ASSESSMENT OF OUTREACH AND FINANCIAL SUSTINIBILITY OF MICRO FINANCE INSTITUTIONS A CASE STUDY OF OMOMICRO FINANCE INSTITUTION

Abstract

In recent years the growth and expansion of microfinance programs and increasing attention to microfinance as a poverty reduction strategy and making profit for their continued existence and resolving the credit access problem of the poor. The main objective of the study is to assess the status of outreach and financial sustainability of omo microfinance Institution (OMFI) and makes recommendations for improving its outreach and financial sustainability. The study uses descriptive type of data analysis using different performance indicators. Data for the study was used from secondary sources such as balance sheet, income statement and operational data. In order to see the trend in performance the researcher used five years data (2012-2016). The major findings of the study indicate that growth of client outreach of OMFI has decreased during the period under study. Regarding financial sustainability, borrower per loan officer has decreased, operating expense has increased, and active client per staff member has decreased. Operational self sufficiency and return on asset has decreased. On the other hand, voluntary and compulsory savings have increased. This implies that except saving, all other indicators show that OMFI has weak financial sustainability during the period under study. The study proposes some policy recommendations implied from the findings: First, in order to retain its clients, OMFI should take some measures such as providing access to additional services, training its clients, promote its services, and establish more branches. Second, to improve its financial sustainability, OMFI has to take measures to expand its borrower base, and improve its operational self sufficiency and return on asset.