11 verdicts on microfinance
Wednesday, October 23, 2013
The sector doesn’t need more regulation, it needs smarter regulation: In some countries, regulation and interest rates are actually driving microfinance institutions away from the poor. This was not the intention of the regulators, but it has been the outcome of their regulations. Regulations need to respond to the fact that the poorest tend to need smaller loans and are more expensive to serve compared to the relatively better off in urban areas.
Nejira Nalic, director, Mi-Bospo, Tuzla, Bosnia and Herzegovina. @NNalic
If a microfinance system has purely commercial aims, it will increase poverty: All financial institutions should be more responsible when it comes to their appetite for growth. While it is important to keep a balance and to ensure innovative approaches, strong consumer protection should be imposed on financial markets. Without these, those with a low income will not be able to use products for their own benefit and for development purposes.