Abstract

The purpose of this study was to examine the effect of banker customer relationship on the performance, case of Nkong Credit For Development(NC4D).To  arrive at this, specific objectives were developed; to examine the effects of banker customer relationship  on the financial performance of Nkong Credit For Development ltd (NC4D), to investigate the effects of banker customer relationship on the economic performance of Nkong Credit For Development ltd (NC4D).

The sampling size was 94. Data was analyse using Descriptive Statistics and presented on tables, pie charts and bar chart, the hypotheses was tested using regression technic. The study found out that Nkong Credit For Development is made up of males and females staff. The findings revealed that There is a positive relationship between ROE and socialism given its slope coefficient 1.

The relationship also also observed not to be statistically significant at t- value of 0.872 at 5% .In hypothesis two, the variables were that; customer banker relationship has an effect on the economic performance of Nkong Credit for Development Ltd (NC4D), The study believes that there is a positive. the relationship is also observed to be statistically significant at a t-value of 3.98 at 5% significant level.

The relationship was observed to be significant at 5%. There is a positive relationship between ROA, Aid and socialism given its slope coefficient of 1 respectively. So, it was recommended that there should be an increase in the availability of investment instruments such as options, derivatives futures and convertible for investors as this will boost the value of transactions in the growth rate and market share.

CHAPTER ONE

INTRODUCTION

This introductory chapter of the study will be discussing the background of the study, research problem, research objectives, research hypotenuses, significant of study, scope and limitation of the research and the organization of the research.

1.1: Background Information

Micro finance institutions can be traced back as long as the middle 1800s when the theorist Lysander Spooner was writing over the benefits from small credits to entrepreneurs and farmers as a way of getting the people out of poverty. The today use of micro financing has its roots in the 1970s. In 1974 an economics lecturer at the University of Chittagong, Bangladesh, lent $27 to a group of impoverished villagers. Mohammed Yunus founded the Grameen bank whose research pioneered the concept of providing micro-banking services and non-collateralised loans or the poor in order to alleviate poverty in 1983 to make very small loans – perhaps $15 a time – to the poor and uncreditworthy. Since then it has loaned about $3 billion to more than six million of the very poorest in Bangladesh and across the Asian sub-continent.

The bank’s impact research suggests that each year, only 5% of their clients (Grameen bank) are lifted out of poverty. The Grameen bank is now experimenting with a holistic approach where basic medical care is available at the same place the customer would go to repay an instalment of the loan and offering adult education. It funds 20 000 students loans a year and provides 50 000 scholarships for schooling. It is also trying to find ways of helping creditors survive disaster, whether it is a personal accident or a major flood. The five largest and most influential MFIs in the world according to Investopedia as of 2016 are;

Firstly, 51give bank found in 2007 in Beijing, provides microfinance solution services to other MFIs, they offers an e-commerce platform that offers both online and mobile technology designed to connect individuals, companies, organisations and institutions with local MFIs, thus facilitating donations, investments and delivery of micro financing services.

Also, bank Raykatt idr250 also known as bank Raykat Indonesia is the oldest Indonesian bank, founded in 1896 in Jakarta, and has established itself as the country’s largest financial institutions, while operating primarily as small scale and microfinance lender, with more than 30 million retail banking clients conducting business with the bank through thousands of    branches and rural service posts. The bank is 70% owned.

In addition, Brac founded in 1972 in Bangladesh, and is one of the oldest existing MFIs.  Brac      provides a broad range of services in the areas of human rights, education, health and economic development, including grants and small businesses loans, housing assistance and micro savings services. Brac operates in a dozen developing countries, stretching from Haiti to the Philippines. As of 2015, its gross loan portfolio was more than $1.4 million.

Furthermore, Grameen bank founded in 1983 in Bangladesh, holds the distinction of being a Nobel peace prize-winning MFI. As of 2015, Grameen bank has more than 8 million borrowers and a loan portfolio in excess of $18 billion. In addition to providing microcredit and other banking services, the bank also launched an award-winning low-cost housing program in 1998.

Lastly, Kiva micro funds founded in 2005 with headquarter in San Francisco, Kiva microfunds is a non-profit MFI that operates in the United States and more than 80 other countries worldwide. Its operational method for providing microfinance lending is through establishing a crowd funding, or peer-to-peer (P2P) lending, platform that allows individuals to lend directly to borrowers in other countries who lack access to traditional financing sources. Kiva provides interest-free financing for small businesses, education and health services such as clean water. As of 2016, kiva has extended more than $850 million in micro loans, and has a network of approximately 1.5 million lenders and approximately 2 million borrowers. The organisation’s website states that it funds an average of $2.5 million in loans weekly.

Another pioneer in this sector is Akhtar Hameed Khan. The main reason why microfinance is dated to the 1970s is that the programs could show that people can be relied on to repay their loans and that it’s possible to provide financial services to poor people through market based enterprises without subsidy.

The first micro finance institution appeared in Africa when CARE which is an NGO launched their first micro finance program in Niger in 1991 and clients-predominantly women-defined their needs and put parameters around the process. Today microfinance institutions are spread all over the continent. However the continent is still under served by financial services. The cost of bringing MFIs services in Africa is very high more than every part in the world because Africa has many vast and sparsely populated rural areas, higher rate of illiteracy and widespread lack of identity documents. Among the African countries where MFIs where spread include Cameroon.

The first appearance of MFIs in Cameroon occurred in 1963 in the Northwest province where Anthony Jasen, a priest from Holland, created the first savings and credit cooperatives in the country in Njinikom in 1963 with a membership of 16 and a total savings of 2,100 FRS. This idea of credit unionism spread all over the north west and south west regions of Cameroon and by 1968, the relative success experienced by 34 credit unions that were already in existence joined together and led to the creation of the Cameroon Cooperatives Credit Union League (better known as CAMCCUL), which became the therefore the umbrella organ of cooperative credit unions and the largest micro finance institution in Cameroon and the CEMAC sub region. It is currently the longest standing microfinance network in Cameroon with general manager Jonas Tientchou. CAMCCUL re-registered under the cooperative law in 1994 and has been registered by the Banking Commission of Central Africa (COBAC).

CAMCCUL is located in Bamenda, Cameroon. The company is working in banks, credit unions, financial activities, business activities.

Another credit union network named Renaissance Cooperative Credit Unions, RECCU-Cam ltd now exists in Bamenda, North West regional chief town, according to a local English language newspaper, THE SUN. It was officially registered on May 30, 2013 but its constituent assembly held earlier in Bamenda on Saturday May 11. However the league is still waiting for an authorisation from the minister of finance to go operational. Located in the commercial avenue, Bamenda’s Wall Street, the head of office RECCU-Cam ltd has 253 as its postal address.

The relationship between a banker and a customer depends on the type of transaction. In this banker and customer relationships; both parties have some obligations and rights. The relationship between banker and customer is not only that of a debtor and creditor.

The relationship between banker and Customer are categorized into three, there can be seen as; Relationship as debtor and creditor, Banker as a trustee, Banker as an agent and other special relationship with the customer, obligations of a banker.

On the opening of an account, the banker assumes the position of a debtor. A depositor remains a creditor of his banker so long as his account carries a credit balance.The relationship with the customer is reserved as soon as the customer account is overdrawn Banker becomes a creditor of the customer who has taken a loan from the banker and continues in that capacity fills the loan is repaid.

Ordinally a banker is a debtor of his customer in the report of the deposit made by the letter but in certain circumstances, he acts as trustee also. A trustee hold holds money or asset and performs certain functions for the benefit of some other person called the beneficiary, For instance;If the customer deposits securities or other values with the banker for the safe custody, the letter acts as a trustee of his customer.

A banker acts as an agent of his customer and performs a number of agency functions for the conveniences of his customer. For example, he buys or sells securities on behalf of his customer, collects cheques on his behalf and makes payment of various dues of his customer. Through the primary relationship between a banker and his customer is that of a debtor and a creditor or vice versa, the special features of this relationship as a note above impose the following additional obligations on the banker.

1.2: Statement of Problem

Organizations have come to the realization that their businesses should focus on building and maintaining strong relationship with customers as they are the key drivers of business prosperity (Newby, Nguyen, & Waring, 2014). Kaura (2013) confirms that the cost of acquiring new customers has become costly due to increase in competition and this has made organizations to improve their retention strategies of existing customers by implementing customer relationship management.

In line with Kaura (2013), Saxena and Khandelewa (2011) assert that customer relationship involves centering the business strategy on customers who are considered to be the organizations assets hence they need to be managed continuously to ensure sustainable profits over the customer lifetime. There are various customer relationship capabilities that have been identified in literature to increase the success of customer relationship implementation in businesses.

However, in order for customer relationship management to focus on the needs of customers and integrate these needs across the MFI, there are three key strategic customer relationship management capabilities. These include human resource capabilities, information technology (IT) capabilities and business architecture capabilities (Wang & 2012; Chen & Popovich 2003).

Wang and Feng (2012) ascertain that information technology(IT) capability may improve an organizations ability to sustain profitable customer relationships by gathering and analyzing information about customers who are profitable, facilitates efficient and effective interactions between the organization and customers, and customizing products or services thus, attract and retaining customers.

However, literature on the IT capability has revealed that the incorporation of information technology capability had no significant effect on performance measures such as increasing customer satisfaction and loyalty in the long- run and that technology is only an enabler and a focus on too much IT would lead to a loss of customer orientation.

Another perspective holds that customer relationship management capabilities such as human resource capability have faced roadblocks such as lack of engagement of employees in the process of implementing customer relationship management which leads to poor commitment (Bohling et.al. 2006). Ata and Toker (2012) established that customer relationship management relies on the organization’s ability to integrate customer relationship management in the existing processes and structures through the business architecture capability. The customer relationship management success is highly dependent on the culture and environment of the organization in building customer relationships.

The business architecture capability is challenged when the top management does not support customer relationship management implementation according to Ata and Toker (2012). There are different perspectives on customer relationship management capabilities that have been brought out in previous studies. It has been highlighted that there is lack of alignment in the goals of firms on the implementation of customer relationship management. The technology, the human resources and processes are not working together towards customer relationship management. This created the need to conduct a study to establish whether customer relationship management is being practiced across the entire organization in the MFI. It therefore becomes imperative that we ask this question:

1.3 Research questions

This study seeks to answer the question: what are the effects of banker customer relationship on the performance of Microfinance institutions?

In line with Kaura (2013), Saxena and Khandelewa (2011) assert that customer relationship involves centering the business strategy on customers who are considered to be the organizations assets hence they need to be managed continuously to ensure sustainable profits over the customer lifetime. This study specifically answer the following questions:

1. What are the effect of Banker Customer relationship on the financial performance of Nkong Credit for Development Ltd (NC4D)?
2. What are the effects of Banker Customer relationship on the Economic performance of Nkong Credit for Development Ltd (NC4D)?

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