missie na te streef teenoor die beplande uitbreiding te behaal sal die belangrikste spannings wees om te balanseer. Ten einde hierdie risiko’s te beperk en duidelike riglyne daar te stel vir sy bedrywighede, het die Kuyasa raad duidelike kriteria ontwikkel om ekwiteitsvennote te evalueer. Die raad het ook ‘n vorderingsplan bepaal vir die transformasie van Kuyasa tot ‘n maatskappy. Die bedoeling hiervan is om die Kuyasa bedryf te lei op die pad na mylpale wat bereik moet word voordat omskakeling kan plaasvind en om kriteria daar te stel om vennote te kies. Die Kuyasa Fund se pad na omskakeling van ‘n klein niche speler, beperk tot een provinsie, tot ‘n nasionale rolspeler, wat getransformeer het tot ‘n ekwiteitsmaaskappy sal interessante leergeleenthede bied oor die uitbreiding van ontwikkelingsmaatskappye en nie net op die gebied van mikrofinansiering nie.

Thesis (MDF)--Stellenbosch University, 2008. / ENGLISH ABSTRACT: High interest rates on credit products in South Africa are not unusual. This would be beneficial to the South African consumers if the cost of incurring these credit products was lower than the benefit derived from incurring them .This is unfortunately not the case to the majority of the South African population. The unlikelihood of this situation is a direct result of the lack of access to appropriate savings and insurance products to a large number of South Africans. Most South Africans use credit, in the form of microloans to augment their consumption patterns. The majority of South Africans do not have a culture of saving; therefore they use credit as a substitute for the lack of savings when consumption patterns exceed income. Using credit as a substitute for the lack of savings becomes extremely costly for low income earners. The result is a perpetual dependence on credit, lack of accumulation of wealth and a lack of improvement in their standard of living. The perpetual dependence on credit has brought about unscrupulous lenders who take advantage of the low income earners dependency on credit for their daily existence. It is due to such exploitations that the South African government through its Department of Trade and Industry (DTI) intervened to bring normality in the South African credit market. This intervention was done through the promulgation of the National Credit Act (NCA), Act No.34 of 2005. The purpose of this study is to focus on a sub set of the credit providers in South Africa known as housing microfinance (HMF) lenders. The study explores the impact of the National Credit Act in the South African credit industry. The Act’s intentions are elaborated and the reality of the implementation of the Act on the drivers of profitability for the housing microfinance institutions is measured. The finding is that housing microfinance institutions have to restructure their business processes in order to be profitable and sustainable in the ambit of the National Credit Act. / AFRIKAANSE OPSOMMING: Vir menige finansiële produkte in Suid-Afrika is rentekoerse wat wissel tussen 80 en 150 persent is nie ongewoon nie. In ekonomiese terme kan verbruikers slegs voordeel trek uit hierdie hoë rentekoerse as die koste om hierdie krediet te verkry laer is as die voordeel wat voortspruit uit die aangaan van die koste. Hierdie situasie is hoogs onwaarskynlik in die oorgrote meerderheid van gevalle in Suid-Afrika. Die onwaarskynlikheid van hierdie situasie is die direkte gevolg van die gebrek aan toegang tot toepaslike spaar- en versekeringsprodukte vir ‘n groot aantal Suid-Afrikaners. Die meeste Suid-Afrikaners gebruik krediet (naamlik mikrolenings) om hulle verbruikerspatrone aan te vul. Die gebruik van krediet as ‘n plaasvervanger vir spaargeld word uitermate duur vir die lae-inkomste verdiener. Die gevolg is ‘n ewigdurende afhanklikheid van krediet, geen akkumulasie van welvaart nie en ‘n gebrek aan verbetering van lewenstandaard. Die ewigdurende afhanklikheid van krediet het gewetenlose uitleners geskep wat die lae-inkomste verdieners uitbuit wat afhanklik is van krediet vir hul daaglikse bestaan. Dit is as gevolg van hierdie tipe uitbuiting dat die Suid-Afrikaanse regering deur sy Departement van Handel en Nywerheid tussenbeide getree het om normaliteit te bring in die Suid-Afrikaanse kredietmark. Hierdie intervensie is gedoen deur die uitvaardiging van die Nasionale Kredietwet, Wet No. 34 van 2005. Die doel van hierdie studie is om te fokus op ‘n onderdeel van die kredietverskaffers in Suid-Afrika bekend as die behuising-mikrofinansiering-uitleners. Die studie ondersoek die impak van die Nasionale Kredietwet in die Suid-Afrikaanse kredietindustrie. Die Wet se oogmerke word uiteengesit en die realiteit van die implementering van die Wet op die drywers van winsgewendheid vir die behuising-mikrofinansiering-instansies word gemeet. Die bevinding is dat behuising-mikrofinansiering-instansies hulle besigheidsprosesse moet herstruktureer ten einde meer winsgewend en volhoubaar te wees binne die strekking van die Nasionale Kredietwet.