Pursuing Better Microfinance Governance in South Sudan

> Posted by Alison Slack, Associate, CFI

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As CEO of the South Sudan Microfinance Development Facility, Elijah Chol is tasked with helping develop the financial inclusion sector in his fledgling country. Elijah is a member of the inaugural class of the Africa Board Fellowship (ABF) program, who begin their six-month fellowship in June in Cape Town, South Africa. We recently sat down with Elijah to learn more about his work in microfinance, and the governance challenges he faces.

South Sudan is a country striving to emerge from decades of crises on many fronts. “Post-conflict countries like ours have unique problems,” says Elijah. “One of the most pressing issues for us is that of education, especially in the villages and rural areas.” Because the education situation is so desperate, it is difficult to find board members with the skills necessary to effectively guide institutions.

Whether it is a post-conflict country like South Sudan or a post-disaster country like Nepal, there are special considerations that a board must be aware of when navigating these uniquely challenging environments. As the European Microfinance Platform notes in their announcement of the 6th European Microfinance Award, which recognizes microfinance in post-disaster areas, post-conflict areas, and fragile states, “Microfinance is difficult to do well even in stable markets, and is even harder in the aftermath of disaster or as a region transitions from civil conflict into a fragile peace.”

For MFIs in a country like South Sudan, to achieve effective governance and realize institutional goals, knowledge sharing can be especially valuable. Networking is an important part of managing a successful financial institution, Elijah notes. “ABF is a good opportunity to connect with and learn from the best, from those who run institutions and can provide expertise.” Convening governance stakeholders – the CEOs and board members – to share information and experiences, and map out issues like risk management and understanding disruptive technologies will be crucial for learning, Elijah indicates. “I want to hear what peers have to say and to compare issues to see if ours are different or if there are other institutions dealing with similar challenges.”

What are the pressing governance challenges Elijah faces in his work?

Two standout areas are strengthening institutions at the top level, and devising policies and strategies both for the short term and the long term. Elijah shares, “It seems that after staff are hired to help run institutions, boards ‘relax’ and are less likely to follow through and take ownership of their role for the strategy and growth of the institution. Often, there is not enough direction provided by the boards.”

At the same time, another area of concern that Elijah finds in some institutions is micro-management. He noted that sometimes the roles of board members can be blurred, and members can get too caught up in the details of running the institution, inhibiting the following of procedures. “It can be a tricky situation finding a balance for the roles of the board members, and if it is not dealt with, it is setting up the institution for failure.”

The skill set of the board, both individually and as a group, is an issue Elijah hopes to discuss with his peer fellows. “There needs to be a variety in the background of board members and the skills they bring to the institution. This is important for the growth of the institution. We need diversity.”

Finally, Elijah would like to develop a clearer understanding of the big picture for his institution. Although it is critical for managers of microfinance institutions to address the issues surrounding governance and good practices, he would like to make sure that the larger goals of service to their clients and the growth of the industry are not forgotten. “We spend so much time dealing with issues around governance, and I would like for this eventually to be less of an issue so that we can focus on other things. If we can be relieved of some of the focus on governance, we can have more time and money to invest in areas like improved products and services.”

Have you read?

Some Good News from Sudan – On Financial Literacy

The State of Mobile Financial Services: An Interview with GSMA’s Jennifer Frydrych

Set to Grow in 2015: Islamic Microfinance