Abstract:
The contributions of Micro-Finance Institutions (MFIs) to the Ghanaian economy can never be
overemphasised. However, most of these institutions are faced with various challenges including
non-payment of loans which constantly affect their operations and subsequently survival. As such,
the study hinged on determining the non-performing loan (NPL) situations of Micro-Finance
Institutions (MFIs) in Ghana focusing on four firms within the Kasoa metropolis, Central Region. The
principal objective of the study was to determine the non-performing loan situations of 4 MFIs. The
study adopted the both quantitative and qualitative approach and obtained a sample from 10 MFIs
using the convenient (haphazard) sampling technique. The respondents comprised a branch
manager, an executive director and two credit managers from each MFI. The data gathered were
analysed using descriptive tools such as frequency table, bar charts and pie chart. The data was
also analysed using narrations. Primary data collection instruments, specifically questionnaires were
employed to gather data from the respondents. The study revealed the categories of loans existing
in MFIs as well as those usually applied for, the factors accounting for non-performing loans, management of non-performing loans, sources of incomes and profits, impact of NPL on firms’
operations. The study concluded that NPLs is a challenge for MFIs especially those in Kasoa
metropolis. Recommendations made were that, The MFIs should make conscious efforts to pursue
the implementation of the existing safeguards as it will help address the NPL situation, Clients
granted loans should be monitored to ensure that loans are used for intended purposes, Training
programs should be organised to adequately equip staff that engage in granting and recovery of
loans, There should be good client profiling to identify the economic conditions of clients, this will aid
the charging of appropriate interest rate that will enhance loan repayment.
