Good Practice in Microfinance

1
Good Practice in Microfinance

• Microfinance Role, expectations and challenges

2
Microfinance is not a panacea for development

• Other services are needed and often more needed
  than microfinance
• Agricultural development
• Health
• Education
• Conflict avoidance and recovery
• Etc.

3
Microfinance market challenges
Geographical border
Densely populated
Less densely populated
Poverty border
Less poor
Increasingly Well covered
More poor
Generally uncovered
4
Challenges related to exclusion mechanisms

• Simanowitzs four mechanisms
• Exclusion by staff
• Exclusion by design
• Self-exclusion
• Exclusion by other members
• two mechanisms (lessons learned from working
  with disabled people)
• Physical exclusion
• Informational exclusion

5
The microfinance schism

• Poverty approach
• We must serve the poor peoples need today
• Sustainability approach
• We must build sustainable services to serve the
  poor peoples need for financial services in the
  long run

6
The schism some differences in expectations

• Poverty approach
• Wider objectives
• Integrated approach
• Welcome subsidies
• Welcome donors
• Focus on individuals
• Groups are an objective

• Sustainability approach
• More narrow and financial objectives
• Specialist approach
• Avoid subsidies
• Fear donors
• Focus on institutions
• Groups are means as a guarantee mechanism