Lauren Abendschein

Leaders in the Field Weigh in on the Future of Microfinance (I)

YunusThe Center for Global Development’s (CGD) event this morning, Eyes beyond the Prize: Envisioning the Next Thirty Years of Microfinance, offered diverse and fascinating perspectives on the future of microfinance. This post will be done in installments to capture the wide breadth of ideas broached at the event.

Elizabeth Littlefield – CEO, Consultative Group to Assist the Poor (CGAP)–started things off by describing four powerful trends that the microfinance industry will have to face in the next thirty years:

  1. Demographics. In the next decade over 2.5 billion young people in developing countries will be looking for jobs. They will be mobile, urban, and informed. This has major implications for community lending models, remittances, and development of SMEs.
  2. Wireless technology. As NextBillion readers know well, wireless tech has seen enormous growth at the bottom of the pyramid. Cell phones and other technology have the potential to reduce transaction costs and reach remote clients. At the same time it should not distract us from continuing to engage with groups that have not yet been reached by wireless technology.
  3. Rise of the BRICs. The governments of large emerging economies are increasingly able to tackle their own poverty issues and are becoming more assertive as other developing countries, including those with populist governments, turn to them for advice rather than to Washington. Microfinance advocates must work with these governments to transmit best practices and promote an enabling environment for microfinance institutions (MFIs) at the critical juncture.
  4. Social activists and donors. There is increasing attention from investors and donors, and with it comes attention from activists and press. This attention puts even more pressure on the industry to increase MFI efficiency, institute consumer protection mechanisms, fair pricing, and transparency.

Littlefield has a recent publication ?Financial Inclusion 2015: Four Scenarios for the Future of Microfinance? that does an excellent job of describing these trends in more detail.

You can check out tomorrow’s installment for more thoughts on the future of microfinance by industry leaders. In the mean time, here are a couple of questions that Elizabeth Littlefield posed for discussion: Will technology set MFIs free from cost constraints? What if China’s 43,000 rural credit cooperatives adopted MFI best practices?