Microfinance institutions' risk and governance in Sub-Saharan Africa

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Haileslasie Tadele ◽  
Helen Roberts ◽  
Rosalind Whiting
Keyword(s):  
Financial Risk ◽  
Risk Measures ◽  
Generalized Least Squares ◽  
Sub Saharan Africa ◽  
Microfinance Institutions ◽  
Content Type ◽  
For Profit ◽  
Sub Saharan ◽  
Female Director ◽  
The Impact

PurposeThe purpose of this study is to explore the impact of MFI-level governance on microfinance institutions' (MFIs’) risk in Sub-Saharan Africa (SSA).Design/methodology/approachThe study uses data from a sample of 151 MFIs operating in 21 SSA countries during 2005–2014. The Feasible Generalized Least Squares (FGLS) regression model is applied to investigate the relationship between MFI level governance mechanisms and risk.FindingsThe study provides new evidence that board characteristics have differential effects on for-profit (FP) and not-for-profit (NFP) MFI risk. Board independence reduces credit risk of NFP MFIs. Foreign director presence increases MFI failure risk. Furthermore, greater female director representation reduces (increases) FP (NFP) financial risk whereas female CEOs are associated with higher (lower) FP (NFP) financial risk.Originality/valueThe paper contributes to existing literature on microfinance governance and risk, by exploring the impact of governance on MFI risk based on MFIs profit orientation. In addition, the study uses three different risk measures unlike previous microfinance studies.

Microfinance board and default risk in sub-Saharan Africa

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Haileslasie Tadele
Keyword(s):  
Default Risk ◽  
Generalized Method Of Moments ◽  
Geographical Area ◽  
Sub Saharan Africa ◽  
Future Research ◽  
Board Structure ◽  
Microfinance Institutions ◽  
Content Type ◽  
Sub Saharan ◽  
Female Director

PurposeThis paper examines whether board structure affects microfinance institutions' (MFIs) default risk in sub-Saharan Africa (SSA).Design/methodology/approachThe paper uses a pooled OLS and system generalized method of moments (GMM) model on unbalanced panel data from 214 MFIs in 26 SSA countries over 2005–2016 period. Default risk is measured using non-performing loans (loans overdue 30 and 90 days) and loans written-off ratios. Board size, proportion of independent and female directors are used as proxies for board structure.FindingsThe empirical results indicate that unregulated MFIs with larger and more independent boards tend to have a lower default risk. In addition, unregulated MFIs with a female director tend to lower default risk.Research limitations/implicationsThis research mainly focusses on SSA. Future research may consider a broader geographical area.Practical implicationsPoor loan portfolio quality is one of the major problems of MFIs operating in SSA. The findings of this study will contribute in emphasizing the role of an effective board structure in lowering MFI default risk.Originality/valueThis study is unique in terms of investigating whether board structure impacts default risk based on MFI regulation.

Cross-Border Funding and Microfinance Mission Drift: Evidence from Sub-Saharan Africa

2016 ◽  
Vol 17 (2) ◽  
pp. 20-40
Author(s):  
Akem Forkusam
Keyword(s):  
Sub Saharan Africa ◽  
Microfinance Institutions ◽  
Public And Private ◽  
Mission Drift ◽  
Cross Border ◽  
The Social ◽  
Sub Saharan ◽  
The Impact ◽  
Different Sources ◽  
Ssa Countries

Sub-Saharan Africa (SSA) has become the top priority for international funders and they are now increasing their cross-border funding to microfinance institutions (MFIs) in the region. This foreign funding is considered an additional source of capital for MFIs in the region who are facing difficulties in meeting the demand of the poor. However, these funds are provided by public and private funders who each have different motives. The paper examines the impact of these different sources of funding on microfinance performance and mission drift in SSA, which is the world’s poorest region. The study utilizes data from 212 MFIs in 30 SSA countries accessed over a three-year period (i.e. 2007, 2009, and 2011). The findings show that cross-border funding does not affect either the social or financial performance of MFIs when time and country effects are accounted for.

Quantitative impacts of mandatory integrated reporting

2019 ◽  
Vol 17 (4) ◽  
pp. 604-634 ◽  
Author(s):  
Elaine Conway
Keyword(s):  
Financial Performance ◽  
Financial Risk ◽  
Risk Measures ◽  
Ordinary Least Squares ◽  
Mandatory Reporting ◽  
Stock Exchanges ◽  
Integrated Reporting ◽  
Content Type ◽  
Environmental Goals ◽  
The Impact

Purpose This paper aims to examine the impact of the 2011 mandatory introduction of integrated reporting (<IR>) on the financial performance, risk and institutional shareholding of listed companies in South Africa to assess whether there is a benefit to <IR> and which may encourage greater adoption of it globally. It contrasts the results with two other African stock exchanges (Nigeria and Egypt with no mandatory <IR>) and examines whether <IR> quality also has an impact on these and on environmental, social and governance (ESG) disclosure scores. Design/methodology/approach A series of multivariate ordinary least squares regressions was estimated on a range of financial, risk, institutional and ESG data from firms on the three African stock exchanges, between 2006 and 2015. Findings Financial performance and risk in South African firms appear to have decreased since the start of mandatory reporting, but institutional shareholding has increased. The production of higher quality reports is associated with decreased financial performance and risk, higher institutional shareholding and increased ESG scores. Originality/value This study is first to test the quantitative effects of <IR> and <IR> quality on a broad range of financial performance and risk measures and the level of institutional shareholding. It also adds to the literature by assessing how the quality of <IR> can impact the ESG scoring of the business. Hence, this study is of interest to firms looking to adopt <IR> for its benefits and to regulatory bodies considering the mandatory adoption of <IR> in support of achievement of national social and environmental goals.

“Does the poor matter” in pro-poor driven sub-Saharan African cities? towards progressive and inclusive pro-poor tourism

2019 ◽  
Vol 5 (3) ◽  
pp. 392-411 ◽  
Author(s):  
Regis Musavengane ◽  
Pius Siakwah ◽  
Llewellyn Leonard
Keyword(s):  
Sustainable Development ◽  
Good Governance ◽  
Urban Tourism ◽  
Sub Saharan Africa ◽  
African Countries ◽  
Content Type ◽  
African Cities ◽  
The Poor ◽  
Sub Saharan ◽  
The Impact

Purpose The purpose of this paper is to question the extent to which Sub-Saharan African cities are progressing towards promoting pro-poor economies through pro-poor tourism (PPT). It specifically examines how African cities are resilient towards attaining sustainable urban tourism destinations in light of high urbanization. Design/methodology/approach The methodological framework is interpretive in nature and qualitative in an operational form. It uses meta-synthesis to evaluate the causal relationships observed within Sub-Saharan African pro-poor economies to enhance PPT approaches, using Accra, Ghana, Johannesburg, South Africa, and Harare, Zimbabwe, as case studies. Findings Tourism development in Sub-Saharan Africa has been dominantly underpinned by neoliberal development strategies which threaten the sustainability of tourism in African cities. Research limitations/implications The study is limited to three Sub-Saharan African countries. Further studies may need to be done in other developing countries. Practical implications It argues for good governance through sustainability institutionalization which strengthens the regulative mechanisms, processes and organizational culture. Inclusive tourism approaches that are resilient-centered have the potential to promote urban tourism in Sub-Saharan African cities. These findings contribute to the building of strong and inclusive Institutions for Sustainable Development in the Sub-Saharan African cities to alleviate poverty. Social implications These findings contribute to the building of strong and inclusive institutions for sustainable development in the Sub-Saharan African cities to alleviate poverty. Originality/value The “poor” are always within the communities, and it takes a community to minimise the impact of poverty among the populace. The study is conducted at a pertinent time when most African government’s development policies are pro-poor driven. Though African cities provide opportunities of growth, they are regarded as centres of high inequality.

Innovation, institutions and economic growth in sub-Saharan Africa – an IV estimation of a panel threshold model

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Joseph Ato Forson ◽  
Rosemary Afrakomah Opoku ◽  
Michael Owusu Appiah ◽  
Evans Kyeremeh ◽  
Ibrahim Anyass Ahmed ◽  
...  
Keyword(s):  
Economic Growth ◽  
Developing Economies ◽  
Innovation Policy ◽  
Threshold Model ◽  
Sub Saharan Africa ◽  
Content Type ◽  
Panel Regressions ◽  
Sub Saharan ◽  
The Impact ◽  
The Relationship

PurposeThe significant impact of innovation in stimulating economic growth cannot be overemphasized, more importantly from policy perspective. For this reason, the relationship between innovation and economic growth in developing economies such as the ones in Africa has remained topical. Yet, innovation as a concept is multi-dimensional and cannot be measured by just one single variable. With hindsight of the traditional measures of innovation in literature, we augment it with the number of scientific journals published in the region to enrich this discourse.Design/methodology/approachWe focus on an approach that explores innovation policy qualitatively from various policy documents of selected countries in the region from three policy perspectives (i.e. institutional framework, financing and diffusion and interaction). We further investigate whether innovation as perceived differently is important for economic growth in 25 economies in sub-Saharan Africa over the period 1990–2016. Instrumental variable estimation of a threshold regression is used to capture the contributions of innovation as a multi-dimensional concept on economic growth, while dealing with endogeneity between the regressors and error term.FindingsThe results from both traditional panel regressions and IV panel threshold regressions show a positive relationship between innovation and economic growth, although the impact seems negligible. Institutional quality dampens innovation among low-regime economies, and the relation is persistent regardless of when the focus is on aggregate or decomposed institutional factors. The impact of innovation on economic growth in most regressions is robust to different dimensions of innovation. Yet, the coefficients of the innovation variables in the two regimes are quite dissimilar. While most countries in the region have offered financial support in the form of budgetary allocations to strengthen institutions, barriers to the design and implementation of innovation policies may be responsible for the sluggish contribution of innovation to the growth pattern of the region.Originality/valueSegregating economies of Africa into two distinct regimes based on a threshold of investment in education as a share of GDP in order to understand the relationship between innovation and economic growth is quite novel. This lends credence to the fact that innovation as a multifaceted concept does not take place by chance – it is carefully planned. We have enriched the discourse of innovation and thus helped in deepening understanding on this contentious subject.

Does economic freedom improve health outcomes in sub-Saharan Africa?

2020 ◽  
Vol 47 (12) ◽  
pp. 1633-1649
Author(s):  
Anand Sharma
Keyword(s):  
Mortality Rate ◽  
Life Expectancy ◽  
Health Outcomes ◽  
Economic Freedom ◽  
Sub Saharan Africa ◽  
African Countries ◽  
Content Type ◽  
The World ◽  
Sub Saharan ◽  
The Impact

PurposeThe purpose of this study is to examine the impact of economic freedom on four key health indicators (namely, life expectancy, infant mortality rate, under-five mortality rate and neonatal mortality rate) by using a panel dataset of 34 sub-Saharan African countries from 2005 to 2016.Design/methodology/approachThe study obtains data from the World Development Indicators (WDI) of the World Bank and the Fraser Institute. It uses fixed effects regression to estimate the effect of economic freedom on health outcomes and attempts to resolve the endogeneity problems by using two-stage least squares regression (2SLS).FindingsThe results indicate a favourable impact of economic freedom on health outcomes. That is, higher levels of economic freedom reduce mortality rates and increase life expectancy in sub-Saharan Africa. All areas of economic freedom, except government size, have a significant and positive effect on health outcomes.Research limitations/implicationsThis study analyses the effect of economic freedom on health at a broad level. Country-specific studies at a disaggregated level may provide additional information about the impact of economic freedom on health outcomes. Also, this study does not control for some important variables such as education, income inequality and foreign aid due to data constraints.Practical implicationsThe findings suggest that sub-Saharan African countries should focus on enhancing the quality of economic institutions to improve their health outcomes. This may include policy reforms that support a robust legal system, protect property rights, promote free trade and stabilise the macroeconomic environment. In addition, policies that raise urbanisation, increase immunisation and lower the incidence of HIV are likely to produce a substantial improvement in health outcomes.Originality/valueExtant economic freedom-health literature does not focus on endogeneity problems. This study uses instrumental variables regression to deal with endogeneity. Also, this is one of the first attempts to empirically investigate the relationship between economic freedom and health in the case of sub-Saharan Africa.

Microfinance accessibility, social cohesion and survival of women MSMEs in post-war communities in sub-Saharan Africa: Lessons from Northern Uganda

2020 ◽  
Vol 27 (5) ◽  
pp. 749-774
Author(s):  
George Okello Candiya Bongomin ◽  
Atsede Woldie ◽  
Aziz Wakibi
Keyword(s):  
Developing Countries ◽  
Social Cohesion ◽  
Social Protection ◽  
Sub Saharan Africa ◽  
Northern Uganda ◽  
Microfinance Institutions ◽  
Content Type ◽  
Sub Saharan ◽  
Post War

PurposeGlobally, women have been recognized as key contributors toward livelihood and poverty eradication, especially in developing countries in sub-Saharan Africa. This is due to their great involvement and participation in micro small and medium enterprises (MSMEs) that create employment and ultimately economic growth and development. Thus, the main purpose of this study is to establish the mediating role of social cohesion in the relationship between microfinance accessibility and survival of women MSMEs in post-war communities in sub-Saharan Africa, especially in Northern Uganda where physical collateral were destroyed by war.Design/methodology/approachThe data for this study were collected using a pre-tested semi-structured questionnaire from 395 women MSMEs who are clients of microfinance institutions in post-war communities in Northern Uganda, which suffered from the 20 years' Lord Resistance Army (LRA) insurgency. The Analysis of Moment Structures (AMOS) software was used to analyze the data and the measurement and structural equation models were constructed to test for the mediating role of social cohesion in the relationship between microfinance accessibility and survival of women MSMEs in post-war communities.FindingsThe results revealed that social cohesion significantly and positively mediate the relationship between microfinance accessibility and survival of women MSMEs in post-war communities in Northern Uganda. The results suggest that the presence of social cohesion as a social collateral promotes microfinance accessibility by 14.6% to boost survival of women MSMEs in post-war communities where physical collateral were destroyed by war amidst lack of property rights among women. Similarly, the results indicated that social cohesion has a significant influence on survival of women MSMEs in post-war communities in Northern Uganda. Moreover, when combined together, the effect of microfinance accessibility and social cohesion exhibit greater contribution towards survival of women MSMEs in post-war communities in Northern Uganda. Indeed, social cohesion provides the social safety net (social protection) through which women can access business loans from microfinance institutions for survival and growth of their businesses.Research limitations/implicationsThis study concentrated mainly on women MSMEs located in post-war communities in developing countries in sub-Saharan Africa with a specific focus on Northern Uganda. Women MSMEs located in other regions in Uganda were not sampled in this study. Besides, the study focused only on the microfinance industry as a major source of business finance. It ignored the other financial institutions like commercial banks that equally provide access to financial services to micro-entrepreneurs.Practical implicationsThe governments in developing countries, especially in sub-Saharan Africa where there have been wars should waive-off the registration and licensing fees for grass-root associations because such social associations may act as social protection tools through which women can borrow from financial institutions like the microfinance institutions. The social groups can provide social collateral to women to replace physical collateral required by microfinance institutions in lending. Similarly, the governments, development agencies, and advocates of post-war reconstruction programs in developing countries where there have been wars, especially in sub-Saharan Africa should initiate the provision of group business loans through the existing social women associations. This may offer social protection in terms of social collateral in the absence of physical collateral required by the microfinance institutions in lending. This may be achieved through partnership with the existing microfinance institutions operating in rural areas in post-war communities in developing countries. Additionally, advocates of post-war recovery programs should work with the existing microfinance institutions to design financial products that suit the economic conditions and situations of the women MSMEs in post-war communities. The financial products should meet the business needs of the women MSMEs taking into consideration their ability to fulfil the terms and conditions of use.Originality/valueThis study revisits the role of microfinance accessibility in stimulating survival of women MSMEs as an engine for economic growth in the presence of social cohesion, especially in post-war communities in sub-Saharan Africa where physical collateral were destroyed by war. It reveals the significant role of social cohesion as a social protection tool and safety net, which contributes to economic outcomes in the absence of physical collateral and property rights among women MSMEs borrowers, especially in post-war communities.

El Nino spells multiple humanitarian crises for Africa

2015 ◽  
Keyword(s):  
El Niño ◽  
El Nino ◽  
Commodity Prices ◽  
Sub Saharan Africa ◽  
Weather System ◽  
Content Type ◽  
Humanitarian Crises ◽  
Cocoa Production ◽  
Sub Saharan ◽  
The Impact

Subject Outlook for El Nino in sub-Saharan Africa. Significance The current El Nino weather system, one of the three strongest since 1950, is causing drought in some areas and flooding in others. Past instances have resulted in significant drops in agricultural production, livestock deaths, infrastructure damage and lost income. Together with likely higher incidence of disease, similar effects could trigger humanitarian crises across sub-Saharan Africa (SSA). Impacts Poor sanitation infrastructure in many major SSA cities will facilitate the spread of water-borne diseases such as cholera. In Southern Africa, strong institutions overseeing intra-regional water sharing will limit prospects for diplomatic disputes over water. Unusual rain and wind patterns in West Africa could curb cocoa production, creating shortages that will push up global prices. Likely lower agricultural output across SSA will compound the impact of low commodity prices on cooling GDP growth.

Impact of globalization on human rights: evidence from Sub-Saharan Africa

2020 ◽  
Vol 47 (12) ◽  
pp. 1453-1480
Author(s):  
Aman Takiyar ◽  
N.V.M. Rao
Keyword(s):  
Human Rights ◽  
Positive Impact ◽  
Social Dimension ◽  
Sub Saharan Africa ◽  
Political Dimension ◽  
Economic Dimension ◽  
Content Type ◽  
Multiple Dimensions ◽  
Sub Saharan ◽  
The Impact

PurposeThe purpose of this study is to examine the impact of globalization and its multiple dimensions on human rights in Sub-Saharan Africa.Design/methodology/approachThe study extends the Poe and Tate (1994) model, which enumerates the various determinants of human rights. Ordered probit estimation is used to estimate the impact of globalization and its dimensions. For the purpose of empirical analysis, the period has been divided into three phases: short, medium and long term. This helps in understanding how the impact of the different dimensions of globalization has evolved over a period of time. Furthermore, analysis has been carried out to detect causality between human rights and globalization.FindingsAs per the results, overall globalization and social dimension of globalization do have a positive impact on human rights in long and medium term and, also, Granger-cause human rights. The political dimension of globalization has a positive relation with human rights, though there exists no causality between the two. On the other hand, the economic dimension of globalization fails to have a statistically significant impact on human rights. Impact of the social dimension of globalization dominates that of other dimensions of globalization.Originality/valueThis is one of the few studies that examine, in an empirical fashion, the impact of globalization on human rights in Sub-Saharan Africa.

Shifting Maghreb migration may prompt EU cooperation

2017 ◽  
Keyword(s):  
Sub Saharan Africa ◽  
North African ◽  
Content Type ◽  
Migrant Populations ◽  
Bilateral Relations ◽  
Sub Saharan ◽  
Alternative Routes ◽  
The Impact ◽  
Difficult Transition ◽  
The Eu

Subject Migration impact on Maghreb. Significance Morocco hosted a summit on African migration on October 31, calling for a common African stance to the growing migration challenge. EU incentives to Libya and Sahelian governments have decreased migrant crossings from Libya, which has been the primary channel for sea crossings. As a result, more migrants are using alternative routes in Morocco, Algeria and Tunisia and staying longer in those countries. Shifting migration trends are forcing North African governments to think about the impact of growing sub-Saharan migrant populations within their borders. Impacts Sub-Saharan migrants could become lightning rods for governments in North Africa struggling with high unemployment and low economic growth. North African policies towards migrant populations will affect bilateral relations with governments in sub-Saharan Africa (SSA). The EU may need to pay more attention to Tunisia, which is grappling with economic problems and a difficult transition.

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