Performance of Microfinance Institutions in Burkina Faso

This study uses indicators such as the sustainable interest rate and the subsidy dependence index to test the performance of microfinance institutions (MFIs) in Burkina Faso. The study indicates that:

• The outreach performance of MFIs is very low compared with the potential demand;
• The factors responsible for low performance are the refusal to mobilize local savings and the high costs of supply of microfinancial services.

The paper also points out key findings:

• Large scale outreach to the poor remains a challenge;
• Savings mobilization leads to better self-sustainability;
• MFIs have a high quality loan portfolio;
• They are not self-sustainable and are dependant on subsidies.

Finally, the paper recommends steps to improve the performance of MFIs:

• MFIs should pay attention on savings mobilization;
• MFIs should adopt efficient management information systems;
• Ceiling on interest rates should be removed and MFIs should be allowed to charge competitive interest rates.