Juliana Siwale

Microfinance: accountability from the grassroots

Purpose – The purpose of this research is to use an accountability framework to explain the emerging tensions in accountability and how an intended bottom-up approach became progressively supplanted. This paper is set within an emerging Zambian microfinance organisation moving into crisis. Design/methodology/approach – A series of semi-structured interviews were conducted with key local microfinance specialists, managers and accountants, clients and past and current loan officers. Live observation of the client-loan officer interface and internal meetings provided triangulation on accountability relationships in the midst of crisis. Data were analysed using NVIVO, a qualitative computer software package. Findings – The findings show that tensions between vertical and horizontal accountability in practice can be directly translated into heightened pressure and stresses on both the non-governmental organisation (NGO) and its loan officers, which constrain overall accountabilities to other stakeholders and disguise other potential dysfunctions. Research limitations/implications – This study focussed on accountability at the grassroots in microfinance NGOs with a social mission. It reveals potential for further personal, community and socially constituted accounting research within microfinance in particular. Originality/value – The paper adds to the literature on NGO accountability. It will be of value to researchers and practitioners seeking to gain a better understanding of not-for-profit organisations whose goals are not primarily wealth creation. It also gives details on under-researched areas in accounting, namely NGOs and poverty reduction, and practices in Sub-Saharan Africa.

Loan officers and loan ‘delinquency’ in Microfinance: A Zambian case

Abstract The paper seeks to promote greater understanding of the importance of loan officers in group-based microfinance by explaining their actual roles, dilemmas and tensions when working with poor clients. Few existing studies have used data outside Bangladesh and most focus upon relatively well-performing institutions. Using data from Zambia this study focuses on the recent crisis of Christian Enterprise Trust of Zambia (CETZAM) and the effects of its practices for accounting for and dealing with defaulters. The findings firstly show that loan officers faced powerful hierarchical accountability pressures and pursued inappropriate methods to compel further repayments to resolve this crisis. Its approach to borrower default was found to be stressful for loan officers and potentially detrimental for CETZAM’s own short and long-term survival by reducing client loyalty and trust.

Disclosing the loan officer’s role in microfinance development

The exclusion of the poor in developing countries requires radical enterprising solutions. Hence, microfinance was originally developed to intermediate through tailored double-bottom line initiatives, which would first supply more appropriate credit and, then other ‘financial services’, in an essentially participatory, ‘bottom-up’ way. This would support local, small-scale economic activity while enhancing well-being and social/gender justice. However, frontline local officers, originally recruited into microfinance institutions to help ‘empower’ the poor towards this end, have in practice been found to adopt unexpectedly different roles. Using original data from Zambia this article examines how this occurred in a frontier field situation. Here loan officers performed multiple, ambiguous and changeable roles while their home institution at first sought to decouple, and then prioritized its own immediate survival over their other founding aspirations. Where they acted more like ‘loan repayment agents’ and ‘debt collectors’ than genuinely participative ‘facilitators’ supporting the poor, further, unintended consequences resulted. Any further decoupling and retreat from committed double-bottom line working could bear heavily upon the further/future development prospects of microfinance.

Accounting for microfinance failure: insights from Zambia

The global trials of mainstream finance have brought calls for the development of human scale alternatives such as microfinance. However, developing country microfinance has itself been taken to task over its collective failings without much evidence about individual grassroots microfinance institution (MFI) failure. So, using an extended case study of PRIDE Zambia (PZ), this paper examines different stakeholder and other accounts about how this once promising MFI frontier failed. It finds that fast track founding and premature expansion based upon indifferent governance, hierarchical mismanagement, and unrecognised frontline problems further compounded by malpractice and corruption were central to PZ’s final failure. Zambia is a difficult frontier for donor-funded MFIs and, when PZ first sought to change its original grassroots character, its survival was so jeopardised that it failed as a result.

Microfinance and Loan Officers’ Work Experiences: Perspectives from Zambia

Abstract This article studies the challenges faced by microfinance institutions in Zambia, whose remit it is to provide financial services to the poor. It focuses on loan officers – the agents of delivery on the ground. With reference to loan officers’ experiences and words, the paper examines how gender and education shape and structure their day-to-day encounters. The study finds that different social spaces – ’the office’ and ‘the field’ – and wider context explains the gendered, culturally complex and multidimensional nature of developmental work at grassroots level. Social expectations emerge as major pressure points more for female loan officers than their male counterparts, making them less suitable for microfinance work, which has traditionally targeted poor women.

Microfinance regulation and social sustainability of microfinance institutions: the case of Nigeria and Zambia

This study examines the effect of regulations on microfinance institutions in Nigeria and Zambia by focusing on the post-regulation experiences and reflections of the microfinance institutions (MFIs) and their regulators. Based on in-depth interviews with the Central Banks as regulators, MFI managers, practitioners and apex microfinance associations, the study finds that regulations in both countries have managed to professionalize the sector, but their effectiveness in augmenting the centrality of social goals to microfinance and MFIs remains doubtful. The poorly designed regulations are not only undermining social goals but also sending wrong signals to would be social investors, with implications for the social image of the industry. The study further finds that regulations have neither speeded the emergence of sustainable MFIs (especially in Zambia) nor accelerated the sectors’ outreach to the poor and the financially excluded. Additionally, considerable levels of political interference and poor regulation have led to unintended consequences to the sector, further frustrating the ultimate goal of extending financial services to the poor. These findings have policy and practical implications for how microfinance engages with the regulatory logic and continues to serve those at the bottom of the pyramid.

Why Did I Not Prepare for This? The Politics of Negotiating Fieldwork Access, Identity, and Methodology in Researching Microfinance Institutions

It has been increasingly recognized that undertaking qualitative research can pose many challenges for researchers. However, scanty literature focuses directly on the experiences of doctoral research students from developing countries studying in Western Europe and other similar geographic regions, and the challenges of doing fieldwork when they return “back home.” In this article, I use my experiences in the process of undertaking PhD fieldwork on two donor-funded microfinance institutions located in Zambia to demonstrate that doctoral students from specific regions (Africa in particular) undertaking research in their native countries can struggle to manage and make sense of the challenges and identity issues raised in their “familiar” environments. I also present a detailed discussion of how various gatekeepers and participants facilitated access, identity alteration, and the impact of insider–outsider positionality on collected data. It is concluded that organizational “politics” and local context can have significant bearing on power relationships, identities of researchers, and methodological preferences.

Microfinance regulation and effective corporate governance in Nigeria and Zambia

Purpose There have been various forms of regulatory intervention by the central banks of countries to streamline microfinance activities and ensure effective corporate governance of microfinance institutions (MFIs). Considering the limited amount of research in this area and the need to ensure regulatory effectiveness, the purpose of this paper is to evaluate the impact of regulatory provisions on the attainment of effective corporate governance in MFIs in Nigeria and Zambia. Design/methodology/approach Interviews were conducted with regulators at the Central Bank of Nigeria and the Bank of Zambia, directors and executive management officers of MFIs and executives of apex associations of MFIs in both countries. Findings The paper presents five significant findings which are that the regulations have enabled negative outcomes in areas such as board composition, the ownership requirements in the regulations have resulted in differing governance implications, the certification requirements for board members are problematic in practice, supervision by regulators is ineffective and has impacts on risk management and the principle of consultation with stakeholders is inadequate in both countries. Practical implications Regulatory provisions must be robust and fit for purpose to ensure the microfinance initiative in emerging economies achieves the objectives of enhancing financial inclusion and economic development of the society. Originality/value The paper addresses an area of limited research and provides empirical findings in relation to regulation and corporate governance in developing economies, which would help to ensure regulatory effectiveness.

Introduction: Overview of the Book

This chapter sets the context of diaspora direct investment (DDI) and establishes a preliminary identification of the actors. It provides a definition of the concepts of DDI and remittances as well as an overview of the African political economy within which the DDI takes place. The chapter poses the questions that are answered in the book, i.e. the question about the socio-economic and cultural rationale for DDI and its possible development impact. This introductory chapter also situates the main perspective of the book and summarises the remaining chapters in terms of their broad coverage and the linkage between them.

Conclusion: Reflecting on African diaspora direct investment

This chapter draws the main coverage of the book together. It brings to light the economic and social opportunities created through diaspora direct investment. The use of social capital and networks by the diaspora create fresh opportunities for African development whose traditional reliance on aid is now being questioned. This chapter recoups the ideas put forward by the various contributors that diaspora direct investment is altruistic and goes beyond the pursuit of economic gain to exemplify deep psychological and cultural attachment to the home land.