Building a financial market that serves the poor requires more than supporting institutions. It also requires coordinating underlying elements - such as educating consumers, drafting appropriate laws, and building capacity in organizations.
Opportunities for reasonably-valued equity investments still remain, but the majority of recent transactions by foreign-owned funds suggest that finding such opportunities is not necessarily an easy task.
Transparency on funding for microfinance made significant progress over the last decade. There are strong reasons to believe that transparency contributes to more effective and more responsible funding.
There is broad recognition within the development community that donors have contributed significantly to building microfinance institutions that serve the poor around the world. But isn’t it time donors updated their investment portfolio to reflect new thinking and the new reality on the ground? It takes a broader ecosystem of providers to deliver the diverse set of services that the poor need. Strategies that remain focused on only one of these providers – MFIs – are missing the bigger picture.
How can aid agencies begin to ‘take’ market development thinking and practice into their efforts to enhance financial services for poor people? Drawing from wider experience, here are five basic starting points to consider.