Vol 10, No 3 (2022)
Outreach and Financial Sustainability: A Depository Microfinance Perspective: Evidence from Low Income Sub-Saharan Africa
Zibusiso Moyo, Sophia Mukorera, Phocenah Nyatanga
Abstract
This article examined the relationship between outreach and financial sustainability of 64 Deposit-taking Microfinance Institutions sampled across 18 Low Income Sub-Saharan African countries. The System Generalized Method of Moments was employed utilising 2006-2017 panel data that was obtained from the Microfinance Information Exchange. The estimated results revealed that there is no significant relationship between financial sustainability and outreach depth but financial sustainability is negative and significantly related to outreach breadth. The study concluded that there is neither mission drift nor a trade-off in outreach depth but a trade-off exists in outreach breadth in depository microfinance. The practical implication is that Deposit-taking Microfinance Institutions should develop appropriate deposit products for each market segment identified and also leverage on cost-efficient deposit-taking methods such as the use of agents and mobile phone banking technology. The policy recommendation is that mobile phone use should be followed by reduction of the transaction costs through subsidisation.
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Keywords
Outreach; Financial Sustainability; Depository Microfinance, Mission Drift; Trade-off.
Publication information
Volume 10, Issue 3
Year of Publication: 2022
ISSN: 1857 - 8721
Publisher: EDNOTERA
How to cite
Moyo Z., Mukorera S., Nyatanga P.: Outreach and Financial Sustainability: A Depository Microfinance Perspective: Evidence from Low Income Sub-Saharan Africa. Journal of Applied Economics and Business, Vol 10, No. 3, 24-41. (2022)