Microfinance: Current and Future Developments
This presentation gives an overview of the origin and growth of microfinance. It discusses major microfinance models, key players, potential demand, target clientele and future outlook for the sector.
The beginning of the microfinance movement can be traced to money lenders, Rotating Credit and Savings Associations and savings clubs. Grameen Bank pioneered the group-based lending model. The industry has registered significant growth, with the number of MFIs growing from less than twenty in 1997 to over 3000 in 2004. A vast majority of microfinance clients were from Asia as of 2004. Although microfinance targets financially excluded communities, MFIs' clientele range from the ultra-poor to small enterprises depending on MFI objectives and perceived demand.
The presentation predicts three scenarios for the future of microfinance in 2015. They are:
- Commercial pullback, demonstrated by loan portfolio of US$15 billion, stagnation of donor support, limited number of commercially sustainable MFIs and lack of product innovation;
- Unequal development, indicated by growth in loan portfolio to US $60 billion along with a weak microfinance market;
- Systematic integration, with better technology, regulatory framework, management systems and stakeholder collaboration resulting in loan portfolio of US $130 billion.
