Making Microfinance More Client-Led

This paper makes a case for client/market driven microfinance operations. It states that microfinance agenda is increasingly becoming client or market centered. Much of it is driven by the industry's focus on competition and dropouts.The paper discusses three levels which define the client/market centric microfinance approach:

• Client-product nexus: Cuts across the issue of customer access to appropriate products and services;
• Institution-client linkages: Differentiate between the internal need for mechanisms to provide institutions with a client database that can be used for product development, marketing or service delivery;
• Client financial landscape: Challenges the attitude among many MFIs that they are the only game in town. The client's portfolio of financial services determines not only how the client uses microfinance but also the role of microfinance in within the financial market.

The paper concludes that:

• Client-product nexus is a necessary part of the client-led agenda, but it is not the only part. It is critical to clarify the role of the institution within an integrated financial system;
• As greater realism enters the microfinance market place, the notion of being customer friendly is increasingly being accepted as good business;
• Practitioners of microcredit must move forward towards further exploration and formulation of a truly client-led microfinance paradigm.