Complementary Alliances and Sustainability of Microfinance Institutions: Evidence from Cameroon

Abstract

Purpose: The Cameroon Microfinance sector has been facing stiff competition as a result of globalization where other players have joined the sector with differentiated innovative products/services rendering MFIs in quest of new strategies of development. Partnerships are becoming an alternative business strategy and hence the formation of strategic alliances in the microfinance industry. This study sought to determine the influence of complementary alliances on the sustainability of MFIs in Cameroon. The objectives were to examine how complementary alliances in financial institutions and complementary alliances in non-financial institutions affect sustainability of MFIs in Cameroon. Materials and Methods: The study used a survey research design to examine the effects of the independent variables on the dependent variable. Purposive and snowball sampling techniques were used in this study. The target population of the study comprised of the 361 MFIs in the Centre, Littoral, NW, SW and West regions of Cameroon that have carried out strategic alliances which were retained and used to develop the sample size. Data was collected through the use of opened and closed ended questionnaires administered to senior management of the MFIs. Data collected was analysed using the Structural Equation Modelling with Ordinary Least Square (OLS) regression estimation techniques to check the robustness of the data set. Findings: OLS Findings suggest that complementary alliances in financial institutions, more than complementary alliances in non-financial institutions has a positive and significant relationship with sustainability of MFIs in Cameroon given their β coefficients of 0.243** and 0.036 respectively. The regression coefficient for complementary alliances in financial institution is significant at 5%. Implications to Theory, Practice and Policy: It is recommended that MFIs should partner with other financial and non-financial institutions in terms of commercialisation of services. This will strengthen their business relationships, enable them have access to resources and expertise from partner organisations to expand their operations, generate revenue that will keep them going and boost the financial growth of the economy.