Effective governance for microfinance institutions

The process of establishing micro-finance as a new industry mirrors the emergence of any entrepreneurial industry. The infant micro-finance industry has achieved a degree of success, and now it must institutionalize that success. This raises challenges that are common to all small businesses as they expand: issues of power, control, and transparency, as well as problems of cash flow, a perceived lack of legitimacy, and a short track record. A closer examination of governance includes an outline of the roles of the board members, board composition, and an explanation of important issues of trust and conflicts of interests. This paper explores governance in the particular case of micro-finance.