Microfinance is rapidly attracting large volumes of private capital for institutions serving low-income consumers. Yet the ability of microfinance institutions (MFIs) to absorb and deploy these investments is rising only gradually. To reach the goal of developing commercially sustainable MFIs – and of mainstreaming microfinance into the banking sectors of poor countries – there is a critical need to establish norms and best practices for investors and prepare MFIs for investment.
Through its Investing in Inclusive Finance program, the Center for Financial Inclusion explores the challenges and opportunities associated with the intersection of microfinance and commercial investment. These areas include strengthening microfinance fund management; creating instruments that foster healthy local capital markets; assisting MFIs with transformation strategies; and building capacity and support for MFIs to qualify for commercial investment and to work effectively with investors. The Center seeks solutions that address the needs of both investors and MFIs and draw on the collective expertise of Accion staff and private sector players.
The work of the Investing in Inclusive Finance team is made possible through the Center for Financial Inclusion sponsors of Credit Suisse and Accion.
- The Aligning Interests Initiative deals with the problem of misaligned interests that can accompany MFI transformation to a for-profit structure.
- The Council of Microfinance Equity Funds (CMEF) brings together the leading private entities that make equity investments in microfinance institutions (MFIs) in the developing world.
- The project area Running with Risk consists of a seven-person dialogue group looking at the role MFI board members play in dealing with risk.
- The publication Weathering the Storm strives to raise awareness and discussion about the root causes, consequences, and context for MFI failures.
- The Risk Management Initiative in Microfinance (RIM) contributes to the development of awareness, best practices, and appropriate standards for risk management in microfinance globally.
Ten Risk Questions for Every MFI Board: Ten industry risk experts each respond to one tough risk question for the questionnaire Ten Risk Questons for Every MFI Board: An Expert Exchange. This questionnaire offers honest and candid responses to some of the most difficult risk issues that board members face, tackling issues such as over-indebtedness, fraud, “newer” risks, and lack of information. This questionnaire also offers board members information about setting risk strategy and appetite, developing risk scenarios, which risks to focus on first, and how technology can help in risk management.
Governance Working Group: The Governance Working Group (GWG) originated at the World Microfinance Forum Geneva (WMFG) in 2010. In early 2012, the Center for Financial Inclusion (CFI)became the new institutional home for the GWG. The Working Group aims to bring together leading experts and initiatives to address the challenge of improving governance in the industry. It has the goals of coordinating the different governance initiatives in microfinance, conducting research to advance the state of knowledge and practices, and engaging with different stakeholders to implement and improve governance practices. The Working Group’s main objectives are to: increase governance visibility and industry collaboration, advance thinking and understanding of how to achieve behavioral change through our governance-strengthening efforts, work to build a business case for governance, and raise awareness around the importance of governance and create a generally agreed upon vision for good governance.
Governance Leadership Seminar: The "Governance Leadership in a Competitive World" seminar will engage board members in an active dialogue about the challenges they face in governance and risk, and their roles and responsibilities in setting and monitoring the MFI’s mission and strategy. Ultimately, a stronger, more effective board presence related to governance and risk management will contribute to the health of MFIs around the world, and this positive change will also be felt by their clients who will benefit from more stable, and secure financial institutions. This seminar will be very interactive with board members sharing both their good and bad experiences. It will provide board members with the opportunity to interact with other players within their geographical context and facilitate greater understanding of the industry trends and regional challenges. Click here to download a flyer on the seminar in English, and click here for the flyer in Spanish. The seminar program is available in English here and in Spanish here. To request an invitation to attend the event, visit the seminar webiste, here.