It is time for DFIs to adopt an alternative approach to financial inclusion that prioritizes needed market changes. A shift to a market systems approach addresses this need and requires that DFIs carefully analyze each market to determine the key gaps, underlying causes, critical actors, and theory of change for bringing about sustainable market development.
Microfinance is experiencing an unprecedented investment boom. The past five years have seen remarkable increases in the volume of global microfinance investments. Between 2004 and 2006, the stock of foreign capital investment—covering both debt and equity—more than tripled to US$4 billion.