SustainabilityMicrofinance is no panacea, but it can be an important part of a comprehensive effort to build promising futures for millions of people around the world. Its social impact is well documented. Communities have seen quantifiable improvements in grade-school attendance, inoculation rates, diet, and the general quality of life.Today microfinance institutions (MFIs) reach an estimated 120 million clients worldwide, with a potential target of 1.28 billion clients1. However, the ongoing success of the industry is dependent on adequate and appropriate funding. In order to promote stability and expand their reach, MFIs, which have been historically funded by donor agencies, are increasingly looking toward private capital sources to meet the scale of demand. As a result, microfinance funds have evolved to assist these institutions to raise capital from individual and institutional investors. The move to tap traditional capital markets enables socially conscious investors to engage in the global community in a way that provides tangible and lasting benefits. Microfinance investors gain the unique opportunity to earn both social and financial returns. In contrast to traditional philanthropy, investing in microfinance is a perpetual gift — MFIs are permanent, and money repaid by borrowers is recycled into new loans and gives other micro-entrepreneurs the opportunity to break the cycle of poverty. 1Source: World Bank; CGAP (Occasional paper #8, 2004) |
Viewpoint"Microfinance has a dual constituency; the micro entrepreneur and the social investor. Microfinance is unique in the way it can feed both at the same time."
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