Factors Influencing the Financial Sustainability of Selected Microfinance Institutions in Namibia
This report assesses the financial sustainability of selected MFIs in Namibia’s formal sector.
The report defines financial sustainability as the ability to cover cost independent of external subsidies from donors or the government. It applies ordinary least squares to an analysis of covariance model consisting of cross-sectional data from Namibian MFIs. These MFIs include savings and credit cooperatives, multi-purpose cooperatives that provide microfinance, savings and credit associations, microlenders, commercial bank branches involved in the provision of microfinance and NGOs registered with the supervisory authority. Findings include:
- All selected MFIs are not yet financially sustainable;
- Degree of financial unsustainability is lowest for term micro-lenders and highest for multi-purpose cooperatives involved in microfinance;
- Donor involvement in providing start-up funds for loan portfolio is positively associated with financial sustainability.
The report highlights MFI identity and tests the relationship between group lending and financial sustainability. The report does not find evidence that lower per capita income in the microfinance target group will hinder financial sustainability of MFIs selected in the study.
