The International Finance Corporation (IFC), the lending division for the private sector of the World Bank, doubled their investment in India in 2017. This investment will inform the division’s strategy moving forward.
Investing in India – A Success Story
The IFC has been successfully investing in India since 1958, and sixty years of ‘boots-on-the-ground’ investment has ensured that sustainable investment is not only successful but a core building block for the organization. Having been part of several key initial investments such as Bharti, HDFC and Jet Airways, the organization has recently moved into the microfinance sector and touts this as key to future investment. ‘You have to finance in rural towns … instead of people migrating to big cities develop ladders of movement’ Mengistu Alemayehu, IFC South Asia director.
One of the fundamental strategies has been to encourage private investment in areas that have traditionally been managed by the public sector. The belief that people living on minimum wage, or even below the poverty line could not, or would not, pay back loans, is completely erroneous. This has been proved time and again by the successor both philanthropic and private sector investment organizations that provide microfinance solutions to the poorest of the poor with excellent financial and social returns.
What’s Next for the Microfinance Industry?
Affordable housing and investment in property and property development on an individual microfinance level is going to be the next trend in investment in the sector. The logistics sector is going to see massive investment from private partners as well, to ensure that microentrepreneurs and small and medium enterprises (SMEs) can purchase and sell their products with lowered transactional costs. The biggest trend in microfinance is going to be in sustainability. Microfinance sustains jobs and helps people improve their immediate lifestyle and surroundings, but slightly larger loans to and investment in SMEs will help create more jobs and increase sustainability on a larger scale.