TECHNOLOGICAL INNOVATIONS IN MICROFINANCE INSTITUTIONS IN THE THREE NORTHERN REGIONS OF GHANA

Abstract

Microfinance institutions (MFIs) in the three northern regions of Ghana continue to find ways of meeting the aspirations of the poor. One way they try to achieve this goal is by adopting technological innovations. This paper explored technological innovations in a sample of 41 MFIs drawn from the three northern regions of Ghana. Chi-square test was used to test the relationship between characteristics of MFIs and the adoption of technological innovations. The Spearman’s rho was used for robustness checks. The findings revealed that computer based technology is the most widely adopted technology followed by telephone, counting machine, internet, satellite, fax machine, and ATM in that order. The study found the adoption of these technological innovations to be significantly related to factors such as board size, number of males in board, board tenure, frequency of board meeting, size of workforce, number of employees with tertiary education, investment in R&D, number of branches or outlets, and sources of funding. According to the MFIs, government policy, competition, regulatory and legal environment, infrastructure and firm specific factors such as client exit rate, human resource capacity and distributional challenges affect their innovative behaviour. A key recommendation flowing out of the study is that, much as the adoption of technological innovation is good, it must be done with caution. A thorough risk assessment must be conducted by MFIs prior to the introduction of any new technology.