Financing Microfinance: "Transitions to Private Capital"

This paper discusses the proceedings of the workshop, "Transitions to Private Capital". The paper:

• Lists the objective of the workshop as - to discuss, define and prioritize major MFI financing issues;
• Talks about 8 main issues that participants identified as the means for MFIs to achieve greater access to private capital:
  • Attractiveness of microfinance as an investment opportunity;
  • Need for transparency and information;
  • Internal capacity of the MFI;
  • Transaction costs;
  • Legal and regulatory issues;
  • Public sector involvement;
  • Foreign exchange risk;
  • MFI credit risk.
• Presents the list that the participants made of the different types of investors;
• States the indicators that participants think can be used to characterize current or potential investors;
• Discusses four themes that emerged from the workshop and that suggested research directions worth pursuing in the project:
  • Is mission drift inevitable as MFIs make the transition to private sources of capital?
  • Does competition drive financial institutions down-market?
  • How can good MFIs that operate in weak or small banking markets access private capital?
  • Which MFIs should be the focus of transition efforts?
• Confers what the microfinance sector needs to know about MFI funding to advance the goals of sustainability and outreach.

The paper concludes by stating that the opinions expressed in this paper are strictly those of the workshop participants.