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Can MFIs Achieve the Double Bottom Line?

Can MFIs successfully combine outreach with financial sustainability?
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This technical note analyzes whether microfinance programs can achieve the double bottom line- maintain profitable operations while also serving a high number of poor clients. The note draws on field level poverty assessment and poverty data from 27 MFIs in Asia in order to:

  • Compare MFI financial performance with outreach to poor clients;
  • Analyze factors that enable some MFIs to have deeper outreach, and to combine that with financial sustainability;
  • Compare results from client poverty assessment at field level with other proxy indicators.

It finds:

  • Weak inverse correlation between financial performance and poverty outreach;
  • Efficiency, portfolio quality and operations in poorer areas as key factors that contribute to MFIs achieving outreach along with financial sustainability.

The note concludes that:

  • There is no trade-off between sustainability and poverty outreach. There are many MFIs that have achieved both;
  • Two different MFI strategies appear to enhance the depth of outreach;
  • Small loan sizes and lower interest rates do not ensure poverty outreach.

About this Publication

By Sinha, F., Brar, A.
Published