Microfinance, a Critical Evaluation

images (4)
Photo Credit: careers360.com

While the assessment of the direct benefits of microfinance lending may be “modest” according to the recent World Bank study, there are other related opportunities that may be more critical. The founding of Grameen Bank several decades earlier also launched much optimism on aiding the aspirations of the less financially mobile and poorer global citizens as well as earning its founder Muhammad Yunus a Nobel. The promise of microfinance has also migrated from the developing to the more developed – modest microfinance operations have been established in the US, and Mr. Yunus recently visited Bosnia & Herzegovina to launch a new initiative.  Nonetheless, the question keeps coming up:   (See Link  “Does Microfinance have a Future?“)

The World Bank evaluation delivers the following broad outline:

—The benefits of microcredit have been modest in field experiments, and commercial microfinance is unlikely to reach the poorest of the poor.

—Subsidies will likely continue to play an important role in bringing financial services to the poorest.

—Other forms of microfinance beyond microcredit, such as micro-savings and micro-insurance, can help increase financial inclusion.

—Alternative delivery channels such as agent banking and mobile financial services hold promise for reducing the costs of reaching the poor.

Read More of World Bank at : “Does Microfinance Still Hold a Promise for Reaching the Poor?

Diplomat-Artist Buzz

 

About the Author