The State of Global Microfinance: How Public and Private Funds Can Effectively Promote Financial Inclusion for All

Promoting the social mission of microfinance
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This paper charts progress of the microfinance industry, and highlights the importance of continued support to the sector by the U.S. government.

Credit services have expanded to include housing, education, transportation and consumer finance. The paper states that:

  • Microfinance models have begun to provide services and products such as pharmacies, clinics, water and sanitation for poor people;
  • Some microfinance providers are pushing the envelope to reach those who are poorer, but others are moving upmarket to address the needs of small and medium enterprises;
  • Microfinance is also making a contribution to food security and nutrition.

Microfinance has matured from a development program largely funded by the U.S. government and donors to an industry that is funded through investment capital, private donations from individuals, corporations and foundations, and peer-to-peer lending. Yet, there are gaps in availability of microfinance funding. Most investment funds fail to reach people in remote and inaccessible areas. Further, the percentage of women clients has gone down as the industry commercialized. There is, therefore a need for the U.S. government to continue playing a role in funding microfinance.