Can MFIs Achieve the Double Bottom Line?
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.
- 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.