CHAPTER ONE

GENERAL INTRODUCTION

This chapter presents the background to the study, statement of problem, research questions, objectives, hypothesis of the study, scope of the study and organisation of study.

1.1 Background to the Study

This section present what other researchers have done in this area of work. It presents their own view on the subject matter (that is the impacts of ICT on performance of microfinance institutions), as a proper understanding of their findings paves a better ground for a successful and essential research work.

In this era of globalization, couple with competition from other organisations, microfinance institutions is faced with the problem of facing the globalization problem and strong forces, this was just when Information Communication Technology just came up with better options and other challenges.

According to Asta and Rimantas (2013), ICT has played a major role in the innovation of small and medium size enterprises. It has help small and medium size enterprises to gain a competitive advantage. For best performance, it is important to note the fact that ICT investment must be match with capacities for best performance to be obtained.

Also, the implementation of ICT development facilities requires adequate scientific planning for its social uses. Considering the weak economic situations of developing countries and also the limited capital of microfinance institutions, investing in ICT is very costly and the failure can cause serious damages on the financial stability of the institutions thus, before investing, organizations must take measures and follow them carefully to avoid failures of the investment (Morteza and Abbas,2013).

According to Rini, Hartayo, Heny and Bustanul (2015), there are internal and external forces influence the adoption of ICT among small and medium size enterprises. Internal factors are factors like quality enhancement while external factors are factors like competition and institutional interventions. Previous findings also confirmed that the performance of firms is determined by their capabilities invested in their functional areas.

ICT has been used to augment the reliability of accounting records and it has also lead to preparation of timely accounting records affecting the quality of services offered by this organisations even though care must be taken adopt the correct ICT facilities that match the organisation ( Taiwo, 2016).

1.2 Problem Statement

Manual accounting practices which is the traditional methods of carrying out accounting practices, had some problems attached to it like all financial statements had to be produced manually and it was really time consuming moving from the journals to statements of financial position at the end of the period before communicating  to users..

It gave rise to the Information Communication Technology that with it software that carries out the bookkeeping in less than no time except for the fact that an expert has to impute the data in the system, information becomes more reliable. Errors can be possible only at the imputing stage but with the use of an expert in the imputing, changes of errors are limited while manually there is an increase chances of errors because if errors are not done in the imputing stage while drawing the other financial statements, gives room for other errors, hence a higher probability for errors reducing its reliability.

Another problem with the manual system is financial statements is hardly possible to be prepared or viewed on a daily basis, weekly basis to observe how the activities of the organisation  are moving in order to exert better control over the day or weekly activities because it will be too tedious on the side of the accountant especially in a large customer base micro financial institution.

This problem encourage the adoption of ICT as it software have been design to address such issues to improve management control but considering the difficulties encountered by management like accountants entering input in the systems with errors, the system processes the output with the errors also ,this is commonly described as “garbage in garbage out” , some users not able to effectively operate the software and couple with the huge cost required for ICT investment. Therefore the researcher, in this study seeks to find out;

• The impact of Information Communication Technology on the performance microfinance institutions.
• The extent to which its adoption has affected the performance of microfinance institutions.
• The relationship between manual and ICT facilities and the adoption of ICT facilitates accounting practices.

1.3 Research Questions

This therefore made the researcher to come up with the following research questions;

1.3.1 Main question;

What is the impact of Information Communication Technology on the performance of Microfinance institutions in Cameroon UNICS PLC (Douala)?

1.3.2 Specific questions;

1. What is organisational performance?
2. To what extend does the implementation of ICT in the banking activities influences activities of Microfinance institutions (UNICS PLC Douala)?
3. What are the changes ICT has brought on the performance of microfinance institutions (UNICS PLC Douala)?
4. How the adoption of ICT does facilitate accounting practices?
5. What are the difficulties faced by accountants as a result of the introduction of Information Communication Technology?
6. What are the relationships between manual accounting practices and ICT based accounting practices?

1.4 Research Objectives

1.4.1 Main Objective

The main objective of the study is to critically evaluate the impact of Information Communication technology on the performance of Microfinance institutions in Cameroon (UNICS PLC Douala)

1.4.2 The specific objectives are;

1. To determine the types of ICT software used by microfinance institutions in Cameroon
2. To analyze the difficulties faced by accountants as a result of the introduction of ICT.
3. To determine the extend to which ICT has impacted the organisations performance of microfinance institutions in Cameroon.
4. Establish the relationship between ICT based accounting practices and manual based accounting practices.
5. To make recommendations.