Abstract:

The development of Microfinance Institutions (MFIs) in Nigeria was a result of determined individual and institutions to solve unemployment and poverty menace by ensuring the promotion of self-employment and entrepreneurship (Hartarska, 2004). The rapid growth and development of many rural areas to provide financial services to the poor and less-privileged people outside the conventional financial services encouraged government action through new policies and regulation in the microfinance institutions in Nigeria. Microfinance institutions operate like the mainstream financial institutions but have different policies and procedures that guide its operation. They have less stringent rules compared to the main financial institutions; therefore, it is imperative to critically consider the issue of financial sustainability of the microfinance banks in Nigeria (Muwamba, 2012). Therefore, financial sustainability in this study is the power of MFIs to be self-sustaining both operationally and financially without compromising governance mechanism and its operations.