A Transformative Period for Microfinance

As mainstream media and capital markets have discovered microfinance in the last few years, they have been witness to a transformative period in the industry. At the retail level, microfinance has expanded rapidly in many markets. Borrower outreach in young markets in North Africa and South Asia has doubled in just a couple years. Millions of new savings accounts have opened in markets as dispersed as East Africa and South America. New funding sources have helped propel this wave of growth. Commercial and socially motivated cross-border investments, coupled with active local banking sectors, have become increasingly involved with the microfinance sector. Commercial financing sources on MFI balance sheets almost tripled in two short years. And as investor comfort with microfinance has increased, money has spilled over from regulated markets in Latin America, the Balkans and Central Asia into markets with no prudential supervision like Morocco or low income countries like Cambodia. These highlights draw out these and other trends in the microfinance industry over the 2004–06 period.