CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Microfinance institution plays vital roles in worldwide economies. Employees help when it comes to delivering and services to their customers and due to excellent services offered by employees it helps in creating a positive perception and ever lasting image in the eyes of microfinance customers. The motivation of microfinance employee plays a  role in achieving high level of satisfaction among its customers (Owusu, 2012).  The financial industry has become so vast that some microfinance are looking for ways and means that can help them to be able to compete. Microfinance now want to become successful and  they are looking for the best way that can help them to be able to retain employees. In order to fulfil some of   these things microfinance are looking for ways and means that is going to help them compete with some organizations in this environment of competition. Jennifer Annan et al (2017)

Also,  human capital is the best asset in which some organizations have not noticed and it  can make an organization successful or if the human capital is not manage well can lead to the down fall of the organisation. Employees in microfinance do not have the same workplace so, motivating all employee with the same motivational tool will not be good for an organisation. As such, it is essential for a manager to understand what really motives employees, without making just an assumption. Jennifer Annan et al (2017). Asking an employee how he feels about a particular situation does not provide an accurate evaluation of his needs. Despite the fact that information technology has become the bedrock of all companies in the financial sector at the global level, employees need to be motivated.

In every microfinance employees are the ones that make the business to be successful. For a  successful  business it requires the commitment and dedication of employees. Employees are particularly important participant in the formulation of the image that customers get in relation to the service outcome. Because of the importance of this interaction with the customer, employees have to communicate effectively the quality standards of their organisation to new starters. For successfully market or sell the company’s services or products, the company must first and foremost target employees. Jennifer Annan et al (2017)

Employees are therefore the first customers of every organisation. Once the company is able to identify employees’ needs, then they will be motivated to work effectively to achieve the goals of the organisation. Motivation is one of the most important concepts in ensuring the success of every business and  even the best strategy put in place, an organisation will not be effective  if it employees are not motivated.

Management plays significant and unique role in terms of leadership drive and direction. This role can be considerably a kind of trigger to be able to tap and awaken each employee’s unique talents and convert them to performance. Moreover this can only be through varied organisational strategies that a manager will be able to trigger his or her employee’s hidden talents which are important in the productivity and performance of the organization. These strategies can be external and internal to employees and one of these strategies employed by managers is motivation. Motivation approaches definitely satisfy the needs of the employees and in return, the employee repays it through their hard work. Jennifer Annan et al (2017) organisational effectiveness can be achieve through the motivation of employees and for this, it  allows employees to focus on the development of their work, in terms of behavior, skills and Knowledge, ethics and effectiveness.  Motivation tends to energize the workforce of employees resulting to good performance. Every employee has his or her own set of motivations and personal motive that encourage him or her to work hard. Some employees are motivated by recognition others are motivated financially. In order to achieve organizational success, productivity and productivity by employees there is a need for them to be motivated Jennifer Annan et al (2017). Motivation is concerned with why people do what they normally do. It gives answer to such questions as why employees go to work and do perform their job well. In most area of our daily life there is a need for motivation. The means for work to be done well by employee to motivate them. In this 21st century every individual in an organization has a something that motivates them. The aim of this research is to identify the impact motivation has on the performance of employee.  The motivation of employees at the microfinance also plays a major role in achieving high level of satisfaction among its employee. Jennifer Annan et al (2017)

Cameroon, located in Central Africa, is characterized by high levels of poverty and limited access to financial services. Microfinance institutions (MFIs) have emerged as a potential solution to address these challenges by providing financial services, such as microcredit, savings, and insurance, to low-income individuals and households. Bamenda, the capital of the Northwest Region of Cameroon, is a city with a significant population living in poverty and facing limited access to formal financial services.

The case of Cameroon is of essence where there is still prevailing high socio-economic challenges. Cameroon currently ranks 153th of 183 on the 2016 Human Development Index (HDI) compared to 150th on the 2011 Human Development Index, and it is estimated that 48 percent of the population lives below the poverty line (HDIR, 2016).Poverty in Cameroon is largely a rural phenomenon; 55 percent of the country’s poor live in rural areas. About half of the people living in poor households are women and children under the age of 15. Most of the youthful population is unemployed. Access to health and other basic facilities such as education, roads, electricity, Failure of commercial banks to meet the needs of the poor, the microcredit model was adopted to fill the vacuum created by the commercial financial institutions. In its traditional microfinance form, the route of formal microfinance activities can be traced back in 1963 following the creation of the first cooperative savings and loans institution (Credit Union), at Njinikom in the North West region of Cameroon by a Roman Catholic clergy from Holland called Father Anthony Jansen (Yuh, 2013).

Development of microfinance institutions and their activities remain every limited until the early 1990s when President Paul Biya in order to incorporate the elites and various interest groups into his New Deal Policy passed the remarkable law No. 90/053 of 19 December 1990 relating to freedom of associations, and Law No.92/006 of 14^th August 1992 relating to cooperatives, companies and common initiative groups. For over three decades now, microfinance has proved its value in many countries as a weapon against poverty and hunger. (Morduch, 2002) posits that, ‘Since the concept was born in Bangladesh almost three decades ago, microfinance has proved its value, in many countries, as a weapon against poverty and hunger. It really can change people’s lives for the better, especially the lives of those who need it most’’ UN secretary General Kofi A. Annan (Latifee, 2006)”.

 However, in Cameroon, there has always existed a controversial view point on whether microfinance is actually a poverty alleviation tool or a business scenario. Today, within the network of microfinance institutions, cooperatives, and some common initiative groups carrying out savings and credits, it is estimated there are about 1.5million accounts (Yuh, 2013). This number is significant when compared to the almost same level of accounts registered in the commercial banking sector (MINFI, 2008). However, access to financial services in Cameroon is deemed very low compared to other parts of Africa particularly when compared to the rest of developing countries. The situation is made worst as most MFIs limit their branch network in urban areas living out the rural areas which harbors about 87% of the poor population (IMF Country Report No.12/237). Many have agreed that microfinance has helped to reduce the number of poor people in Cameroon especially those who did not have access to the commercial banks services have at least been able to get access to the MFIs. Microfinance services have gained significant attention as a means to alleviate poverty and improve household welfare in developing countries, among these countries is Cameroon.

1.2 Statement of the Problem

The statement of the problem is that the performance of microfinance has come with critisms. The study aims to investigate the impact of financial motivation on the performance of employees in a microfinance institution focusing on JACCUL. The study seeks to determine whether financial incentives such as salary, bonuses and other monetary rewards have a significant influence on the motivation and subsequent performance of employees in this particular microfinance institution.

1.3 Research Questions

The research questions are divided into the main research question and the specific questions.

1.3.1 Main Research Question

What is the effect of financial motivation on employees’ performance in JACCUL?

1.3.2 Specific Questions

The following are specific research questions.

• What is the effect of Bonus on employees performance in JACCUL?
• What is the effect of commission on employees performance in JACCUL?
• What is the effect of performance related Pay on employees performance in JACCUL?
• What is the effect of financial motivation on employees performance in JACCUL?

1.4 Objectives of the Study

1.4.1 Main Objective

• To investigate the effect of financial motivation on employees performance in JACCUL.

1.4.2 Specific Objectives

• To examine the effect of Bonus on employees performance in JACCUL.
• To determine the effect of commission on employees performance in JACCUL.
• To asses the effect of performance related Pay on employees performance in JACCUL.
• To investigate the effect of financial motivation on employees performance in JACCUL.