Determinants of Sustainability of Microfinance Institutions in Bulawayo

Abstract

The study sought to establish the determinants of sustainability of Microfinance Institutions as research design. The study was based on the 23 Microfinance Institutions registered with Zimbabwe Association of Microfinance of Institutions (ZAMFI) and operating with Bulawayo. The study used both primary and secondary data. Primary data was gathered from the employees of the Microfinance Institutions using self-administered structured questionnaires. Multiple linear regression model was used for data analysis. The study established that portfolio at risk had a negative impact while corporate governments had positive impact on operational self-sufficiency of Microfinance Institutions in Bulawayo. The study concluded that portfolio at risk as well as corporate governance are the determinants of sustainability of Microfinance Institutions in Bulawayo. On the challenges the study discovered that the major challenge faced by MFIs in Bulawayo is of nonperforming loans. The study recommends that MFIs should be strict on monitoring and evaluation of loan portfolio at every stage to reduce credit risk. The study further recommends that the Reserve bank of Zimbabwe (RBZ) must step up Credit Bureau system which links to all MFIs databases so as to minimize defaults by clients who might be having lots financial obligations from other lending Institutions to reduce credit risk. The owners and management of MFIs should have an understanding of corporate government principles through proper training and even workshops.