It has been observed that, MFIs are able to reach the poor effectively mainly because they have designed products and channels, which are friendly and suitable to the need of the poor. However, MFIs outreach is limited in comparison with the mainstream financial institutions because of the shortage of financial and human resources. A key component of an MFI operation is growth and sustainability. It is however important for an MFI to concentrate on internal growth as a bait for sustainable overall growth. It is therefore important for an MFI to research and identify factors that are critical to its internal growth. Hence, the Sun Shade Foundation-FNGO has identified the following under listed factors as critical to its growth;
- a) Majority of MFIs demand that their clients to make ‘susu’/deposits for a number of months (to serve as a form of collateral) before they can have access to credit. SSF, on the other hand does not make deposit a prerequisite for accessing credit.
- b) SSF utilizes social collateral in the form of peer groups to ensure loan repayment. Borrowers take out loans in groups of three individuals. This cohesive-group social pressure encourages borrowers to repay loans in full and on time, resulting in the higher than 98 percent repayment rates. All loans require weekly repayments.
- c) SSF offers Business Advisory Services and these involve various trainings including financial management, customer care, inspirational messages, etc. The advisory services are compulsory business training for its prospective clients (since these are very poor and have no business skills to run their businesses efficiently and profitably). The Sun Shade Foundation believes micro-credit with tailor-made training support is one of the best methods to help individuals lift themselves out of poverty through their own ingenuity. Sun Shade Foundation does not only help the poor with micro-credit and clothing support but also empower these women to sustain their climb out of the claws of poverty through well tailored training sessions. The objective is to encourage economic growth and sustainability by sharing our knowledge and access to resources with these women.
- d) Strong Human Resource Base: Senior executives in the SSF are knowledgeable, and have been able to effectively communicate the mission, vision, and strategy to the other members of the organization. Sun Shade Foundation is also blessed to have a workforce that is young, enterprising, highly trained and motivated. The team has acquired academic and professional experiences in various fields related to microfinance both in Ghana and abroad.
- Besides, technology is critical to growth and sustainability of MFI. However, most semi-formal and informal MFIs do not have adequate technological support systems in their organizations. Technologically, SSF has an information system to support the current operations. However, it will need to achieve the full complement of equipments, information systems for its future expansion in order to serve its clients well.
In concluding, there have been several calls on all stakeholders to create a congenial environment for providing credit to the economically poor, and awaken the entrepreneurial spirit at the micro-level, which is critical to MFIs sustainability and growth in emerging economies such as Ghana’s.
Isaac Kwasi Akohene-Asiedu,
Sun Shade Foundation-FNGO,