Risk management framework for microfinance institutions in Ethiopia: a methodological triangulation approach

Abstract

The primary challenge of microfinance is that it offers unsecured financial services, primarily in order to assist low-income households. In the twenty-first century, the focus on expansion and outreach by microfinance institutions has been accompanied by crises and failures, mainly due to risk. Risk management is therefore a crucial concern for microfinance institutions. Currently, only a limited number of studies have been done on risk management in Ethiopia, the majority of which are master's theses that focus primarily on selected microfinance institutions and operational-level risk categories. Too far, few or no studies have explored the function of risk management foundations in risk management framework. By using a methodological triangulation approach, this study examines the risk management strategies and frameworks of Ethiopian microfinance institutions. Using a sequential explanatory mixed methods research design, 610 respondents from 20 microfinance institutions and 15 interviewees who are senior officials and experts in the microfinance industry were surveyed. Structural equation modelling (SEM) with AMOS version 23 and SPSS Statistics 26 were employed as the analytical models. AMOS was used for confirmatory factor analysis and path analysis, while SPSS was used for descriptive analysis and exploratory factor analysis. Confirmatory factor analysis was utilised to assess the reliability and validity of the conceptual model; SEM, in conjunction with multi-group analysis, was used to test the model’s hypotheses. All variables, including risk culture, board effectiveness, internal controls, and internal audit, have a positive and significant effect on risk management performance. In addition, the study uncovered the moderating effect of microfinance institution ownership structure on the connection between exogenous dimensions (risk culture, board effectiveness, internal control, and internal audit) and endogenous dimensions (risk management performance). The result demonstrated that ownership structure has a moderating effect on the association between exogenous constructs (risk culture and board) and endogenous construct (risk management performance). The study further uncovered a significant indirect effect of internal audit on risk management performance through the partial mediation of internal control The findings suggest that foundational aspects like risk culture, board effectiveness, internal control, and internal audit are crucial to consider in MFI’s risk management. The study contributes to existing literature by providing empirical data on the model under consideration, as well as providing a number of significant theoretical and practical implications of the research.

Kgwetlho e kgolo ya ditirelopotlana tsa ditšhelete e mo go thuseng malapa a a nang le lotseno le le kwa tlase ka go a neela ditirelo tse di se nang tshireletsotlotlo tsa ditšhelete. Mo seemong seno, ntlha ya taolo ya matshosetsi e tswelela go nna maleba thata. Fa e sale go tloga ka tshimologo ya ngwagakgolo ono, kgolo le tlamelo ya ditirelo tsa ditheo tsa ditirelopotlana tsa ditšhelete (di-MFI) di tsamaya mmogo le mathata le go palelwa go go amanang le matshosetsi, mme seno se dira gore taolo ya matshosetsi e nne botlhokwa thata mo ditheong tseno. Go dirilwe dithutopatlisiso di le mmalwa fela ka ga taolo ya matshosetsi kwa Ethiopia, ntle le ditlhotlhomiso di le mmalwa tsa maemothuto a mmasetase tse go le gantsi di tsepamisang mo ditheong tse di rileng tsa ditirelopotlana tsa ditšhelete le mo ditlhopheng tsa matshosetsi a a mo maemong a tiriso le tiragatso. Ke dithutopatlisiso di le mmalwa kgotsa ga go na dithutopatlisiso dipe tse di ikaegileng ka maitemogelo a mmatota tse di batlisitseng tiro ya metheo ya taolo ya matshosetsi e e mo teng ga letlhomeso la taolo ya matshosetsi. Thutopatlisiso eno e lekotse mekgwatiriso ya taolo ya matshosetsi le matlhomeso a di-MFI tsa Ethiopia, go dirisiwa mekgwa e mentsi ya go bapisa tshedimosetso e e kgobokanngwang le go sekasekiwa ka go dirisa netefatso ya tshedimosetso e e dirwang ka go bapisa metswedi ya yone. Ka ntlha ya seo, baikarabedi ba le 610 go tswa mo ba le 20 le batlhankedi-bagolwane ba le 15 le baitseanape ba MFI ba boditswe dipotso go dirisiwa mokgwa o go dirisiwang dikgato tse di latelanang go kgobokanya le go sekaseka tshedimosetso. Mo dikaong tsa tshekatsheko tse di dirisitsweng, go akareditswe Sekao sa Tshekatsheko ya Kamano fa gare ga Ditlhotlhomisiwa (SEM), ka tiriso ya AMOS v. 23 mo tshekatshekong ya tlhomamiso ya nepagalo ya dikamano (CFA) le tshekatsheko ya tlhotlheletsano ya ditlhotlhomisiwa mo kamanong ya tsone, fa go dirisitswe SPSS v. 26 mo tshekatshekong e e fokotsang tshedimosetso e e tlhalosang le e e batlisisang sengwe se se rileng gore e tlhaloganyesege. Go dirisitswe CFA go tlhatlhoba boikanyego le nepagalo ya sekao se se ka ga kgopolo nngwe, fa go dirisitswe SEM le tshekatsheko ya ditlhophantsi go dira teko ya ditshitsinyo tsa sekao. Go fitlhetswe gore tiro ya taolo ya matshosetsi e amiwa ka tsela e e siameng le ya botlhokwa ke dikarolwana tsotlhe, go akaretsa megopolo le maitshwaro a a matshosetsi, boto ya MFI, taolo ya yone ya ka fa gare le boruni jwa ka fa gare. Mo godimo ga moo, go fitlhetswe fa thulaganyo ya go nna mong wa MFI e sekaseka kamano fa gare ga dikakanyo tse di ikaegileng ka mabaka a kwa ntle (megopolo le maitshwaro a a matshosetsi, boto, taolo ya ka fa gare le boruni jwa ka fa gare) le kakanyo ya ka fa gare (tiro ya taolo ya matshosetsi). Tshekatsheko ya kamano e senotse gore thulaganyo ya go nna mong e sekasekile fela kamano fa gare ga dikakanyo tse di ikaegileng ka mabaka a kwa ntle tsa megopolo le maitshwaro a a kotsi le boto, le kakanyo ya ka fa gare ya tiro ya taolo ya matshosetsi. Diphitlhelelo tseno di supa gore go botlhokwa go akanyetsa dikarolwana tsa motheo tse di jaaka megopolo le maitshwaro a a matshosetsi, boto, taolo ya ka fa gare le boruni jwa ka fa gare fa go dirwa taolo ya matshosetsi a MFI. Tiro e na le seabe mo tshedimosetsong le kitso e e maleba mo porofešeneng e e rileng ka go neela deitha ya mmatota ka ga sekao se se tlhatlhobiwang, mo godimo ga go lemoga ditlamorago di le mmalwa tsa botlhokwa tsa tiori le tiragatso.

Inselela enkulu yezezimali ezincane isekusizeni amakhaya ahola kancane ngokuhlinzeka ngezinsizakalo zezezimali ezingavikelekile. Kulo mongo, udaba lokulawulwa kobungozi luya ngokuya lubaluleka. Kusukela ekuqaleni kwaleli khulunyaka, ukwanda kanye nokufinyelela ezikhungweni zezimali ezincane (ama- MFIs) kuhambisane nezinkinga ezihambisana nobungozi kanye nokwehluleka, okunikeza ukulawulwa kobungozi kubaluleke kakhulu kulezi zinkampani. Kuye kwenziwa ucwaningo olulinganiselwe ekulawuleni ubungozi e-Ethiopia, ngaphandle kwemibhalo yeziqu zobumpetha ezimbalwa ezigxile kakhulu ezinkampanini ezincane zezimali ezikhethiwe kanye nezigaba zobungozi ezisezingeni lokusebenza. Zimbalwa noma azikho izifundo ezicwaningayo eziphenye umsebenzi wezisekelo zokulawula ubungozi ngaphakathi kohlaka lokulawula ubungozi. Lolu cwaningo luhlole amasu okulawula ubungozi kanye nezinhlaka ze-Ethiopian MFIs, kusetshenziswa izindlela ezingunxantathu. Ukuze kufezeke lokho, abaphenduli abangu-610 bezikhulu eziphezulu ezingu-20 kanye ne-15 kanye nochwepheshe be-MFI babuzwa imibuzo kusetshenziswa indlela yokulandelana exubile. Izifanekiso zokuhlaziya zisetshenzisiwe, zihlanganisa Isifanekiso Sokuhlola Okuguquguqukayo Okuningi (SEM), kanti i-AMOS v. 23 isetshenziselwa ukuhlaziywa kwesici sokuqinisekisa (i- CFA) nokuhlaziywa kwendlela, kuyilapho i-SPSS v. 26 isetshenziselwa ukuhlaziywa kwezinto ezichazayo nezihlolayo. I-CFA yaqashwa ukuze ihlole ukwethembeka nokuba semthethweni kwesifanekiso somqondo, kuyilapho i-SEM nokuhlaziywa kwamaqembu amaningi kwasetshenziselwa ukuhlola okucatshangwayo kwesifanekiso. Ukusebenza kokulawulwa kobungozi kutholwe kukuhle futhi kuthinteke kakhulu kuzo zonke izici, okubandakanya isiko lobungozi, ibhodi le-MFI, ukulawula kwayo kwangaphakathi kanye nocwaningomabhuku lwangaphakathi. Ukwengeza, isakhiwo sobunikazi be- MFI sitholakale silinganisa ubudlelwano phakathi kobukhulu bangaphandle (isiko lengozi, ibhodi, ukulawula kwangaphakathi kanye nocwaningomabhuku lwangaphakathi) kanye nokwakhiwa okungapheli (ukusebenza kokulawulwa kobungozi). Ukuhlaziywa kokulinganisela kuveze ukuthi ukwakheka kobunikazi kwengamele kuphela ubudlelwano phakathi kokwakhiwa kwangaphandle kwesiko lengozi kanye nebhodi, kanye nokwakhiwa okungapheli kokusebenza kokulawulwa kobungozi. Lokhu okutholakele kukhombisa ukuthi izingxenye eziyisisekelo ezifana nesiko lobungozi, ibhodi, ukulawulwa kwangaphakathi kanye nocwaningomabhuku lwangaphakathi kubalulekile ukuthi kubhekwe lapho kwenziwa ukulawulwa kobungozi kwe-MFI. Umsebenzi unikela endikimbeni yolwazi ngokunikeza imininingwane yangempela yesifanekiso ngaphansi kokuhlolwa, ngaphezu kokuhlonza inani lemiphumela ebalulekile yombono nengokoqobo.