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The 12th EMN AC: Microfinance and Banks, are we the right partners?

Publication Policy notes

Collaboration between MFIs and banks has been a key driver for growth for many microfinance actors. This collaboration has often been established due to regulatory restraints that impede MFIs from providing services directly (“necessity”), but the majority of collaboration cases have been to identify mutually beneficial arrangements for both parties (“opportunity”).

However, in today’s financial climate, banks are becoming increasingly attracted to markets they did not previously serve. While most banks prefer to reach these new markets by supporting MFIs, some banks are starting to offer microfinance products themselves (“downscaling”). As the microfinance sector becomes increasingly visible and mature, relationships between the banking and microfinance sectors should evolve into more fruitful and diversified collaboration.

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