Microfinance is financial services for the global poor. Financial services are provided by “Microfinance Institutions” (MFIs) or “microlenders”, generic terms for the estimated 10,000 diverse entities such as commercial banks, NGOs, credit unions, finance companies etc. These services include providing business and housing loans, insurance, pensions, and deposits.

The prospects for this industry are strong since the gap between demand and supply is great. Currently, an estimated 4 percent of the overall global demand for microfinance services is being met. Although estimates vary widely, the potential global microfinance market is worth approximately $300 billion. The commercialization of microfinance is gaining momentum as non-profit charities convert into regulated financial institutions. Nonetheless, an estimated 90% of the (non-deposit) capitalization in microfinance is public funding in origin, although often filtered through a private intermediary. Recently, we have seen public agencies work to guarantee layers of private investment funds into order to attract commercial investors. Will an asset class emerge?

Page last modified on Monday 02 of November, 2009 23:19:29 MST