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Will Microfinance Still Exist 10 Years From Now? Thoughts from European Microfinance Week
Does microfinance still have a place in global development? Grassroots Capital Management President Paul DiLeo tackled the subject in the closing plenary of the 2017 European Microfinance Week, which asked where microfinance – and MFIs – would be in five or 10 years. He discusses three key takeaways from the discussion, which included some surprising insights into the role the often-maligned industry can still play in poverty alleviation.
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A Milestone in Innovative Finance: Exploring the First-Ever Outcome-Based DIB for Poverty Alleviation in Africa
The graduation approach to poverty alleviation has been effective in helping raise incomes and savings over the long term. But traditional funding models don't provide enough flexibility or performance incentives to boost this impact, since funding is typically tied to activities rather than outcomes. To address this challenge, Village Enterprise and Instiglio have partnered with USAID and DFID to launch the first-ever outcome-based development impact bond for poverty alleviation in Africa.
- Categories
- Investing, Social Enterprise
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Can Digital Credit Outperform Microcredit in the Developing World?
Microfinance has been hailed as a transformative force for poor households and entrepreneurs in emerging markets. But recent evidence suggests it is not the silver bullet it was once thought to be. Meanwhile, mobile phones have become ubiquitous in most developing countries, and Alexandra Wall, Natasha Beale and Carson Christiano explore whether digital credit can do a better job than microcredit in meeting the needs of the underserved.
- Categories
- Impact Assessment, Investing
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There is Such a Thing as Too Much, Too Fast: Avoiding ‘Mismatched Expectations’ in Off-Grid Energy Investing
A recent post by impact investing firm Ceniarth on the "Energy Access Hype Cycle" has generated considerable discussion, prompting critical responses from fellow impact investors Persistent Energy Capital and the off-grid lighting trade organization GOGLA. With this post, writers at the IFC join the discussion, analyzing the effect of rapid growth rates, high levels of consumer financing and operational efficiency on the liquidity of solar home system providers.
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- Energy, Investing, Technology
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In Impact Investing’s Rush to the Mainstream, Who Are We Leaving Behind?
After a long march toward mainstream acceptance, many in impact investing are claiming victory. But a new report by Oxfam and Sumerian Partners argues that the sector should focus on the needs of the businesses working to reduce poverty rather than on the investors who stand to benefit from their work. In other words, it's time to stop pretending that investors seeking a pure market return can tackle the most complex global challenges in high-risk markets.
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- Investing
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An Impact Investor Urges Caution on the ‘Energy Access Hype Cycle’
Ceniarth, an impact investor, has been actively engaged in the energy access sector since 2014. But now it's reducing its exposure to the venture-backed, solar home system segment of this market while shifting its strategy toward enterprises – for-profit, nonprofit and hybrid – that are finding the most capital-efficient ways to reach rural customers. Here, three principals in the firm candidly explain why they are reassessing their approach.
- Categories
- Energy, Environment, Investing
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Investment where profit means better schools
The British Asian Trust is planning to raise $10m (£7.5m) for an "education development impact bond" in which investments are linked to specific targets in improving education for disadvantaged communities in India.
- Region
- South Asia
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New Products, New Markets – New Risks? Microfinance Shifts its Gaze to Housing
$2.3 trillion: That's what low-income households are predicted to spend on urban housing by 2025. So it's no surprise that many microfinance providers view housing lending as their next big opportunity for both profit and social impact. But this new focus brings plenty of challenges – and more than a few risks. We explore the implications of this development – a key topic of discussion at the recent European Microfinance Week.
- Categories
- Investing, Social Enterprise