Leadership Problems at Ganzeb Microfinance Institution
(4 pages of text)
Ganzeb Microfinance Institution (Ganzeb) was formed as an extension of an indigenous non-governmental organization, and provides loans to rural Ethiopians to fund their business ventures. The microfinance industry is heavily regulated by the Ethiopian government, and the political landscape is not very stable. Since its inception in 2000, Ganzeb has been run by the same chief executive officer. The company flourished until 2006, when its financial performance declined as a result of an increasing number of defaulting loans from clients. Many other organizational problems have also emerged, which are quickly degrading the institution’s work. Now, in late 2008, the chair of the board of directors is faced with threats from the National Bank of Ethiopia: he must fix the problems or lose Ganzeb’s licence to operate. The board chair is being asked to meet with the bank to talk about the situation and the proposed solutions. He must figure out how to fix the problems of high turnover among staff, poor financial performance, and a lack of communication between the different levels of the organization.
This case can be used in an undergraduate level course on a range of issues focusing on strategy and loan production offices. After working through the case and assignment questions, students should be able to do the following:
- Describe how to effectively manage issues in a high-growth business.
- Critically analyze an organization facing multiple surface problems to identify causal factors.
- Explain the relationship between government and business in a heavily regulated industry.
- Explain the need to maintain strong relationships with donors.
Finance and Insurance
Ethiopia, Small, 2008
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