Decentralized financial system and financial viability

Between 2001 and 2011, 25 microfinance institutions, also known as decentralised financial systems (SFDs), were placed under provisional administration in the WAEMU area. In 2021 alone, 14 SFDs were affected. The near-bankruptcy of these SFDs raises questions about their sustainability and is a cause for concern for the monetary authorities. We therefore believe it is necessary to address the issue of the financial viability of SFDs. This involves identifying the main determinants of the financial viability of an SFD. In this paper, we propose to analyse the financial viability of an SFD, using the case of ACEP Senegal as a basis. The study shows that the determinants of financial viability are savings, delayed financial viability, personnel costs and the scale of activities. Beyond these results, some salient facts that contradict conventional wisdom are highlighted. Contrary to expectations, for example, savings collection is not always beneficial for a microfinance institution. Such a study could be extended to the WAEMU area, with a larger number of factors.