The institutional development components for both the MCFs and MCIs should be determined in line with attaining sustainability of each microfinance program as a whole. Three interrelated sustainability issues in microfinance must be properly addressed. These are:
a) Sustainability of clients of MCIs
b) MCFs’/MCIs’ financial & economic viability and
c) MCFs’/MCIs’ institutional viability.
For the purpose of setting the general direction of activities undertaken by the MCFs/MCIs, sustainability of the clients must be monitored on a regular basis by using appropriate indicators (both process and impact indicators). For the MCF, monitoring the sustainability of both the MCIs and their clients will be required.
Using four sets of indicators related to
(ii) operating efficiency,
(iii) portfolio quality and
(iv) profitability, the sustainability mentioned in (b) and (c) can be assessed. PKSF and CGAP have done some work in this area.