> Posted by Sergio Guzmán
Who really sets the agenda for the microfinance industry? This is a question haunting every major conference I attend. Is it MFIs, donors, investors, or governments? Who?
A recent UK government report by the All-Party Parliamentary Group on Microfinance once again raises this question for me. The report’s strong message is that the microfinance sector is “unbalanced”: While access to loans has expanded greatly in the last 15 years, access to other financial services (savings, insurance, and remittances) has not. The report urges the UK’s Department for International Development to play a central role in “refocusing” the sector.
I fully agree that the microfinance industry has come a long way but that there is still much work to do to bring a balanced suite of service to those who need it. Diversification of products is a call to the industry that we at the Center have repeatedly made. Read more about it here.
However, one thing that concerns me about the Parliamentary Group’s report is how it narrows the vision of the relevant actors that affect change in the industry. It calls on high-level donors and government agencies to steer the industry in a new direction; in other words, bring the industry back into its fold.
Frankly, this approach is flawed. The microfinance industry has grown up. Organizations like BRI, SKS, Compartamos, FMM Popayan, and Equity Bank, along with many, many others, are no longer donor-dependent. They have achieved financial sustainability that allows them to prosper, grow, and invest in expanding their product offering. Donors and First World governments do not necessarily steer the industry the way they once did. Practitioners themselves and the investors who own and lend to them are increasingly the drivers.
Here at the Center, we have tried to promote a collaborative model that builds on the experience of diverse actors in the microfinance industry (who don’t necessarily always agree). We work to engage the industry through our projects. We’re about to release our survey of a wide range of industry players whose opinions on “Opportunities and Obstacles to Financial Inclusion” will guide the Center’s work going forward. Successful strategies to steer the microfinance industry somewhere must involve industry-wide dialogue, collaboration, transparency, patience, and — perhaps most importantly — compromise.
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