Paper

Microlending in Germany: A Case Study on DMI

Can Germany replicate the microfinance of developing countries?
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This study looks at the present situation of micro lending in Germany and analyzes the German Microfinance Institute (Deutsches Mikrofinanz Institut, DMI) as a case study. It tries to answer the question whether micro lending in Germany can be sustainable and have a substantial outreach at the same time. The paper:

  • Gives an overview of microfinance and its best practices in developing countries;
  • Assesses the situation in Germany in general;
  • Studies the case of DMI in detail;
  • Compares its findings with the experience in developing countries.

The author concludes that:

  • Replicating microfinance in Germany is not easy;
  • The role of microfinance, which is gradually becoming established, must be to facilitate access to credit and enable target groups to undertake self-determined employment and income opportunities;
  • Mixing social intentions with business needs in lending is an obstacle to outreach and sustainability; this is reflected by the DMI model too.
  • There is a need to:
    • Develop incentives within institutions;
    • Reduce costs by reducing operational expenses, loan losses and costs of funds.
  • DMI has been active in innovations and scientific research;
  • Close attention must be paid to the design of suitable, demand-driven products;
  • Although lessons can be learnt from developing countries, micro lending cannot simply be replicated and must be adapted to the German context.

About this Publication

By Lahn, S.
Published