Creating Opportunity in Emerging Markets: Microfinance. Microfinance has arrived. It has built a clear track record as a critical tool in the fight against poverty and has entered the financial mainstream. Yet it still reaches less than 20 percent of its potential market among the world’s three billion or more poor. More private investment is needed to allow a greater number of poor people to gain access to the financial services they need, to fulfill their business potential, and to build a better life.
IFC’s focus is on creating and supporting commercially viable microfinance institutions that can attract the private capital needed to scale up and respond to unmet demand. IFC is playing a catalytic role by demonstrating the business case for commercial microfinance and promoting it as an asset class to private institutional investors. Since pioneering commercial microfinance in the early 1990s, IFC has continued to lead innovation in microfinance, using developments in technology, financial products, and policy to help financial institutions reach a greater number of people in a more cost-effective way.
IFC provides Advisory Services and direct and indirect Investment Services to the microfinance sector.IFC’s advisory services portfolio of 60 projects spans the globe and we are active in frontier countries such as Afghanistan, Sierra Leone, and Yemen. Microfinance is a key first intervention in frontier and conflict countries, providing support to micro and small enterprises, which serve as the engines of growth after a conflict. IFC-supported microfinance advisory projects have facilitated access to finance for about five million micro entrepreneurs.
Microfinance advisory services flagship initiatives for FY10 include significantly expanding deposit mobilization in the microfinance industry, enhancing risk management frameworks for portfolio clients, and developing microfinance credit reporting. Going forward, IFC will work toward sustainable poverty alleviation by focusing on: scaling up its reach, capacity building and savings mobilization and diversification.
For more information about our work see Microfinance or contact us.