Is Cinderella Finally Coming to the Ball? SA Microfinance in Broad Perspective

This paper argues that South African microfinance may be coming of age. It states that:

• In the past ten years, the South African microcredit sector has been mainly led by private players;
• The historic growth trajectory positions South Africa well for progress in the next phase of microfinance development;
• It is possible that the South African market will make rapid progress in extending access to financial services in this decade.

However, the following are the challenges to South Africa’s participation in global microfinance:

• South Africa’s initial special circumstances that included high formal employment and a well developed financial sector, which took the focus away from the informally employed;
• Sustainability problems of MFIs;
• Donor/ apex attitudes, which showed low tolerance for the task of institution building.

The paper states the evolving vision of microfinance in this decade including:

• More focus on client needs;
• Increasing commercial participation in microfinance;
• The recognition of the role of other financial services such as savings and insurance in microfinance.

The paper concludes by arguing that if the next microfinance ball is about a broad range of financial services from a diverse group of providers with a strong commercial flavor, then South Africa will find itself well placed to join the ball.