An assessment of credit delivery practices of microfinance institutions in Ghana, a case of Sinapi Aba Savings and Loans Ltd.
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Date
August 2016
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Abstract
The concept of credit delivery has conventionally been considered an essential part of the microfinance institutions operation management, which is most vital to the success of these financial institutions. In spite of the various credit delivery procedure laid down by the central bank which must be followed by financial players, many of these rural microfinance institutions do not deliver credit prudently which has made many microfinance institutions unable to recover credit advance to clients resulting in the declaration of many credit as bad debts. This study assessed the credit delivery of microfinance institutions in Ghana, A Case of Sinapi Aba Savings and Loans ltd. This study employed both qualitative and quantitative research in which both descriptive and regression analyses were employed to assess the credit delivery in Microfinance Institutions in Ghana. The researcher collected data from all the departments of the organization for the purpose of eliciting information on the bank’s credit delivery management and performance. This consisted of 1 head and 4 other senior staff from each of the 9 departments. In effect, a total of 45 respondents were selected. Regression analysis was employed to analyse secondary source of data on bank capital, profit, loan and amount of non-performing loans from 2006 to 2014.After assessing the level of credit delivery system in Sinapi Aba Savings and Loans ltd, the study found that there is high level of competition in the microfinance sector and so players in the sector are implementing measures to ensure that strategic credit delivery policies are carried out. In analyzing credit delivery management techniques using microfinance credit delivery processes and operations technique developed by Teresa (2002), the study found out that loan application is very important, Loan Appraisal and Recommendation are important in credit delivery system in Sinapi Aba Savings and Loans ltd. More than half of the respondents indicated that they are not sure whether Approval/Deferment or Rejection is important in credit delivery system in Sinapi Aba Savings and Loans ltd or not. Again loan agreement, loan disbursement, loan repayment process are very important in credit delivery system in Sinapi Aba Savings and Loans ltd. Among the barriers hindering credit policies of the bank include inadequate credit assessment personnel, inadequate regular training on current trend in strategic credit delivery polices in microfinance institutions in Ghana, a lot of bureaucracies, accusations of bribery, corruption and conflict of interest in some credit delivery practices.The study recommends that Sinapi Aba Savings and Loans ltd should be able to employ qualified personnel who are well vexed in credit delivery policies of the bank, organize adequate and regular training on current trend in strategic credit delivery polices and that credit delivery polices should be simplified in order to dwell more on results oriented rather than strict procedure.
Description
Research Submitted to the School of Business, Department of Marketing and Corporate Strategy Kwame Nkrumah University of Science and Technology in partial fulfillment of the requirement for the Degree of
Master of Business Administration.
(Strategic Management and Consulting –Option).