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Why is MMW needed today?

Despite its well-known accomplishments, the microfinance industry has come under increasing criticism for failing to meet expectations. More than 2.5 billion people still have no access to formal financial services and those who do have access are not necessarily moving out of poverty. This begs an important question: why is microfinance not meeting its potential as a mechanism for facilitating financial inclusion and poverty alleviation?

There are many answers to this question, some of which include:

  • Sustainability and profitability pressures that have led MFIs to prioritise growth in the most familiar and easy-to-reach markets;
  • A heavy focus on microenterprise credit rather than on meeting the varied financial service needs of low-income households;
  • Limited skills and strategies for survival in increasingly competitive markets;
  • Systems and staff development that do not keep pace with growth;
  • Inadequate MFI and client risk management;
  • A lack of awareness about products and delivery strategies that can meet the needs of more difficult-to-reach markets cost-effectively; and
  • Lack of interest and/or investment in systems that can measure the impact of microfinance on the incomes and poverty rates of clients.

The Making Microfinance Work training curriculum helps microfinance managers recognize these performance gaps and acquire knowledge, skills and attitudes that enable them to do something about those gaps. The program is designed to get managers away from their offices and day-to-day responsibilities to a place where they can question their assumptions, see alternatives to the status quo, and be inspired by what others have proven to be possible.  It creates a space within which managers can refocus on their mission and collaborate with others to identify ways of making their microfinance operations work better for the clients they already serve, as well as those who are still waiting to be served, while simultaneously strengthening their institutional performance.

Microfinance is no panacea for poverty alleviation, but it has demonstrated the potential to facilitate risk management, asset acquisition and decent work for low-income households. Until it realizes that potential for all low-income households, there is a role for MMW to play in making microfinance work better.