Twenty Years of Microfinance Work and Future Challenges

This presentation addresses ACCION Internationals microfinance history over the past twenty years. It:

• Describes the four major stages of evolution;
• Highlights the main outcomes in each stage;
• Identifies the most significant mistakes or shortcomings in each stage;

• The presentation identifies the following two guiding principles of ACCION:
  • To reach a massive number of the economically active poor with credit;
  • To build sustainable local, autonomous institutions that provide credit.
• It describes the four stages of evolution as follows:Stage one (early 1980s):
  • Development of solidarity-groups lending methodology;
  • Increased role of non-government organizations (NGOs);
  • Shortcomings: Lack of funds and skilled staff.
• Stage two (1985-1990):
  • Creation of new NGOs;
  • Shift from donor-funded portfolios to commercial loans;
  • Links between ACCION affiliates and local capital markets;
  • Financial self-sufficiency;
  • Specialization, impact evaluation, documentation and dissemination;
  • Shortcomings: Lack of financial skills, application of standardized definitions and governance.
• Stage three (1990-1995):
  • Achievement of massive scale;
  • Transformation of NGOs into regulated financial institutions;
  • Shortcomings:
    • Lack of a strong technical team;
    • Weak regulatory and supervisory environment.
• Stage four (1996 onwards):
  • Support to commercial banks;
  • New products and technologies;
  • Competition;
  • Increase in scale, efficiency and financial viability.
• The presentation concludes by listing the future challenges and highlighting the continuity of vision within ACCION and among ACCION affiliates.