MICROFINANCE NGOS IN PAKISTAN: OUTREACH AND SUSTAINABILITY

This study investigates the tradeoff between Financial Sustainability and Outreach of microfinance NGOs in Pakistan, and to find out long term relationship among the selected variables of outreach and sustainability. To achieve this objective, three outreach indicators including Number of Active Borrowers, Percentage of Female Borrowers and Average Loan Balance per Borrower are used in addition to three Financial Sustainability indicators, including Return on Assets (ROA), Return on Equity (ROE) and Operational Self-sufficiency (OSS) ratio. Secondary data of 10 NGOs for the years 2004 to 2015 is collected from Mix Market, annual reports of NGOs, and Microfinance Annual Reports. Data is analyzed using Pearson's correlation analysis, and Johenson's Co-integration Trace Test. Augmented Dickey Fuller-ADF test is also applied to check stationarity; all variables were found stationary at level. Correlation results do not clearly indicate the tradeoff between outreach and sustainability, whereas Co-integration Trace Test indicates that in long run both outreach and sustainability variables are significantly related. This study concludes that in the MFIs (NGOs) of Pakistan, there does not exist a clear tradeoff between outreach and sustainability. Long term relationship exists among all the variables of outreach and sustainability. KEYWORDS: Microfinance, Financial Sustainability & Outreach