UNITED NATIONS CAPITAL DEVELOPMENT FUND    Microfinance

Issue 10 / March 2005

Issue Table of Contents

Marketplace

Made by Microentrepreneurs

Update

on the International Year of Microcredit 2005

Upcoming Events

Conferences, events and trainings.

Links

New websites and publications.

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please email the Editor, Vanessa Ward.

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Past Issues

There are many obstacles to making the world's financial sectors inclusive of poor and low income people; in this issue of Microfinance Matters we examine some of those barriers. The contributors have taken a variety of routes, and make various suggestions to address challenges according to their own perspectives.

Kathryn Imboden of UNCDF defines the new paradigm of the inclusive financial sector, in which financial services are available to the vast majority of the population, while Philippine Central Bank Governor Rafael B. Buenaventura, Chair of the Philippine National Committee for the International Year of Microcredit, presents his country's success in instituting a National Strategy for Microfinance - a policy framework that has allowed for significant growth in the Philippine microfinance sector and the economy as a whole.

UNCDF and UNDESA are conducting the Blue Book initiative to examine the challenges to building inclusive financial sectors and answer the question "Why are so many bankable clients unbanked?" by bringing together national governments, central banks, multilateral institutions, civil society, the private sector and the microfinance industry.

In "Creating a Virtuous Triangle," John Brinsden, Vice-chairman of ACLEDA Bank in Cambodia, argues that the biggest challenge in building an inclusive financial sector lies in persuading the private sector that microfinance represents a business opportunity, while CGAP presents the challenges faced by donors, which include distorting markets and displacing local commercial initiative with cheap or free money. CGAP reports that as microfinance evolves, donors will find it more difficult to apply good practice, and in response, has developed Donor Guidelines on Good Practice in Microfinance.

Microfinance institutions can also be effective agents in overcoming barriers and creating a conducive environment for the growth of microfinance. In 1998-99, the five Colombian affiliates of Women's World Banking joined with other stakeholders to successfully initiate concrete policy change in the face of a profound crisis in the country's financial sector.

Finally, this issue of Microfinance Matters invited comment on the importance of access to financial services and what role this plays in eradicating poverty and achieving the Millennium Development Goals. An array of responses from all over the world confirm that the microfinance community can supply many reasons why extending financial services to poor people is crucial in eradicating poverty, yet in the end, little hard evidence was offered.

No matter what the perspective, we are all working towards the same final goal - providing poor people the opportunity for a better life.

Vanessa Ward
Editor