CRITICAL ANALYSIS OF THE PERFORMANCE OF MICROFINANCE BANK; A CASE STUDY OF UMUCHINEMERE PROCREDIT MICROFINANCE BANK

CRITICAL ANALYSIS OF THE PERFORMANCE OF MICROFINANCE BANK; A CASE STUDY OF UMUCHINEMERE PROCREDIT MICROFINANCE BANK

ABSTRACT

The goal of this research work is to carry out a critical analysis of the performance of microfinance bank in terms of meeting its objective on financial sustainability and economic empowerment. Umuchinemere Procredit Microfinance Bank one of the vibrant private owned micro-finance bank in operation in the eastern part of our country Nigeria, was therefore selected as case study of this research. The rationale behind the research work was the paucity situation of credit facilities available to the poor class of the society and effort of the government to remedy the issue by formulating policies that promotes participation of private stakeholders in economic empowerment through financial intermediation targeted to the poor economic unit. The problem the research is about to solve therefore, is to analyze the performance of the microfinance bank which is a 100% private initiative, in the area of financial sustainability and economic empowerment. Suggestion from previous authors in the area of study was review for recommendation and solution on how to run an efficient and profitable funding unit by applying some of the principles as follows; corporate governance, financial sustainability, welfare impact, outreach to the poor e.t.c. considering the nature of study, the research design used was a case study of Umuchinere Procredit Microfinance Bank (UPMFB). Data was collected from a secondary source of published financial statement for a period that covered the trend of 10 years. The data was presented in tabular and graphical form. The tool for analysis was CAMEL rating and financial ratio. After critical analysis, the findings made was that the bank has strength in capital and liquidity base but with very poor earnings, poor asset quality, low or no capital growth and vulnerability of the bank asset to unsecured loan. The researcher came up with the recommendations that the government should provide special deposit insurance scheme to cushion the high risk vulnerability associated with the peculiar nature of microfinance bank. The microfinance bank should embark on risk management policy review, periodic staff training to enhance professionalism and efficiency, reaching out to untapped viable sources of the economy with the excess resources (deposits) available to it.