Investment Readiness and Microfinance Associations: Bridging the Financing Gap

This technical note offers guidance to microfinance associations on increasing members' access to commercial capital.

Recent trends in financing flows to the microfinance industry reflect an increase in private and commercially-oriented capital, which has a different range of investment criteria and return expectations than donor capital. Yet, many MFIs are unable to access commercial capital. As regional and national level microfinance associations grow, they need to support their members in accessing commercial capital. They can leverage their positions in the market to increase the flow of information to investors and prepare their members to begin accessing debt and equity.

Microfinance associations can promote transparency and information exchange, and investment readiness services. As they develop their strategies for supporting greater member access to capital, they should:

• Leverage their comparative advantage;
• Build upon existing efforts;
• Expect to accommodate a broad range of understanding on the topic;
• Be prepared to educate investors;
• Help members make a clear business case.