Microfinance at a Crossroads: How Best to Create Value for the World's Poorest Citizens

This article presents a brief overview of the discussions on microfinance that took place in Wharton Finance Conference 2006 titled Creating Value in a Global Economy.

• Speakers such as the Second Secretary for Economics at the U.S. Embassy in Jordan, Vinay Chawla, and Mariama Ashcroft, Manager for Policy and Industry Impact/Africa for Women's World Banking (WWB) discussed the history of microfinance as:
  • A young industry, initiated as a social mission by NGOs;
  • Going through a paradigm shift to primarily institutional lending.
• However, Ms. Ashcroft also pointed out that the gradual mainstreaming of the microfinance industry may result in ignoring the poorest of the poor.

• During the conference, speakers:
  • Identified the human resources and technology as the key challenges in the microfinance industry;
  • Cited various examples as to how various MFIs have effectively used various innovative ideas to combat the challenges posed by the particular countries;
  • Expressed their concern regarding the gradual involvement of commercial entities in the microfinance industry, which may affect the actual beneficiaries of this industry, the poor.
• The moderator of the conference, Mr. Keith Weigelt (Wharton management professor), also echoed the question as to how to maintain the double bottom line of profitability and social responsibility in the industry.