Refinancing and Efficiency of Microfinance Institutions in Niger

Ali Hadizatou

Working Papers from African Economic Research Consortium

Abstract: The aim of this study was to establish the effect of refinancing resources (deposits, loans, grants) on the efficiency of 24 microfinance institutions (MFIs) in Niger over the 2005-2008 period. The study's hypothesis was tested using a Translog function that was estimated in the form of a system with equations of cost-sharing of inputs. The outreach of the activities of the MFIs studied was established by using a descriptive analysis. A Principal Components Analysis revealed that the independent MFIs had recourse to deposits, loans, and grants more often than those affiliated to unions. Econometric results showed that the MFIs in Niger were not efficient. But they also showed that the use of deposits, physical capital and human capital led to a drop in the charges incurred by those MFIs. They further showed while deposits could replace loans and grants, the latter two could not be substituted for each other. The study also found that the social performance of the MFIs in Niger was low, due to the fact that their service outlets were still being set up and were located mostly in large towns. Men formed the majority of customers targeted by the MFIs, and these granted loans mainly to customers living in urban areas. A slowdown in the MFIs' loan granting was observed in all the country's regions, which had the effect of lowering the MFIs' costs related to economies of scale. Finally, the study found that there was a link between MFI efficiency and social performance.

Date: 2017-05-30
Note: African Economic Research Consortium
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