Research Key


Project Details

Project ID
International: $20
No of pages
Analytical tool
 MS Word & PDF

The custom academic work that we provide is a powerful tool that will facilitate and boost your coursework, grades and examination results. Professionalism is at the core of our dealings with clients

Please read our terms of Use before purchasing the project

For more project materials and info!

Call us here
(+237) 654770619
(+237) 654770619



Financial sector has witnessed transformation with the adoption of information and communication technology (ICT) in providing financial services that ensured financial services to distant customers and reduced cost of providing financial services. The advent of ICT in financial system in general and microfinance sector in particular would not only scale up the access to finance but also attempt to ensure provision of financial services to the remotest and far-flung areas. Adoption of technology by microfinance institutions (MFIs) has increased its outreach and achieved cost reduction but confronted numerous challenges especially with respect to regulatory issues and delivery channels used. In this context, this study assessed the effect of ICT on performance of MFIs in Buea. To do so, the study was guided by two specific objectives which were to examine the effect of branch networking on the performance of MFIs and to determine the effect of digital financial services on the performance of MFIs. The descriptive survey design was adopted for the study. The study targeted a sample of 50 respondence to provide data for the study. The multiple regression analysis was preferred for the analysis of the data and findings show that both financial digital service and branch networking have no significant effect on performance of MFI. The study concluded that ICT has no significant effect on MFIs in Buea. The study recommends that the microfinance should select packages or software that are user friendly and should consider customisation of the systems to fit specific needs

Keywords: ICT, Performance, microfinance




1.1 Background of the Study

In recent times, the usage of computers and other advanced technology have increasingly been adopted in most practices including accounting. Prior to this, accountants were vigorously involved in all accounting activities as the traditional methods were in place. Daily records had to be kept by humans, preparation of financial statements such as the statement of financial position and statement of comprehensive income were done manually by the accountant (Linus, 2012). According to Lim (2013), the implication of technology has indeed caused obvious changes in organizations relating to their accounting systems and organizational performance, which has been of great concern and interest. Accounting decisions and plans have to be made with consideration of ICT in order for companies to stay relevant and competitive.

Microfinance institutions are the main financing sources for the poor and low income households around the world. These institutions provide financial services to the poor who are excluded by formal financial systems, to enable them sustain living and engage in economic activity through entrepreneurial activity and small business which together have impacts on country economic developments. The performance of Microfinance institutions has recently been a point of focus among different stakeholders of the sector as a result of failure and poor performance of most of microfinance projects, which were mainly financed by donors and governments (Bada, 2012). Microfinance institutions have faced increasing competitions for scarce donor funds and increased market competition due to entrances of commercial banks in the microfinance business. They have also faced declining donor support and advancements in the financial sector technologies which together have affected their operations. This has resulted into the need for efficiency and sustainable operations with reduced operating costs and greater productivity to ensure future survival. As a way of improving efficiency and sustainability, Microfinance Institutions around the world have adopted different advanced operational methodologies together with information and communication technology (ICT) in order to facilitate their operations, reduction of cost, increasing staff productivity and improved communication and coordination

The penetration of ICT in the Microfinance and Financial institutions performance over the recent years has not gone unnoticed. Over the last few years, with rapid changes brought by ICT’s, microfinance has been evolving, and MFIs is expanding services in an innovative way through applying ICT in providing services. A case point is the delivery of microfinance products using Mobile financial services (MFS) which used to access banking services and execute financial transactions. MFIs are leveraging this dramatic penetration of mobile financial service technology and mobile loans repayments to improve delivery of microfinance services and products to their clients. This is being utilized in improving risk assessment and management; reduce transaction cost, details analysing portfolio statistics and branch networking (Majumdar et al, 2010). Therefore, mobile money, e-banking and electronic fund transfer has acted as a gateway to more sophisticated financial products and services to MFI in both rural and urban Tanzania.

ICT usage in Microfinance institution is vital in the reduction and management of transaction costs. Transaction cost in Microfinance institutions is the bottleneck of its survival. Most of the Microfinance institutions operate at very high transaction costs as a result of high administration costs, financing costs and information costs. Unlike in commercial banks with larger loan and long maturity, most of the poor people served by Microfinance require small loans with shorter maturity. Such types of loan are expensive to administer and involve high follow up costs as well as high defaults, which results into high operating costs (Brandt et al, 2013). The adoption of ICT in Microfinance institutions around the world has resulted into improved efficiency, sustainability and profitability. ICT adoption and usage have enabled Microfinance institutions to reduce their transaction costs due to reduced staff working time, better financial management due to generation of timely and quality information for financial decision making, decreased chances of fraud as well as customer satisfaction and loyalty.

Regardless these advantages of the use of ICT most of Microfinance institutions in developing countries have not yet adopted ICT in most of their internal operations. Most of them still rely on their traditional manual processing systems which are inefficient and results into poor performance (Parikh, 2015). The adoption and usage of ICT in Microfinance institutions in developing economies faces several challenges associated with high direct and indirect costs. These costs are associated with implementation of ICT, such as installations costs, training costs and service costs. Evidences have shown that, the benefit of implementing ICT in developing countries is outweighed with the associated costs, due to institutions size, volume of operations and rural orientations. ICT implementation in Microfinance institution has also shown to be costly and not beneficial especially in areas with low population density. Microfinance institutions ICT adoption, have also been challenged by low education level of their clients, especially in rural areas, which are characterized, by poor communication infrastructure. Most clients are ICT ignorant and cannot utilize most of ICT developments such as online services hence requiring physical interaction with loan officers of Microfinance institutions.

The use of ICT concepts, techniques, polices and an implementation strategy to microfinance and banking services has become important in serving the growing needs of customers. Adeoti (2011) notices that, ICT investment directly affects how managers decide and plan on what products and services are offered in the banking industry. It has continued to change the ways banks and their corporate relationships are organized globally and a variety of innovative tools available to boost speed and quality of their service delivery.

Globally, computerised systems, have improved the functionality of accounting departments in MFI which has increased the timeliness of accounting information which enable accountants to prepare reports and operations analysis, which give a clear picture of current operations, useful to the management (Ali et al, 2013). Records can be kept and tracked more effectively with the use of computerized system increasing company efficiency and minimising errors to ensure customer satisfaction. So far, ICT has improved corporate relationships, facilitated speed and enhanced quality delivery in jobs. It has also improved productivity and increased value creation of organizations. ICT is important for a firm’s growth and survival, it is an integral part and fundamental to support, sustain and grow a business. Keller & Gracht, (2014), reports that despite the current economic slowdown, worldwide IT spending reached $3,4trillion in 2010, a 4.6% increase from 2009, yet such great investment does not guarantee high returns. ICT is being increasingly setup to improve the infrastructure of foresight. It will likely be used to implement more routine and continuous foresight processes in companies and organizations in the future.

In India, according to Yadav (2016), the affordability of computer technology for small business entities has created great opportunities for these entities to improve their business. Information technology advancements made effective and efficient information flow that enhances managerial decision making, thereby increasing the firm’s ability to achieve corporate and business strategy objectives. Computers, servers, the Internet, wireless and personal digital devices have forever transformed the way companies conduct business. Software packages have also improved traditional operations and production processes.

In Tanzania, Bakisi (2019) holds that Microfinance sector is dominated by SACCOS which is small in size and rural oriented, Non-governmental organizations (NGOs), microfinance companies, nonbank financial institutions (NBFIs) and few commercial banks offering microfinance services. Most of these institutions are characterized by poor performance with high inefficiency and low financial sustainability which together has hindered their outreach to the poor and low income households. Accordingly, only 12.4% of the country population is served by formal financial sectors. The 4.3% is saved by semi-formal sector, mainly being Microfinance institutions while 27.3% and 56% of the population was reported to be informally included and totally excluded from financial services respectively. Microfinance institutions have not been able to reach most of poor population especially in rural areas, which account for about 70% of the total population of the country. Most of the Microfinance institutions were reported to operate at high costs and low productivity, which in turn results into high losses as well as low outreach to the poor which is the primary objective of these institutions.

In Rwanda and banking sector, ICT in now-a-days is not a matter of convenience but a survival factor. If traditional banks, mostly public sector banks, do not transform their business by introducing ICT in its all aspects, their survival will become difficult (Keivin et Al., 2011). That’s why, the potential customers and big companies are shifting their accounts from traditional banks (not fully computerized) to E-banks (fully computerized and provide different e-channels). Accordingly, a number of MFIs had already invested in ICT but they are still operating in the old traditional way (Keivin et Al., 2011). RIM Ltd is one of these MFIs which introduced ICT in its services and products in about five years ago after a long period of traditional and manual management and its abuses.

In the Cameroonian context, Fambeu (2017) analyses the determinants of ICT adoption in the 1008 enterprises in Cameroon. He finds that, in addition to the traditional determinants cited by the technology diffusion model and expected profitability, organizational practices are also the rationale for ICT adoption in firms. In addition to these results, the author notes that the nationality and education level of the manager are the factors responsible for ICT adoption. This work is mainly concerned with firms, but the special case of MFIs has been the subject of some work. To this end, Sall and Birba, (2013) truly lay the groundwork for thinking about the role and impact of ICTs on the structures of the microfinance industry. They conduct an analysis of the role and impact of ICTs at several levels (client level, institutional level, donor level and the microfinance industry level), with ideas that highlight the impacts and transformations in the value chain, which provide a basis for assessing the extent to which ICTs support the sustainability of microfinance. Their results show that in a competitive environment, MFIs need to take ownership of this tool that can guarantee their performance and, above all, their survival. Other work has looked at the potential impact of ICTs on the supply and demand of microfinance services, particularly with regard to the effect of ICT integration on the supply side of microfinance on the one hand and, on the other hand, its implications on the well-being of beneficiaries in terms of reduced time, savings in transaction costs, improved income, access to more convenient services.

In addition, Falls & Birba (2015), address the link between microfinance and ICTs by highlighting macroeconomic effects. At the micro level, the field of research on the impact of ICTs on enterprise development in general, and MFIs in particular, remains fundamentally unexplored. They point to the need for in-depth analyses of the impact of ICTs at the level of clients, MFIs and NGOs. Falls & Birba (2015) also attempted to empirically analyse the adoption and impact of ICT in microfinance. Using the “Pattern Matching” approach, the authors mapped the different types of ICT adopted by MFIs and the different changes in operations and outreach. They show that the adoption of ICTs allows MFIs to increase their reach and provide financial services to the poorest and most geographically remote. Falls & Birba (2015) also conclude that software and databases (the software) enable MFIs to improve their financial performance, while it is the infrastructure, hardware and telephones (the hardware) that have an impact on the geographical reach of microfinance and the quality of its proximity to clients. Other authors have focused on the role that ICT adoption can play in improving MFI services.

1.2 Statement of the Problem

Despite its important contribution to the development of the national economy and the reduction of poverty levels, the microfinance sector in Cameroon faces many difficulties (risks), the most important of which is the closure of some MFIs. The best known and most publicised cases are: The Goldy Businessmen Fund (GBF) in 2008; the Compagnie Financière de l’Estuaire (COFINEST) in 2011; the First Investment for Financial Assistance (FIFFA) in 2012. And the problems recently encountered by the Compagnie Equatoriale pour l’Epargne et la Crédit d’Investissement (COMECI), affected in 2016 by a cash crisis, revealing the financial fragility of these local financial institutions in Cameroon. Beyond the latter, other reasons have been put forward to justify these failures, including: the existence of over- indebted clients, practices of high overall effective costs, erosion of the confidence of the sector’s clients who have seen their savings disappear without any guarantee of repayment. Indeed, the microfinance industry in Cameroon is one of the most heterogeneous and dynamic in the sub-Saharan zone. It benefits from a particular context, marked by a local economy with a strong potential for innovative and very dynamic microenterprises. Another peculiarity of microfinance in Cameroon is that it is based on a long existing tradition of micro-financing. This sector of activity has successively evolved to reach its modern form regulated by Regulation N°01/02/CEMAC/UMAC/COBAC adopted on 13 April 2002 by the Central African Monetary Union, reviewed and amended by Regulation N°01/17/CEMAC/UMAC/COBAC of 27 September 2017, relating to the conditions for the exercise and control of microfinance activity in CEMAC. It nevertheless reveals problems of financial and social performance, efficiency and viability of the sector. This problem is manifested by an imbalance in the supply of services which may be attributed to uneven and poor adoption of ICT in their operations.

1.3 Research Questions

1.3.1 Main Research Question

The main research question for the study is; what is the effect of information and communication technologies (ICT) on the performance of microfinance institutions in Buea?

1.3.2 Specific Research Questions

The specific research questions are;

  1. What is the effect of digital financial services on the performance on MFIs in Buea?

  2. What is the effect of branch networking on the performance on MFIs in Buea?

1.4 Research Objectives

1.4.1 Main Research Objective

The main research objective for the study is to assess the effect of information and communication technologies (ICT) on the performance of microfinance institutions in Buea

1.4.2 Specific Research Objectives

The specific research objectives for the study are;

  1. To investigate the effect of digital financial services on the performance on MFIs in Buea
  2. To assess the effect of branch networking on the performance on MFIs in Buea



Translate »
Scroll to Top