1 PAPER CODE: STUIJT20170001 Vol 1 Issue 3 -April, 2017 PUBLISHED BY: WWW.STU.EDU.GH STU INTERNATIONAL JOURNAL OF TECHNOLOGY (STUIJT) Vol 1 Issue 3 -April, 2017 (ISSN 2508-0997, Online) PUBLISHED BY; WWW.STU.EDU.GH CHALLENGES FACED BY MICRO FINANCE INSTITUTIONS IN THE RECOVERY OF CREDIT TO SMEs IN THE ASHANTI REGION OF GHANA Frank Donkor 1 , Delroy Jefferson 2 , & Francis Kwabena Adjei 3 1 Pricipal Auditor, Ghana Audit Service. 2 Director of Health Service, Cayman Islands. 3 Assistant Registrar (Production,) Sunyani Technical University. , Abstract The concept of Micro Finance found its genesis from a driving force towards poverty alleviation. It provides alternative source of savings and credit availability for people who, otherwise; cannot get access to those services from the mainstream financial intermediaries. Despite its relatively long history, lack of homogeneity in its structure coupled with the nature of the clientele that it targets makes it vulnerable to various challenges that threaten its sustainability. Several challenges are associated with the non-recovery of credit to Small and Medium Enterprises (SMEs). Through a mixed method exploratory research, the researchers examined these challenges and the impact on MFIs. Framed against the background of an institutionist perspective, the study sought to determine the challenges faced by Micro Finance Institutions in their recovery of credit from SMEs and to closely examine the part that managers of Micro Finance Institutions and SMEs owners could play in mitigating these challenges. Seventy five percent of MFI managers reported challenges in the recovery of credit. Approximately 87 % of SMEs faced challenges in the repayment of credit. The study provides clear indication that there are several challenging factors that pose a threat to the sustainability of MFIs in the Ashanti Region of Ghana. This is irrespective of one’s perspective or occupied position on what the researchers here have chosen to call the institutionist-welfarist continuum. There will always be tradeoffs between self-sufficiency and charitable social benefits. Keywords: Micro Finance Institutions, Small and Medium Enterprise, Sustainability, Institutionist, Welfarist