The Structure of Microfinance Banks in Africa: Impact on Microfinance Institution Governance and Performance
Nsabimana, André
The Structure of Microfinance Banks in Africa: Impact on Microfinance Institution Governance and Performance - 2009.
86
Microfinance is undergoing profound changes, in which strong growth, intense competition, capital inflows, and new players are the main factors. Among the new players, banks occupy a prominent place. According to the Consultative Group to Assist the Poor (CGAP 2003), 225 commercial banks and other financial institutions were operating in the microfinance sector in 2003. In Africa, some twenty commercial banks are currently involved in microfinance (AMAF 2008). This change has consequences in terms of the management and governance of microfinance institutions (MFI), two dimensions seen today as weak links in the chain. This involves strategic choices and new challenges for management that may fundamentally transform the dual mission of the microfinance sector. This paper explores entry strategies by commercial banks in microfinance in Africa and analyzes the impact of MFIs on governance and performance. We examine how the entry of commercial banks into the sector affects the governance system (through approaches to decision making, vision, system control, etc.) and how the governance mechanisms affect the performance of MFIs.
The Structure of Microfinance Banks in Africa: Impact on Microfinance Institution Governance and Performance - 2009.
86
Microfinance is undergoing profound changes, in which strong growth, intense competition, capital inflows, and new players are the main factors. Among the new players, banks occupy a prominent place. According to the Consultative Group to Assist the Poor (CGAP 2003), 225 commercial banks and other financial institutions were operating in the microfinance sector in 2003. In Africa, some twenty commercial banks are currently involved in microfinance (AMAF 2008). This change has consequences in terms of the management and governance of microfinance institutions (MFI), two dimensions seen today as weak links in the chain. This involves strategic choices and new challenges for management that may fundamentally transform the dual mission of the microfinance sector. This paper explores entry strategies by commercial banks in microfinance in Africa and analyzes the impact of MFIs on governance and performance. We examine how the entry of commercial banks into the sector affects the governance system (through approaches to decision making, vision, system control, etc.) and how the governance mechanisms affect the performance of MFIs.
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