The Sustainability and Outreach Performance of Ethiopian Microfinance Institutions: Does Scale of Outreach Matter?

Abstract

This study analyzes sustainability and outreach performance of Ethiopian MFIs using scale of outreach as a classification variable. Performance is compared against local and international benchmarks and across time. Secondary data of 13 MFIs collected for 6 years (2003-2008) is used for analysis. The result reveals scale of outreach matters when performance is compared against local benchmarks. It further indicates the presence of commercial and social oriented MFI clusters. Comparison with international benchmarks shows mixed evidence across scale of outreach, but the whole industry is weak in terms of depth of outreach. The trend analysis indicates the industry suffers from lack of clear women targeting policy and erratic profitability as measured by ROA.

Keywords: Microfinance, Sustainability, Outreach