In an article published in the US-based website Huffington Post, Melanie Walker of the US-based nonprofit Bill and Melinda Gates Foundation expounds the concept of “metafinance,” which is defined as the provision of financial service that “occupies the intermediary space between individual finance and large-scale municipal finance…. It enables creditworthy individuals and families to pool their discrete capacity to save or to borrow into a single loan for a communal purpose–hence the “meta” or “transcending” dimension, extending beyond and bridging existing microfinance or municipal finance paradigms” . One example is the work of K-Rep Bank, a microfinance institution (MFI) in Kenya, which is financing such loans for community-level water projects . Ms Walker states that the increasing global population and lack of basic infrastructure, especially in urban areas, form a major obstacle to “self-improvement” and economic growth. Microfinance, which often offers financing in the range of USD 100 to USD 1,000, cannot finance community-level infrastructure projects for which the costs range from USD 30,000 to USD 150,000. This project size is where metafinance can bridge the gap between microfinance and municipal loans that start in the range of USD 1 million.
Ms Walker is the deputy director of the “Urban Development Special Initiative” of the Bill and Melinda Gates Foundation that is supporting efforts to identify sustainable approaches to metafinance. Acknowledging that metafinance cannot substitute for needed city-wide investments, she believes that metafinance, just like microfinance once did, “will likely need strong support from philanthropic organizations as it establishes itself as a mainstream and financially sustainable service.”
By Nisha Koul, Research Associate
About Bill and Melinda Gates Foundation: Based in the US, the Bill and Melinda Gates Foundation provides grants to organizations in approximately 100 countries with the aim of enhancing health care, reducing poverty and expanding access to education and information technology. The Bill and Melinda Gates Foundation’s Financial Services for the Poor initiative focuses on providing people with secure places to save money. To support this initiative, the foundation works with financial organizations to increase access to technology (point-of-sales devices, automated teller machines, etc.) and to forge partnerships among mobile phone companies, banks and microfinance institutions. It also supports the startup and growth of new banks in “difficult markets”. As of June 30, 2011, the Bill and Melinda Gates Foundation reported an asset trust endowment of USD 36.3 billion. In 2010, the Foundation awarded USD 2.6 billion in grants.
Sources and Additional Resources:
 “Towards Metafinance Slum Dwellers around the World Need Financing Options beyond What Microfinance and Traditional Banking Can Offer: Metafinance Shows the Way Forward By Melanie Walker and Franck Daphnis,” http://www.metafinance.org/
 Huffington Post, “From Microfinance to Metafinance: A New Tool to Fight Global Poverty,” http://www.huffingtonpost.com/melanie-walker/metafinance_b_1223712.html
MicroCapital.org story, September 19, 2011, “MICROCAPITAL BRIEF: Housing Microfinance Not a Viable Solution for Slums, Opines Ruban Selvanayagam,” http://www.microcapital.org/microcapital-brief-housing-microfinance-not-a-viable-solution-for-slums-opines-ruban-selvanayagam/
MicroCapital Universe Profile: Bill and Melinda Gates Foundation, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bill+and+Melinda+Gates+Foundation
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