Investigating the trade-off between microfinance sustainability and the depth of outreach: A case of Zimbabwe microfinance institutions
MetadataShow full item record
The purpose of this study was to ascertain whether financially sustainable MFIs can still play their strategic role of poverty alleviation by providing financial services to the poorest and low-income households. This was done by adopting a survey approach where questionnaires were administered to various microfinance institutions. Microfinance is viewed as a mechanism for financial inclusion, that is, it facilitates access to financial services by the financially marginalised segments of the society at an affordable cost. In recent years there has been a paradigm shift towards financially sustainable MFIs. The attainment of self-sufficiency by microfinance institutions is viewed as the necessary conditions for effective poverty reduction. However, it has been observed that too much focus by MFIs on self-sufficiency might lead to a mission drift whereby the extremely poor households are further financially marginalised. The reviewed literature on MFIs sustainability and the depth of outreach reflects that there are two major schools of thoughts on microfinance, namely, the institutionalist, and the, welfarist whose views are contradictory with regards to the impact of MFIs’ sustainability on the depth of outreach. The literature also revealed that there is an ongoing debate among various authorities on the impact of MFI’s sustainability and the depth of outreach. The findings of the study indicated that the pursuit of financial self-sufficiency does not lead to mission drift. The study concludes that in the process of pursuing sustainability the microfinance institutions still serves their target market that is the poor and financially marginalised. The study proffers recommendations that would help to ensure that MFIs become an effective mechanism for financial inclusion. Government interventions through the review of MFIs licences and the Moneylending and Rates of Interest Act, and availing of targeted cheaper loans. It is also recommended that MFIs should be innovative and specialise on lending strategies that allows the poorest households to borrow without collateral.
Additional Citation InformationMatanga, T. (2012). Investigating the trade-off between microfinance sustainability and the depth of outreach: A case of Zimbabwe microfinance institutions (Unpublished master's thesis). University of Zimbabwe.