5.6Toward sustainability:
An endless fight
The attempt to analyse the viability of a rural MFI network
evinces that rural MFIs, particularly those savings and credit self managed
MFIs, are daily compelled to dwell uncertainties and hopes for their
survival.
The first challenge they need to come up remains the delivery
of affordable services which should not jeopardise members' deposits and the
financial viability of the institution as well. This challenge appears really
tricky regarding the increasing portfolio at risk reported, exclusively due to
flexible loan delivery (investment loan and seasonal loans for instance). For
Buchenau (2003), investments loans (especially those provided without
appropriate guarantee and legal framework) are riskier than short term loan
because the longer the loan maturity the more likely inauspicious situation
might occur. Three main risks are underscored: the market risks, the conditions
of production (climate changes, pests' management, natural disasters...) and
the purpose of the investment. All these aspects should be considered in the
project appraisal process before the loan granting. Moreover, even if rural
MFIs members/clients are more eager for bullet repayment loans, for Rutherford
(2011), one key element of microfinance success remains the loan repayment
based on frequent instalment of small or tiny amount.
The second challenge for rural microfinance institutions is
their fitful financial performance. It appears that these rural MFIs recorded
low financial performance not because they are grudging performing but mainly
due to the specific features of their target group, their financial products,
their loan procedures, the volatility of rural activities. This finding
espouses AFD (2008) which stipulated that the time a MFI takes to reach
sustainability is related to the context and the target group though it thrusts
a good management of the MFI. That is why amongst all these MFIs, some emerge
meaning that in some key conditions, there are still possibilities for rural
members-managed MFIs to attain good financial performance. For these latter
their financial sustainability is also due their low operating expenses for
financial services (Goujon, 2009).
Governance appears as the third issue in rural MFI pathway
toward sustainability as it is positively correlated to social performance and
some indicators of financial performance. This finding corroborates the thought
of AFD (2008) which stipulates that MFIs sustainability depends on their
institutional viability meaning good governance ingrained in an adequate
regulatory framework. Rather, for Mersland & Strøm (2009) the
governance measured by board members enhances MFIs' performance peculiarly with
endogenous and well informed board.
The fourth concern of rural MFI network and accordingly rural
MFI is their lack of knowledge about social performance mainstream even if
arguing that they are socially ingrained with allegations that they have real
social impact on their communities. Not only they do lack information, but also
they lack method and tools to record, report and track both financial and
social facets of their institutions. This obviously should lead to the bad
performance results recorded. For Rosenberg (2009) indeed, there is a strong
relationship between attentive reporting and good outcome of MFIs. As
consequence, for the same author, MFIs holding accurate information tend to be
more successful and vice versa.
Finally, most of the MFIs surveyed faced the issue of vision
and mission and consequently a lack of leadership. After five years of
implementation, regardless their status and operating areas, MFIs should
clearly be able to show up their mission a vision. They should have well
stated objectives and indicators to assess them in short, mean or long term.
Rural MFIs do not need to transform before being more professional. They need
more cogency in their methodology.
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