Exploring Innovations in Microfinance Institutions in Northern Ghana

Abstract

This paper explored innovations offered by microfinance institutions (MFIs) operating in the three northern regions of Ghana. A sample of 41 MFIs comprising savings and loans companies, credit unions, and rural banks were surveyed. Data were analysed using descriptive statistics and analysis of variance (ANOVA). The study found that MFIs in the three northern regions have introduced a wide range of innovations in the past 3 years. These innovations that have been employed at varying degrees include product innovation (savings, and loans), marketing innovations, microinsurance, location innovation, and R&D innovation. On the basis of the introduction of new loan products in the past 3 years, 4.9%, 39%, 36.6%, and 19.5% of MFIs were found to be potential innovators, slow innovators, moderate innovators and high innovators respectively. The study established significant relationship between company characteristics such as frequency of board meetings, educational profile of staff, ownership structure, number of branches/outlets, years of operation, company location, and some indicators of innovation. The adoption rate of microinsurance is found to be very low (14.6%) among MFIs. Due to the fact that innovations come with risks, MFIs are admonished to perform risk analysis before implementing innovations. This will enable them develop effective mechanisms to address potential risks associated with the introduction of innovations.