Towards a more market-oriented approach to credit and savings for the poor
Over the last decade a number of similar initiatives to provide credit and savings to the poor have been evolving which treat the poor as commercial clients rather than 'beneficiaries'. These initiatives are proving in a variety of cultural settings that the poor are able to save and to repay loans made at unsubsidized rates of interest.This article argues that credit and savings services for the poor are provided on a scale appropriate to the market (loans and savings services in the range of $15–$1,000) on a sustainable basis (high recoveries, high mobilization of savings on a break-even or profitable basis), then the clients themselves have proven that the service is justified. A distinctive and universal characteristic of these programmes, however, is that it may take some years of operation before these programmes achieve a critical mass of operations which allows them to be self-sustaining financial entities. This is where donor and government support can play a critical promotional role. Finally, this paper suggests that if the early indications of success throughout the world continue, with appropriate support from donors and governments, it is conceivable that hundreds of millions of clients could be benefiting from these services by the end of the decade.
Perspectives from the Council of Microfinance Equity Funds
The Council of Microfinance Equity Funds is a group of private equity funds with joint social and financial missions that invest in microfinance institutions (MFIs). This article discusses the role of equity finance in the microfinance industry. It categorizes the types of funds and their varying objectives and describes the typical MFI being invested in. Drawing on the deliberations that have taken place at council meetings, this article identifies key issues confronting the microfinance field as it begins to incorporate these new players, such as how these players affect governance, whether the funds are financially viable and whether the funds can help develop a local investor market.
We asked for private sector involvement - now we've got it. Some challenges to microfinance from disruptive new entrants
Banco Azteca is one of the fastest growing commercial banks serving poor people in Mexico. It has very different origins from the more usual MFIs, but what can these institutions learn from Banco Azteca about achieving scale and delivering quality financial products? What can they teach Banco Azteca about reaching poorer clients with fairly priced services?
Crossfire: Formal vs. informal sector savings
Considering that decent shelter is essential to the quality of human life, the meagre attention given by the development finance sector on how to provide it is shocking. The need for a secure place to live garners surprisingly little focus outside the relatively small housing subsectors of urban development, and water and sanitation.