Paper short abstract:

This study assesses the institutional designs of Microfinance institutions (MFIs) against their actual implementation. I argue for effectiveness of MFIs product designs be viewed from both supply and demand sides of the core market and as well consider the livelihood strategies of MF clients.

Paper long abstract:

Poverty still remains one of the world's biggest challenges especially in developing countries; this old and well researched phenomenon presents a renewed development threat to the global commitments to the achievements of the Sustainable Development Goals (SDGs). According to estimates professed by the Global Multidimensional Poverty Index (MPI), 1.6 billion people, living across 108 countries representing 78% of the current global population are multidimensionally poor (Alkire et al. 2014).

To this point, some commentators consider the emergence of microcredit (that later metamorphosed to microfinance) as the game changer in the fight against poverty in the global south (Khandker 1998; Armendáriz and Morduch 2010); but this claim is not without contestations on the actual poverty reducing effects of microfinance interventions (Bateman 2010; Bateman and Chang 2012; Hudon and Sandberg 2013).

The current trend of microfinance commercialization has brought about some schism in the microfinance sector, generating arguments among proponents of welfare and commercial microfinance. With proponents of welfare microfinance arguing that the commercialization drive of the former welfare based MFIs would compromise on the original poverty reduction objectives of MFIs.

This research therefore seeks to assess the institutional designs of microfinance institutions to ascertain whether the reflect the actual implementation designs. The study will be interested in revealing knowledge on factors that impede the effective implementation of microfinance both on the demand and supply; and whether MFIs take into account the livelihoods of their clients in the design of products and services.