Determinants of Microfinance Sustainability and Outreach to the Poor: Evidence from Microfinance Institutions in Sub-Saharan Africa

Poverty eradication is a continuous global incident, however the global severity have never been the same, on that specific note, developing countries such as Sub Saharan Africa countries (SSAC) with wide scale poverty prevalence have employed various poverty reduction institutions such as microfinance institutions as appropriate mechanisms to remove many poor people from poverty trap. A sample of 200 microfinance institutions from 30 Sub Saharan African countries was taken for research investigation with three-stage least square (3SLS) method adopted as appropriate model for investigation, the fondness is owing to the fact that the 3SLS is an amalgamation of the 2SLS and seemingly unrelated regressions (SUR) which produces more efficient results. From our result, as evidence suggest, there is enormous disagreement between sustainability and outreach of MFIs mission as regression results interestingly demonstrates trade-off between sustainability indicators and outreach indicators among MFIs in Sub Saharan Africa. Furthermore, from regression outcome, we found no complementary relationship between sustainability and outreach, additionally as evidence further suggest, we see that, the degree of different of coefficient on influence of sustainability on outreach is slightly bigger compare to degree of influence of outreach on sustainability, from that view, we deduced that concentrating on sustainability in Sub Saharan Africa is tremendously dangerous to the social goal of microfinance institutions, this therefore concurred with the mission drift emphasized in most literatures. We have also been able to identify major institutional determinants of sustainability and outreach as yield, loan portfolio, operating expense and not-for-profit, the results are particularly important to policy makers and institutional managers in deciding matters of outreach and sustainability. furthermore, by Looking at the possibility on whether MF can lead to poverty alleviation, we found no substantial evidence in support of the fact that microfinance institutions can be final panacea for poverty alleviation in Sub Saharan Africa.