Paper

Credit with a Social Mission: Why Aligning the UK with the European Microfinance Movement Matters

Arresting the declining outreach of UK’'s microfinance sector
Download 26 pages

This paper focuses on the segment of Community Development Financial Institutions (CDFIs) in the U.K. that lends to microbusinesses. Research reveals that U.K. CDFIs share goals and characteristics similar to European microfinance organizations. However, the term '‘microfinance' is not used in the U.K. and the sector is not aligned with the broader European microfinance movement. There is no distinction between microfinance and other credit lines offered by CDFIs. This coupled with the resulting lack of demand information creates problems for the sustainability of the microfinance sector in the U.K. This issue must be addressed if microfinance is to fulfill its role as a facilitator of social and financial inclusion. Explicitly using the term ‘'microfinance' and distinguishing the sector from other credit lines would benefit microfinance in the U.K. as it would:

  • Decrease the pressure on microlending organizations to be financially sustainable;
  • Enable CDFIs to leverage advocacy power and political lobbying for development of appropriate policies;
  • Allow CDFIs to improve lending methods, funding strategies and impact measurement methods by tapping into existing microfinance networks.

About this Publication

By Thiel, V.
Published