Overall IFC’s strategy is driven by its desire to extend reach and its understanding that to do so we need to give full consideration to complex ecosystems which must hold a value proposition for all players involved.
The real strength of microfinance is industry building – creating institutions that bring useful services to poor people who need them. While clients’ businesses rarely revolutionize the economic fabric of their communities, microfinance institutions (MFIs) do.
As the U.S. Government’s Development Finance Institution, the Overseas Private Investment Corporation (OPIC) has a mandate to help channel private capital to address some of the world’s toughest development challenges. One of the core ways we carry out that mission is by working with microfinance institutions. In recent years, OPIC has tailored its financing and insurance products to better serve the microfinance sector.
Despite evidence of financial and impact tracking, most DFIs do not disclose data on financial performance. Reporting on social impact is even harder to obtain. We are a long way from full transparency.
Access to finance is the most significant obstacle to business growth globally (16.2%) and experts estimate that there are 310 to 380 million enterprises that need more credit but can’t access it, with collective needs totaling $2.1 to $2.5 trillion.
If microfinance is to rely on impact investors to fund its future growth, it's crucial that it build credibility with both financial-first and below-market investors. Without clearer and more accurate investment propositions, microfinance could progressively alienate all its investors.