ABSTRACT

The study sought to assess the investment practices of category one microfinance institutions in Buea municipality, two research objectives was formulated to guide and direct this study. Specific objective investigated the purchase of fixed assets and the purchase of securities by category one microfinance institutions in buea municipality. Descriptive and inferential research design was used for this study. The primary data was obtained using questionnaires and it was analyzed using descriptive and inferential statistics. Analyses was don using a frequency table, means and standard deviation. The findings from this study revealed that investment practices influence growth of category one microfinance institutions in buea municipality. Among the investment practices on purchase of fixed asset and risks has a significant influence on the growth while the other variables do not. This information can help policy makers, regulators and microfinance practitioners on ways to enhance their investment capability.

Keywords: microfinance institutions, investment practices, category one, buea municipality, growth, sustainable development.

CHAPTER ONE

GENERAL INTRODUCTION

1.1 ORGANISATION OF THE STUDY

This research comprises of five chapter followed by a reference section, at the end an appendix section has been included for further information on some specific issues. A brief outline of the study. Chapter one is providing a general introduction 0rganisation of the study and a background study problem statement objectives, research question significance of the study, scope of the study definition of term. Chapter two is centered on the literature reviews that is conceptual review, theoretical framework and empirical review. Chapter three talk on the research methodology it describes the research designs analytical, data collection methods, sampling technique, ethical consideration approach and validity of the research. Chapter four will constitute of thee presentation and analysis of data implication of the result limitation of the research. Chapter five will constitute the summary of findings conclusion recommendation and suggestion for future research. Lastly we have the references , list of work cited , appendices, research instrument and supplementary data.

1.2 BACKGROUND OF THE STUDY.

The major objective of microfinance institution (MFIs) is to provide the low income earners in the society with access to financial services as well as opportunity  for them to build their financial capacity and skills to raise financial self- reliance (Kasangaki , 2018)

The issue of poverty especially in developing counties has always been a call for concern in both local and world agendas to fight again Cankerworm Muhamed Yunus introduced the Grameen Bank model of Bangladesh in 1998 to improve access to financial services for the relatively poor in the society. The Grameen bank of five people to provide mutual morally binding groups guarantees instead of the collateral request by conventional banks. Gb successfully reversed conventional banking practices by eliminating collateral requirement and development a banking system based in mutual trust accountability participation and creativity (Yunus 1983).

The declaration of the year 2005 as microfinance by united nations and the award of peace noble prize in 2006 to Dr muhamed yunus and Grameen bank jointly further accelerated the speed of microfinance as a belief magical solution of poverty across the country(Armendariz &Morduch,2010) .

MFIs also plays a very important role in  the economy more precisely MFIs  have two fold mission which is social  and economies by helping the customers to have active financial lives intermediate a large  part of their income on the day to day needs (Bernd 2007).

Microfinance refers to the provision of financial services including micro insurance, micro savings to the poor and near poor household on a wider scale and permanent basis (Christen, Rosenberg, & Jayadeva, 2004). The idea of microfinance was materialized as a decent substitute

for formal credit. It was believed that as one of the strongest element to be used against the absolute level of poverty and for the generation of self employment (Shirazi, 2012).

However the instrument can help skillful and active poor who have energy to work but lacking economic resources to  realize their intentions(Sharazi 2012) the success behind the microfinance programs reveal the broader coverage of financial services like the provision of loans, deposit and insurance to the poor who can help the skillful and avtive poor on a high scale .

Microfinance is not a new phenomenon as it is widely portrayed. It can be traced back as far back in the 18^th century, when jonathan swift established the irish fund loan system with the aim of providing loans to poor farmers who had no collecteral and where unable to get loan (Armendariz et al 2010). According to Armendariz et al(2010), through this irish fund system 20% of irish households and farmers were able to get loans. This was followed by friedrich Wilhelm Raiffeisen in the mid 19^th century, who developed the financial cooperative in Germany and which later spread to the rest of Europe (Esmail, 2008)

Even though microfinance started earlier  in other countries around the world it started in Cameroon in September 1963 with the st Anthony discussion group( Long 2009) this idea was introduced in Njinikom in the north west province known as the north west region of Cameroon by a certain Rev father Anthony jansen, a roman catholic priest from Holland initially 16 members of this discussion group started with some small contributions that amounted to FCFA 2100(Long 2009).However it was not until the late 1980 as a result of the commercial banking sector in Cameroon experiencing a serious crises with major banks becoming illiquid and insolvent that microfinance institutions have gained grounds. Ever since the microfinance market and the number of MFIs in Cameroon have been increasing today , there are over 850 registered MFIs in Cameroon.The MFIs which exist in different category includes category 1  microfinance institution , category 2 microfinance institutions and category 3 microfinance institutions that provide basic microfinance institutions is to fight against poverty , reason why their services are open to even the grassroots people considered to be poor.

Category 1 microfinance institutions are institutions that providing lending and saving facilities only to its members excluding third parties . Cat 1 MFIs in Cameroon are  made up of cooperatives, credit unions and associations, there is no specific capital for category 1 institutions, instead COBAC text required the capital to be sufficient to cover and meet up with specific sensitivity role.

Therefor this research seeks to critically assess the investment practices carried out by this category one microfinance institutions in Buea municipality and how this practice affects their financial performance and sustainability

1.3 STATEMENT OF THE PROBLEM.

Microfinance institutions play a crucial role in providing financial services to low income individuals and small businesses, contributing to poverty reduction and economic development. These institutions have evolved significantly over the years catering to the unique need of various client segment. However, the achievements of MFIs in Cameroon to reach the average poor, have been adequate, especially regarding getting to small entrepreneur’ farmers, particularly the rural poor( fotabong,2012). Investment decisions are risky and very uncertain on whether the cost incurred to invest will be recouped and profit gained within the specific time period (Virlics,2013).

 Among the diverse categories of microfinance institutions , category 1 microfinance institutions have been known for their extensive outreach and sustainable investment in supporting underserved communities therefore it is only proper to examine or assess the investment practices which are carried out by this institutions which helps to improve in their customer services in terms of the loan and equally their financial performance and sustainability.

However despite their commendable efforts, it is essential to critically evaluate the investment practices employed by category 1 microfinance institutions to ensure their effectiveness, sustainability, and alignment with the overarching goal of financial inclusion and poverty alleviation

1.4 RESEARCH QUESTION

The main research question of the study are

• What are the purchase of fixed assets practice carried out by category one microfinance institutions in Buea municipality?
• What are the purchase of securities practice carried out by category one microfinance institutions in Buea municipality?

1.5 RESEARCH OBJECTIVE.

The main research objective of this study to assess the investment practices of category 1 microfinance institutions in Buea municipality.

The specific objective are,

• To examine the purchase of fixed assets by category one microfinance institutions in Buea municipality.
• To examine the purchase of securities by category one microfinance institutions in Buea municipality.

1.6 RESEARCH HYPOTHESIS.

H0: There is a relationship between the purchase of fixed assets and securities of category one microfinance institutions.

H1: There is no relationship between the purchase of fixed assets and securities of category one microfinance institution.