Critical Success Factors for Microfinance Institutions (MFIs) Survival in Emerging African Markets: A TOPSIS-Based Evaluation Critical Success Factors for Microfinance Institutions (MFIs) Survival in Emerging African Markets: A TOPSIS-Based Evaluation

Abstract

Microfinance institutions (MFIs) play a crucial role in advancing financial inclusion, promoting entrepreneurship, and supporting poverty alleviation across emerging African economies. Despite their developmental significance, many MFIs continue to face sustainability and survival challenges stemming from financial constraints, institutional inefficiencies, and macroeconomic vulnerabilities. This study identifies and ranks the critical success factors that determine the survival and sustainability of MFIs in six emerging African economies: South Africa, Kenya, Nigeria, Egypt, Ethiopia, and Morocco. Using data from 210 MFIs in the MIX Market database covering 1999–2019, the research employs a multi-criteria decision-making approach, specifically the Technique for Order Preference by Similarity to Ideal Solution (TOPSIS), to rank factors derived from a prior Cox Proportional Hazards (Cox PH) survival analysis. The results reveal that GDP growth is the most influential determinant, followed by the rural population share (PERRURPOP). The study contributes to the microfinance literature by combining survival and ranking methodologies, offering a replicable framework for prioritising sustainability determinants that can guide policy, investment, and strategic management decisions in the microfinance sector.