The impact of training and monitoring on loan repayment of microfinance debtors in Ghana

Microbusiness entrepreneurs training and monitoring programmes are widely recognized as key to loan repayment performance of microfinance institution (MFI) loan clients in developing countries. Empirical evidence is, however, largely lacking and where present, not consistent. The present paper introduces objective data on loan repayments and examines whether loan client training and monitoring improve loan repayment rates. We conducted a two-step longitudinal survey. We collected baseline data on 229 uniCredit Ghana Limited MFI loan client files. One and half years later, after having introduced training and monitoring interventions, follow-up data on the same loan clients were collected. Results showed that training interventions fail to improve loan repayment rates. Strikingly, client monitoring does improve repayment rates, irrespective of the clients' educational level, business experience or gender. These results suggest that MFI's may significantly improve repayment rates should they consistently monitor their loan clients.