The Paradox: The Shifting Goal of Microfinance from Social Performance to Financial Performance

Banbul Shewakena Tessema


Since people with low incomes do not have access to financial institutions, and in most developing countries only public workers benefit from the services of public banks, the poor and private workers with low incomes cannot borrow from these public banks. Hence, microfinance institutions (MFIs) have become the answer to those who cannot benefit from the financial services of the public banks. The primary objective of this article is to present issues to concerned body to look on the problem which is the shifting goal of micro finance from financial sustainability to social sustainability.On my topic which is entitled the shifting goal of micro finance from social sustainability to financial sustainability, I have tried to summarize different literature and make an argument on the two contradicting ideas. Tracing the goal of microfinance I conclude that the microfinance objective has to be kept as to provide social and financial service for the poor and marginalized group. But the concern of scholars and the institution on financial sustainability of micro finance which should not be underestimated problem has to be solved. Unless otherwise the microfinance institution has to be merged with banks Shifting of the goal of microfinance from social sustainability to financial sustainability is the missing link. The scholars and the financial institutions against my idea have to answer the question of what is the reason for the existence of micro finance. Finally I recommend as strengthening the microfinance social service such as training and development on entrepreneurial skill, leader ship skill, marketing skill and others which in turn proof financial performance.

Keywords: Microfinance, Social performance, financial performance, entrepreneurial development, financial institution, banks, microcredit, saving, micro insurance, loan

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