Will Microfinance Continue to do Well?

This is a report of a debate among Xavier Reille, Andre Laude, Roland Siller, Chikako Kuno, and Damian von Stauffenberg on the role of public funding in managing the risk of private investments in microfinance. The debate focused on development finance institutions (DFIs). The debate was part of an event organized by World Microfinance Forum Geneva (WMFG) to deepen the private sector's understanding of current issues surrounding investment in inclusive finance. It discussed microfinance investment trends, DFI's role in microfinance and in catalyzing private investment in microfinance, and their response to the microfinance crisis. Key points include:

• MFI assets have grown more than ten-fold between 2000 and 2007;
• Public, institutional, and retail investors have dominated the landscape;
• DFIs have helped in the early development of the microfinance market in ways such as investing in greenfield undertakings and helping commercial banks to downscale;
• DFIs help to build a nascent industry, ensure that MFIs meet their social mission, and reduce risks for investors;
• DFIs have contributed to help microfinance do relatively well in the crisis;
• Both public and retail investors will drive foreign capital investment growth in microfinance in 2009.