Factors Affecting the Performance of Microfinance Institutions in Uganda

Doctoral Thesis / Dissertation from the year 2013 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: .69, Uganda Management Institute (Uganda Management Institute), course: Masters in Business Administration Degree, language: English, abstract: The purpose of this study was to examine factors affecting the performance of microfinance institutions in Uganda. Hofokam Limited (Ltd) was used as a case study. The objectives of the study were: to assess the effect of governance mechanisms on the performance of Hofokam Ltd, to establish the effect of management information systems on the performance of Hofokam ltd and to find out the extent to which finding affects the performance of it. The study sample was 48 and the findings showed that the selection criteria of the board members was not based on related experience and management remuneration was not competitive enough to attract and retain talent. The Management Information System didn't support real time reporting for decision making and branches were not networked with head office with the MIS, the microfinance institution had struggled to access reasonable capital with affordable terms since the donor funding stopped. The study drew conclusions that governance mechanisms greatly affected the performance of microfinance as they determine the direction of the MFI, MIS in its state had a relatively low impact on the performance of Hofokam Limited and that funding was not a critical success factor for MFI performance as compared to other factors. The study recommends that the selection of the Board should be to a large extent based on ones' professional experience, the MFI shouldn't commit all efforts to be regulated as it has not proved a success factor for many other MFIs, the MIS in use should be upgraded to enable linkage across the branches and head office rather than invest in a totally new software, the MFI should look at increasing the level of operational efficiency especially for the staff in the credit department so that wastage is saved and also enhance in negotiation skills with funding partners so as to get the most affordable credit in the market.