Sustainability of Microfinance Institutions: A Term With Multiple Understandings

Dr. Yogendra Acharya,
Dr Salim Lakha,
Dr Anthony Marcus
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This paper is based on empirical research and reports the understandings of small farmers about sustainability, and related issues. The performance of microfinance institutions in terms of institutional sustainability in Nepal seems not encouraging despite the fact that international and national development programs have been giving high priority on sustainable microfinance for poor for many years. In response to low repayment rate and the question of sustainability of microfinance schemes, many proposals have been forwarded for initiating small farmers’ development program and encouraged their participation in sustainable microfinance projects. Nevertheless, the repayment rate - the crux of sustainability - of farmer-run organizations is significantly low and is unable to reach the required level. Yet, little research has been done to understand and ascertain small farmers’ local understandings of sustainability. It is our argument that without a strong understanding of the divergence between the perspectives and interests of small rural farmers and those of bankers and policymakers microfinance programs are likely to continue to struggle to fulfill their mission of poverty alleviation and sustainability of microfinance.

The study is a case of rural Nepal from small farmers’ perspectives. Our data came from in-depth individual interviews, and focus group discussions carried out in three farmers’ cooperative organizations (the most successful, unsuccessful and the average) from the same geographical area and demonstrate how local understandings of rural small farmers can contribute towards sustainable microfinance and poverty alleviation in rural Nepal. This study has demonstrated that what is sustainability for a banker is not the sustainability for small farmers.

Keywords: Sustainability, Microfinance, Rural Nepal, Small farmers, Frame of reference, Credit defaults, Repayment rate, Poverty alleviation, Local understandings
Stream: Cultural Sustainability, Economic Sustainability, Social Sustainability
Presentation Type: Virtual Presentation in English
Paper: Sustainability of Microfinance Institution

Dr. Yogendra Acharya

PhD Candidate, School of Anthropology, Geography and Environmental Studies, University of Melbourne

Earned 10 years of teaching experience. Holds more than 12 years experience in microfinance. Published dozen of articles in journals. Attended and presented papers in international conferences. Interests in reading, writing and singing. Holds MBA, MPA (public Admin), M.Sc (Planning), LL.B, and BBA.

Dr Salim Lakha

Senior Lecturer and Program Coordinator, Development Studies Program, University of Melbourne

Dr Anthony Marcus

Academic Head of School, School of International Development, Melbourne University Private

Ref: S06P0436