Achieving Long-Term Poverty Reduction and Institutional Sustainability in Microfinance through the Dynamic User-Focussed Approach

Abstract

Microfinance institutions that are primarily poverty reduction (PR) oriented must be confused about the prioritisation of institutional sustainability (IS) recent times. While theoretical arguments show a trade-off  between PR and IS, empirical evidence indicates the contrary. This paper examines an MFI in Ghana which describes itself as explicitly poverty-oriented to ascertain how the PR objective is affected when they prioritise IS. Findings from the qualitative study reveal that when the MFI emphasised sustainability, it had significant negative implication for PR. The dynamic user-focussed approach is proposed as a solution to the conundrum poverty oriented MFIs encounter when they prioritise sustainability.

Keywords: Institutional sustainability, microfinance, poverty reduction