A REVIEW ON CORPORATE GOVERNANCE IN ETHIOPIAN MFIs: LEARNING FROM EAST AFRICAN COUNTRIES

Abstract

The purpose of this study is to review the Corporate Governance general practices in the Ethiopian MFIs, identify the gaps and based on experiences from selected East African countries and offer suggestions for improving the performance of the corporate governance for various stakeholders that include Regulators, Networks, etc.. Among various research designing methods, this study used the descriptive research designing method. Interviews were conducted through questionnaires to Chief Executive Officers, micro finance departments at the National Bank of Ethiopia & Development Bank of Ethiopia and the Association of Ethiopian Micro Finance Institutions. Both the qualitative and the quantitative approaches were used to study the critical issues of Corporate Governance in MFIs. The results of the study show that Corporate Governance in the Ethiopian MFIs has gaps that need to be addressed to strengthen the MF Sector. Board members are not well skilled, not educated as expected, and not exposed to the international experiences. In addition, the participation of women and youth professionals is very limited. Ethiopian MFIs lack application of technologies/innovations, skilled and educated human capital, and infrastructures. Moreover, there is political interference on the MFI sector. These all helps to conclude that the governance of MFIs in Ethiopia has influences on the growth of the sector as compare to other East African countries. Therefore, regulators, owners of MFIs and other stakeholders’ of MFIs are suggested to take appropriate measures in creating infrastructures, good working environment and enhancing capacity of board members in order to have appropriate measures on Corporate Governance for MFIs in Ethiopia thus facilitating enhancing microfinance sector in Ethiopia.