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|a Microfinance has attained a universal avowal as a vital tool for poverty alleviation. Microfinance Institutions (MFIs) provide financial services to the poor people who are deprived by mainstream commercial banks. MFIs face unique and unparalleled challenges of financial sustainability and outreach; therefore, a debate arises of whether microfinance worthwhile or worthless? Moreover, there are gaps in the existing literature of MFIs in less developed countries and Islamic MFIs. Consequently, this research studies the factors that influence the performances of microfinance sector in Sudan. The first three objectives of this research are to pursue an understanding of how microfinance interventions are implemented and how the mechanisms of the involvement namely; interest rate, client protection, financing method, microinsurance and institutional characteristic affect MFI's performance from financial sustainability and outreach perspectives. The fourth objective is to assess the impacts of microfinance loans on the clients. This study deployed mixed methods, in the quantitative study 123 MFIs and 228 clients participated in two separate survey questionnaires and in qualitative study 18 managers from MFIs participated in the semi-structured interview. Smart PLS-SEM, Descriptive, and Chisquare techniques of analysis, were used to analyse the data collected. While comparing the results of qualitative data integrated along with quantitative results, it was found that predictors of interest rate, client protection, and lending method have significant and positive relationship with the performance of MFIs from financial sustainability and outreach perspectives, however, the predictor microinsurance shown no relationship with the performances of MFIs. Moreover, results of the structural analysis provided sufficient support that the institutional characteristics of client type, the type of organization and the years of establishment of MFIs have an effect on the performances of MFIs. On the other hand, results from client's survey stated that microfinance loan has positive impact on MFI clients. This study contributes to the literature of microfinance industry by determining the factors that have impact in the performance of MFIs. In addition, the results proved that microfinance loans have significant effect on clients and provided social and economic security. This study contributed also to MFIs by proposing, as a future work, a theoretical Performance Measurement Frameworks (PMF), that is recognized by Consultative Group to Assist the Poor (CGAP). One of the recommendations for policy makers is that; encouraging institutional diversification, making MFIs a taxfree income, revising microinsurance policies, client-oriented regulations, and enforcing a positive interest rate ceiling, can assist MFIs in achieving their core objectives. Moreover, Government should not politicize microfinance programs.
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