Trends of Outreach and Sustainability of Microfinance Institutions in Southwestern Nigeria

Trends of Outreach and Sustainability of Microfinance Institutions in Southwestern Nigeria

Author by Dr. Babatunde Akinlabi

Language: English

Abstract

This study examines the trends of outreach and sustainability of microfinance institutions in Southwestern Nigeria. The study made use of secondary annual panel data collected from 80 microfinance institutions in Lagos and Ondo States over a period of six years from 2005 to 2010. The study employed pooled Ordinary Least Square Method to analyze the trends of outreach and sustainability of microfinance institutions. The empirical results showed that there has been an increase in the trend of outreach and sustainability of the sampled microfinance institutions in Southwestern Nigeria contrary to earlier studies with coefficient values of 0.03940 (t=1.9417, p<0.05) and 0.3317 (t=9.448, p<0.000) respectively. Therefore, microfinance institutions are encouraged to increase their outreach by providing relatively small loans. The small loan sizes can reach more clients and therefore achieve a greater outreach. Also, since sustainability is usually an outcome of a strong governance structure, as the microfinance institutions strengthen their governance structure to achieve the outreach objective, sustainability will be achieved simultaneously.


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