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UNITED NATIONS CAPITAL DEVELOPMENT FUND Microfinance |
Issue 13 / June 2005 |
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Editor's Note: Talking about the Future of Microfinance
What will the future of microfinance look like? Everyone has an opinion on this perennial favorite, but the real question is much more difficult to answer - how to get there. Will microfinance remain ghettoized as a donor-driven niche, or is the industry truly ready to let go and allow microfinance to become the serious part of the financial sector it should be? The challenge of building inclusive financial sectors is certainly not for the feint of heart. The obstacles are many. Luckily, the dedication and commitment that we have seen thus far in 2005 are evidence that there are many optimists out there, willing to devote their hearts, souls, and minds to achieve a future in which financial services are available to all. In the context of the International Year of Microcredit, hundreds of events on microfinance have already been held around the world, and visions for the future of microfinance are inevitably a part of these discussions. This issue of Microfinance Matters looks at a selection of these recent gatherings, and select opinions about what the future holds in various regions. This month's Featured Guest is Matthew Bishop, Business Editor of The Economist, and Advisor to the International Year of Microcredit. Mr. Bishop voices concern about the small role microfinance has played until now in international poverty debates, and believes that the progress of microfinance may be hindered by an image problem. Halfway through 2005, Mr. Bishop says the recognition of microfinance on the global stage still "hangs in the balance". From within the microfinance community, it is encouraging to note that several of the major conferences of recent months took place at universities in order to inspire a new crop of microfinance enthusiasts/optimists - students - to get involved. Two such conferences were held at Georgetown University, where experts discussed an array of challenges and tools to overcome them, such as data and technology, and the University of Chicago, where discussion focused on the commercialization of microfinance. The Blue Book on Building Inclusive Financial Sectors for Development has gathered an unusual mix of financial sector stakeholders from the world over. These participants rarely have the opportunity to exchange views, and during this process have contributed a wide range of perspectives on how to integrate micro and SME finance into domestic and international markets to offer a truly comprehensive vision. The conference "Remittances and Financial Inclusion: Cross-Regional Perspectives," jointly organised by the World Savings Banks Institute and the Multilateral Investment Fund of the Inter-American Development Bank, stressed that remittances are just the entry point, and envisioned a future in which migrant customers are integrated into society, as well as the financial system. DFID policy expert Sukhwinder Singh Arora provides his personal vision of the future of microfinance in India - likening it to the current experience with mobile phones, and sanguinely envisioning a quick explosion of access to financial services if the right enabling environment is created. Another vision for the future comes from the ground in India, and is perhaps the most concrete and most ambitious we have seen. The Moneylender-Free Villages Project of the Marathwada Gramin Bank in Maharashtra State boldly lays out a plan to reach no fewer than all 600,000 Indian villages in four years. Finally, Alejandro Soriano, Senior Executive of the Andean Development Corporation (CAF), imagines a future for Latin America in which microfinance institutions use their comparative advantages to continue the exciting transformation that is taking place in Latin American financial systems. While no one knows what the future will hold, this issue is dedicated to those who are tirelessly working to ensure that poverty will not be a part of it.
Vanessa Ward
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