The Future of Microfinance

A major source of financing for the poor and no longer a niche industry

Over the past four decades, microfinance—the provision of loans, savings, and insurance to small businesses and entrepreneurs shut out of traditional capital markets—has grown from a niche service in Bangladesh and a few other countries to a significant global source of financing. Some 200 million people globally now receive support from microfinance institutions, with most of the recipients in the developing world. In the beginning, much of the microfinance industry was managed by non-governmental organizations, but today the majority of these institutions are commercial and regulated by governments, and they provide safe places for the poor to save, as well as offering much-needed capital and other financial services.

Now out of infancy, the microfinance industry faces major challenges, including its ability to deal with mobile banking and other technology and concerns that some markets are now over-saturated with microfinance. How the industry deals with these and other challenges will determine whether it will continue to grow or will be subsumed within the larger global financial sector.

This book is based on the results of a workshop at Lehigh University among thirty-four leaders in the industry. The editors, working with contributions from more than a dozen leading authorities in the field, tell the important story of how microfinance developed, how it has met the needs of hundreds of millions of people, and they address key questions about how it can continue to meet those needs in the future.

Contents:

Foreword

Preface

Acknowledgments

Abbreviations

Introduction, Paul DiLeo and Jose Ruisanchez

Section I: Background

1. The Growth and Commercial Evolution of Microfinance, Ira W. Lieberman

Section II: Where We Are Now—What Is Needed in the Future

2. The Changing Face of Microfinance and the Role of Funders: Financing the Future, Paul DiLeo and Anna Kanze

Vision Statement. Fifteen Years of Financing MFIs: From Microcredit to SDG Integration, Roland Dominicé

3. The Future of Microcredit Depends on Social Investors, Timothy N. Ogden

4. Microfinance Industry Concentration and the Role of Large-Scale and Profitable MFIs, Todd A. Watkins

5. The Future of Microfinance as Knowledge Management: The Experience of the BBVA Microfinance Foundation, Claudio Gonzalez-Vega

6. Refocusing on Customer Value: Meaningful Inclusion through Positive Partnerships, Gerhard Coetzee

7. Understanding the Impact of Microcredit, Timothy N. Ogden

Section III: The Challenge of Technology and New Product Innovation and Development

8. Microfinance in the Age of Digital Finance, Momina Aijazuddin and Matthew Brown

Vision Statement. Microfinance and Digital Finance, Greta Bull

9. Governance in the Digital Age: Responsible Finance for Digital Inclusion, Lory Camba Opem

10. Product Diversification: Consumer Loans for Education and Housing, Alex Silva

11. Insurance for Development: How Has It Evolved and Where Is It Going? Craig Churchill and Aparna Dalal

Section IV: A Geographic Perspective

12. Asia and the Pacific: Tremendous Progress, but Hundreds of Millions Yet to Serve, Jennifer Isern

13. Financial Inclusion in India—A Himalayan Feat, Jennifer Isern

14. Inclusive Financial Development in China, Enjiang Cheng

15. The Future of Microfinance in Africa: Differentiating East and West, Renée Chao-Beroff and Kimanthi Mutua

Vision Statement. The Future of Microfinance in Africa, Renée Chao-Beroff

16. Latin America and the Caribbean: The Journey, the Gap, and a Vision of the New Microfinance Revolution, Jose Ruisanchez

Appendix: What the Data Tell Us, Blaine Stephens and Nikhil Gehani

Glossary

Contributors

Index