The Behaviour of Microfinance Institutions in Targeting and Lending Strategies : Case of BRAC and Finance South Sudan Limited in South Sudan

Microfinance has been receiving recognition and support from international community, international organizations, NGOs and governments as a policy option for poverty reduction. Governments, donors and NGOs have adopted development strategies to support the growth of MFIs for the implementation of microfinance programs by providing financial services to the poorest segment of the population. The rapid growth of MFIs has raise concerns from both scholars and academic researchers on whether MFIs are really operating using the right strategies to serve the poor. Therefore, base on this fundamental idea, this paper examines MFIs (FSSL and BRAC) in South Sudan looking at their targeting strategies, lending methodologies and their problems to serve the poorest. The study shows that for-profit making MFIs tend to target the productive clients and exclude the poorest segment from their programs in terms of both targeting and lending than the no-for-profit making MFIs. Only those MFIs that have programs with well designed products within the demands of the poor may likely maintain the poorest clients. Overall MFIs in South Sudan have low level of well designed targeting and lending strategies for serving the poor and poverty level increases due to the current conflict in the country. Government and doors should empower microfinance sector through financing MFIs, build their capacity and strengthen other poverty related development intervention programs to assist microfinance in poverty reduction.