At the recently held European Microfinance Week, several leading microfinance experts were asked about the future of the field, and discussed key industry trends for the next five to ten years. With the world in constant flux and global finance scrambling to provide better solutions for small entrepreneurs, where does that leave the stalwarts of the microfinance industry.

Will Microfinance Still be Around Ten Years from Now?

While commercial banks may be nominally addressing the needs of their customers, microfinance provides a solid to those who cannot enjoy bank services for various reasons. Most microloans are specifically tailored to address the important issue of eradicating poverty in diverse rural regions around the world. How? By growing local economy from the ground up; by helping small business owners stand on there own two feet and maybe even open a humble savings account for the future. The concept of microfinance is not a new one. As an industry, it has been around for more than 30 years. The work that key organizations in this field do towards helping the fight against poverty through entrepreneurship is an ongoing challenge, and while they haven’t always succeeded there have been quite a few positive results. The European Microfinance Week was filled with interesting debates on the pros and cons of this field. The situation is far from perfect, but the bottom line is that poverty isn’t going away, and so microfinance probably isn’t either. Microfinance institutes (MFIs) will have to continue streamlining and innovating their procedural systems, improve their solutions and rise to challenge at a grassroots level, where many commercial financial institutions will not.

Microfinance Investment Opportunities and Challenges

One of the significant challenges in the industry is finding investment partners that truly understand the level of support needed to help alleviate poverty and provide consistent outreach and innovative financial solutions for micro-borrowers around the world. Success stories in Kenya and some areas of China over the last ten years have shown that it can be done and that sustained investment and development can lead to economic empowerment in an entire region. There is though, the danger of turning over microfinance principles to commercial ventures that have little or no regulation and consumer protection policies in place.

The microfinance industry has clearly aligned goals where making money is secondary to providing a service that truly serves the sector of the population that needs it most. Treating people not liabilities but as potential success stories from the start has been a large part of the success of the industry and will continue to set MFIs above the commercial finance world for decades to come.

Will Microfinance Stand The Test of Time?
Article Name
Will Microfinance Stand The Test of Time?
Where will Microfinance be in 10 years? Will MFIs still be leading the way in poverty reduction? How will the microfinance industry continue to beat the big banks?
Publisher Name
Sharone Perlstein