Sustainability of Microfinance Institutions in Togo

Abalo Kodjo

Working Papers from African Economic Research Consortium

Abstract: For several years now, microfinance has become an important tool in the fight against poverty. That is why this study sought to analyse the sustainability and success of the microfinance institutions (MFIs) in Togo, and to identify explanatory factors for this sustainability and success. The study is based on data obtained from 63 MFIs,and covering the period from 2002 to 2008. It used two indicators to measure MFI financial sustainability the operational self-sufficiency (OSS) and the subsidy-dependence index (SDI). It found that, overall, the MFIs studied were not financially high-performing and still depended on subsidies: their OSS was, on average, below acceptable standards. Several factors were found to be statistically significant in terms of explaining the variation in those MFIs' performance. Among them are the MFIs' number of beneficiaries, the number of years they have been in business, their labour productivity, observance of prudential rules, and the existence of a relationship between the MFIs and banks.

Date: 2016-10-30
Note: African Economic Research Consortium
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