Compliance to Corporate Governance Best Practices by Microfinance Institutions in Uganda

Posted: 13 Feb 2012

Date Written: October 2011

Abstract

In Uganda, the private sector is dominated by Small and Medium commercial banks that have been in the economies since independence in 1962. The need for credit and other financial services to sustain Small and Medium Enterprises (SMEs) has led to a proliferation of MFIs. These institutions have affected the population positively and negatively. They have provided ready financial services to enterprises, but they have also cheated the unsuspecting public by taking deposits and paying the executives excessive amounts and/ or closing off businesses without paying the depositors. These problems may be attributed to lack of corporate governance practices by the MFIs.

The 2003 MDI Act provides an opportunity for promoting Corporate Governance of MFIs in Uganda. However, the Act is not applicable to tier 4 MFIs which dominate the microfinance sector in the country. The practice of good corporate governance remains at the discretion of the leadership and management of the MFIs. Despite this, tier 3 MFIs compete with MFIs in tier 4 for the same clientele. This thesis is based on the notion that, MFIs in Uganda were established to contribute to sustained economic growth and development. In line with the Globalised settings of economies, MFIs are required to comply with corporate governance best practices to achieve sustained economic growth and development.

The objective of the study was to examine the extent to which MFIs comply with corporate governance best practices for sustainable economic growth in Uganda. A cross-sectional case survey research designs for Kampala district were applied. The SPSS was largely used to analyze the data. Presentation of findings is largely by tables and descriptions. Findings depicted that to a large extent, the MFIs and especially non regulated MFIs do not comply with corporate governance best practices. This is largely due to ignorance of corporate governance best practices by the stakeholders.

Suggested Citation

Daniel, Angualia, Compliance to Corporate Governance Best Practices by Microfinance Institutions in Uganda (October 2011). Available at SSRN: https://ssrn.com/abstract=2004243 or http://dx.doi.org/10.2139/ssrn.2004243

Angualia Daniel (Contact Author)

M/s Angualia & Co. Advocates ( email )

P.O.Box 27689
Kampala, 256
Uganda
+256774477656 (Phone)

HOME PAGE: http://www.lawyers-uganda.com

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
1,521
PlumX Metrics