Creating Opportunity Where It's Needed Most
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Annual Report

Reaching the Poor with Responsible Microfinance

India's Rural Women

We act on many fronts to ensure fairness in microfinance.

IFC has played a leading role in establishing and maintaining inclusive financial systems.

Partnering with more than 220 financial institutions that serve micro, small, and medium enterprises in 80 countries, we supported a combined outstanding portfolio of 8 million microloans worth $12.6 billion in 2010. In some regions that lack financial services altogether, we have supported the creation of new microfinance institutions.

In Latin America and the Caribbean, 43 IFC financial intermediaries provided 2.9 million microloans, with a value of $5.2 billion in 2010. We’re also helping microfinance institutions broaden the mix of financial services they offer, including deposits and insurance. In Sub-Saharan Africa, our local-currency funding has allowed the Advans Group to expand credit to thousands of microentrepreneurs in Cameroon and Ghana. In the Pacific, IFC launched the $11.3 million Pacific Microfinance Initiative to tailor lending products to hard-to reach communities.

We are not blind to the limitations of microcredit. Because of its rapid growth, the industry has, at times, let down the very clients it sought to lift up. Last year a crisis unfolded in India—frantic growth in microfinance contributed to increased competition, rising indebtedness, and, ultimately, default. IFC responded by engaging with industry, policymakers, think tanks, banks, and others to promote the development of codes of conduct, credit bureaus, social performance tracking, and consumer protection.

Nearly 3 billion people have no access to formal financial services. Microfinance provides the best framework in which to address that problem. As the Consultative Group to Assist the Poor noted recently: “The microcredit movement made a critical contribution in proving that it is possible to deliver financial services to poor people at scale, and in a sustainable way.”

Recognizing that the poor are especially vulnerable to unfair banking practices, IFC will continue to act on a number of fronts to ensure fairness in microfinance. Domestic regulation and legal structures must also be in place. The absence of a credit bureau, for example, can also contribute to microcredit crises—banks can’t tell which borrowers have loans from multiple providers.

Through our Global Credit Bureau Program, IFC has created or improved credit bureaus in more than 14 countries and advocated for relevant laws in more than 30. We also take an active role in advising microfinance institutions.

Though short-term studies of microfinance outcomes may provide differing results, increasing the capital available to low-income entrepreneurs will, with the proper care, support long-term development. Microloans have allowed millions of people worldwide to signal their desire for opportunity and advancement—a signal IFC cannot ignore.

IN 2010

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