Microfinance Horizon

Author: H. I. Latifee, Managing Director, Grameen Trust, Bangladesh

Conclusion:

Microfinance has come a long way despite doubts expressed and criticism launched about its viability, impact, and poverty fighting capacity. The pioneers in the field and the practitioners at large with their commitment, determination, and innovations have not only demonstrated its power and success, but also accelerated its growth. The Microcredit Summit Campaign deserves credit for making it a worldwide movement. Everyone who has supported or participated in this movement deserves high appreciation.

There should, however, be no room for complacency. The task of building a poverty-free world is yet to be finished. There are still over 1.2 billion people living in extreme poverty on this planet. They are not living in one country or region but spread all over the world.

Considerable work and continuous efforts are needed to diversify the source of funding for microfinance, to attract more foreign investments for well established MFIs, to use all the possible channels to serve more rural and urban poor, to develop its staff as more productive and professional, and to make it more poverty-focused and profitable. As the number of microfinance programs is growing, it is expected that they will remain competitive and innovative in serving the underserved and unserved throughout the world.

Although the last decade has witnessed an impressive growth of microfinance, lack of funding is still considered a major obstacle in the way of its growth. However, it is encouraging that the situation is changing. Given the experiences of large and fast growing MFIs, there are lessons for others who want to increase their outreach and operate on a sustainable basis.

Fortunately, there is an increasing awareness about the power of microfinance, and the need to support its growth. Many players have committed themselves to its promotion. Governments are taking an increasing interest in it. More banks, both national and international are coming forward with different support packages. NGO-MFI partnerships are on the increase. New instruments are being used to solve the problem of funding. It is expected that in the coming years more ideas, innovations, cost saving devices, and players will continue to reinforce the microfinance movement and increase its expansion.

How fast microfinance outreach will increase and what role different players will play in it, will largely depend on the creation of an enabling environment by the governments. Macroeconomic stability, liberalized interest rates, viable alternatives to subsidised credit schemes, savings mobilisation, opportunities for institutionalisation, and participation of domestic and foreign investments are some of the issues that deserve government attention. Fortunately some governments have already developed legal and regulatory frameworks for the microfinance sector and some more are in line.5 The sooner the enabling environment is created through appropriate legal and regulatory frameworks in more and more countries, the better the chance for achieving the goals of the Microcredit Summit Campaign is.

Given the goals set by the UN through its Millenium Development Goals and the Microcredit Summit Campaign’s new goals for 2015, this commitment to end poverty is an historic opportunity for all to make a breakthrough in poverty alleviation. If an effective roadmap is put together to incorporate poverty reduction strategies through microfinance, and if all the actors in the society join hands—practitioners, governments, donors, banks, corporations, NGOs, foundations, wholesale funds, networks, civil society and others—then there is no reason why the goals should not be achieved.

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