Paper
Reversing the Coin: What International Financial Institutions Do to Change the Face of Microfinance
IFIs provide their perspective on the debate over IFI roles in microfinance investment
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4 pages
This paper focuses on the role of international financial institutions (IFIs) in a changing microfinance environment and in closing the gap between supply and demand.The paper states that:
- The current microfinance landscape is diverse and dynamic,
- IFIs are responding to this dynamic environment by:
- Strengthening and tapping the local financial sector and deposits,
- Applying innovative refinancing instruments,
- IFI approaches both a strengthening, as well as a financing focus on MFIs and on financial sector development,
- IFIs act as market enablers, where microfinance sectors are still underdeveloped and immature,
- IFIs:
- Tap local markets,
- Mobilize funding through innovative instruments,
- Create and strengthen microfinance institutions (MFIs),
- Foster stability in a volatile environment,
- IFIs have been very active in developing and supporting financing structures that are designed to crowd in new investors.
The paper concludes that:
- Microfinance is ready to be integrated into the financial sector,
- MFIs need to become sound financial institutions guided by their missions but with clear status, ownership and governance structures to form an integral part of a financial system and to tap local and international funding,
- IFIs have played and continue to play a prominent role in microfinance development,
- The role of IFIs is broad and not limited to funding,
- There is still ample demand for the role of IFIs, which are fully complementary to growing private investments.
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