EXPLORING ORGANIZATIONAL FACTORS INFLUENCING INTERNAL SUSTAINABILITY IN RURAL MICROCREDIT GROUPS IN SRI LANKA: A QUALITATIVE STUDY OF LEADERSHIP, GOVERNANCE, AND CAPACITY DEVELOPMENT

Abstract

Microcredit groups are beneficial in boosting socio-economic empowerment and financial inclusion in underserved communities. However, the long-term viability of microcredit groups depends on a balance of organizational, social, and financial elements. The organizational durability of microcredit groups is attributed to their ability to maintain stability, active member engagement, and loan repayments. At the same time, clear rules reduce default risks and ensure steady group operations. This research aims to explore the organizational sustainability of Sri Lankan rural microcredit groups, focusing on leadership, group management, and training programs to enhance their effectiveness. The research employs a qualitative approach to examine the sustainability of microcredit groups, and interviews were conducted with 16 microfinance groups in the Anuradhapura district. The interviews focused on their experiences, and groups with fewer than three members or those that are no longer operating were excluded. Thematic analysis was the analysis tool used to identify organizational dimensions of sustainability. The research findings highlight the importance of strong leadership, clear operational systems, teamwork, participatory decision-making, and continuous training for the long-term sustainability of microcredit groups. It also suggests that government support and modern digital financial tools are crucial for future sustainability. The research findings aim to enhance the long-term viability of microcredit groups by targeting the development of leadership capabilities, improving governance systems, promoting inclusive decision processes, and providing broader training opportunities.