Effective Governance for Microfinance Institutions

Topic :

This brief paper reviews nature of governance and how ownership affects governance. It identifies the key challenges of governance to be:

  • How does the business preserve its vision?
  • How does it balance growth, risk and profitability?
  • How does it establish a governance system that holds management accountable without undermining its independence and flexibility?


The basic responsibilities of a board are reviewed and what composition is appropriate. The governance procedures and actions of the board members have to be such that they create accountability and enable stakeholders to trust one another.

The focus note concludes with an examination of governance in the microfinance industry, which it concedes raises more questions than answers.

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