Original Research

Determinants of microfinance outreach in Sub-Saharan Africa: A panel approach

Abdulai Adams, Devi D. Tewarib
Acta Commercii | Vol 17, No 1 | a414 | DOI: https://doi.org/10.4102/ac.v17i1.414 | © 2017 Abdulai Adams, Devi D. Tewarib | This work is licensed under CC Attribution 4.0
Submitted: 03 July 2016 | Published: 31 January 2017

About the author(s)

Abdulai Adams, Faculty of Commerce, Administration and Law, University of Zululand, South Africa
Devi D. Tewarib, Faculty of Commerce, Administration and Law, University of Zululand, South Africa

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Orientation: The study focused on analysing the outreach performance of microfinance institutions (MFIs) in providing critical services for the poor using innovative lending techniques within constrained environments.
Research purpose: The study examined the trade-off relations between the depth and the breadth of outreach and identified institutional level factors that influence MFIs outreach in sub-Saharan Africa (SSA).
Motivation for the study: MFIs continue to play critical roles in extending financial services to the poor and yet previous studies have not analysed comprehensively the dimensions of outreach necessary for financial inclusion.
Research design, approach and methods: The study employed correlation analysis and random effects methodology to panel data regression analysis (619 observations, 71 MFIs across 10 countries) to establish the trade-off relations and the determinants of outreach in SSA.
Main findings: It was established that a trade-off exists between the depth of outreach (access to credit disbursement by poor clients) and breadth of outreach (number of clients served). The results further revealed that gross loan portfolio, portfolio at risk, borrower per staff member, interest rate, and operating expenses to assets ratio are the main institutional determinants of MFIs outreach in SSA.
Practical/managerial implications: The policy implication is that MFIs that concentrate efforts in reaching the relatively poor do so at the expense of reaching a large number of poor clients. We suggest that effective monitoring of depth and breadth and the adoption and implementation of cost-saving outreach technologies by MFIs could enable them to operate sustainably and efficiently.
Contribution/value added: A major contribution of the study is the trade-off relations revealed between the depth of outreach and the breadth of outreach of MFIs which advances the outreach literature.


Breadth; Depth, Determinants; Microfinance Institutions; Outreach; Sub-Saharan Africa


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