Assessing corporate governance practices in selected microfinance institutions in Ghana

Thumbnail Image
September, 2015
Journal Title
Journal ISSN
Volume Title
Microfinance institutions (MFIs) are playing an increasing role in the delivery of financial services to SMEs in Ghana. They have proven to be a powerful tool for promoting inclusive economic growth and employment generation. However, events such as huge financial scams by Onward Investment Limited in 2012, the PYRAM case and the seemingly bankruptcy of Noble Dreams Financial Services have raised many questions about trust, credibility and governance issues in the financial sector. This study therefore sought to assess governance practices in some selected Microfinance institutions in the Ashanti Region. The research was descriptive in nature. It combined both quantitative and qualitative approaches in the data analysis. The population comprises 170 “Tier 2” Microfinance Institutions operating in the Ashanti region out of which a sample of 4 institutions with a total of 116 respondents were chosen using convenience sampling technique. The main data sources included both primary and secondary. At the end, the study found some conflict of interest situations resulting from the fact that majority of CEO’s in the selected MFIs doubled as chairs of their board. Again the study found that many Microfinance institutions in the Ashanti Region did not have structured policies for reviewing CEOs compensations and performance. Reducing owner concentration was also identified as the most important variable in improving governance practices within MFIs. To address the challenges enumerated, the researcher recommends that MFIs review the role and contribution of non-executive directors to ensure that all directors have a sound understanding of the company’s operations. It is also important to ensure that directors have access to all the information required to function effectively. Auditing of financial statements must be tightened to meet the agreed International Accounting Standards.
A Thesis submitted to the Department of Accounting and Finance, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirements for the degree of Master of Business Administration (Finance Option)