Who Are the Clients of Microfinance?

Microfinance clients are often described according to their poverty level - vulnerable non-poor, upper poor, poor, very poor. This can obscure the fact that microfinance clients are a diverse group of people – and require diverse products. While women clients make up a majority of clients - and in some instances comprise 100 percent of an MFI’s clientele, 33 percent of all microfinance clients are men .

These clients operate small businesses, work on small farms, or work for themselves or others in a variety of businesses – fishing, carpentry, vegetable selling, small shops, transportation, and much more. Some of these microfinance clients are truly entrepreneurs – they enjoy creating and running their own businesses. Others become entrepreneurs by necessity when there are few jobs available in the formal sector.

Recently, microfinance institutions have begun using poverty assessment tools to more accurately measure the number of their clients who are living on less than $1 a day. Serving the very poor and the destitute – those who lack shelter, income, or even sufficient food – is more challenging, and may require ongoing subsidy. Innovative schemes, such as the BRAC Ultra-Poor Program, have opened up pathways to economic activity and access to financial services for the extreme poor. CGAP has launched pilots in India, Pakistan and Haiti that are modeled on the successful BRAC program. The program targets destitute clients through a carefully sequenced combination of livelihoods grants and microfinance, with savings playing a critical role, so that clients ‘graduate’ out of poverty. Each pilot is accompanied by a rigorous impact study.

Success in reaching poorer people with microfinance is determined by the mission of a microfinance institution, and its ability to translate that mission into effective products and services. With the industry’s renewed focus on social performance – the term used within the microfinance industry to mean the effective translation of mission into action – we expect to see more clients overall, and very poor people in particular, served with appropriate, varied products from a variety of institutions.