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JSPES, Vol. 34, No. 3 (Fall 2009)
pp. 318-346

Local Government Investment Outreach and Sustainability of Microfinance Institutions: A Case Study of BURO, Bangladesh

Mostafa Monzur Hasan
Daffodil International University

M. Kabir Hassan
University of New Orleans

Mohammad Riaz Uddin
U niversity of Illinois at Urbana-Champaign

While the world is fighting poverty and hunger, the new concept of Microfinance has emerged in the last couple of decades to provide loans to marginal and underprivileged people. Outreach and sustainability have become prominent indicators for success for microfinance institutions. Outreach pertains to the range of services; sustainability to a program’s long-term existence., looking at the same time to the quantity and quality of services. This study deployed Sustainability Dependency Index (SDI), Sustainability Dependency Ratio (SDR) and Efficiency and Subsidy Intensity Index (ESII) techniques to measure the situation of “BURO” (the Bangladesh Unemployed Rehabilitation Organization), a prominent microfinance institution of Bangladesh. From the analysis, BURO is found to have progressed towards achieving outreach and sustainability from 2001 to 2005, but then to have seen this trend deteriorate in 2006 and 2007. The study leads to a recommendation that microfinance institutions should concentrate on enhancing financial efficiency and reducing reliance on subsidies. Because the desire for micro credit is increasing day by day, microfinance institutions still have lots of opportunity to put more emphasis on outreach and sustainability factors. This study of BURO shows much that is relevant to the overall microfinance market in Bangladesh.