Exploring the Effect of Balanced Scorecard Implementation on the Performance of Selected Micro-finance Institutions in Nigeria: A Study of North Eastern Geopolitical Zone

Abstract

Abstract

This research aimed at exploring the effect of Balanced Scorecard implementation on the performance of selected Microfinance Institutions in Nigeria: North-Eastern Geopolitical Zone as a Study Area. The BSC framework of the study developed using a total of 20 performance indicators which were equally categorized under the 4 BSC perspectives (financial, customer, internal business process and learning and growth). The developed framework applied to purposively selected 8 MFIs operating in Nigeria which have head office in each state capital of North-Eastern states region and report to Association of Nigerian Microfinance Institutions (ANMFI) starting from 2019-2024 consecutively. Quantitative research approach adopted and primary data collected using five scale Likert and secondary data obtained from ANMF used. A total of 12 microfinance experts, 130 staffs and 75 clients contributed in the research. The analysis is done using descriptive statistics and SPSS version 21 used. The findings of the research indicates based on financial performance results, on average the institutions go through were sustainable with high relative productivity and efficiency and reasonable profitability. The average nonfinancial performance was also high, indicating that the studied institutions were highly performing in nonfinancial measures likewise the financial. Alongside the performance results, the findings of this research confirmed the relationship assumption of BSC perspectives and it demonstrations of positive correlation among them. The research concludes comprehensive performance is observed when measured in a collective way. So, Nigerian MFIs in the North-Eastern States suggested paying attention on the use of BSC as a performance measurement tool and also center to specified performance indicators that needs enhancement. The research recommends that the government (through the regulatory organ e.g. CBN ) should introduce a system that will facilitate MFIs operating not only in North-Eastern States Region but in the country as a whole to use different measurements of BSC performance indicators together with financial performance processes. The Central Bank of Nigeria (CBN) should support and build the capacity of MFIs towards using BSC in measuring their performance, for example through revising their performance reporting content. The use of BSC will give a comprehensive view on the financial and non-financial performance. So, the management of MFIs should introduce and study the use of BSC in measuring their respective performance.