Diverse Financial Needs:
Principle: The poor require a range of financial services to meet their varying needs.
Approach: We support demand-driven microfinance interventions that develop and provide comprehensive financial solutions, tailored to the specific requirements of underserved populations.
A Tool Against Poverty:
Principle: Microfinance is a potent instrument for combating poverty.
Approach: Our operations are designed to support initiatives that expand access to quality financial services for people in Resource Mobilizing Countries (RMCs) who are currently excluded from traditional banking systems.
Building Financial Systems for the Poor:
Principle: Effective microfinance involves creating financial systems that serve the needs of the poor.
Approach: We assist RMCs in developing robust financial systems that cater to the needs of low-income individuals, ensuring that these systems are both accessible and efficient.
Financial Sustainability:
Principle: Achieving financial sustainability is crucial for reaching a large number of poor people.
Approach: We support initiatives that help financial intermediaries achieve financial self-sufficiency, thereby enabling them to serve a broader audience over the long term.
Local Financial Institutions:
Principle: Microfinance should focus on building enduring local financial institutions.
Approach: Our support is aimed at developing local financial institutions that gradually reduce their reliance on concessional funding and work towards financial independence.
Beyond Microcredit:
Principle: Microcredit alone is not a complete solution.
Approach: While supporting microfinance, we ensure that resources are channeled through viable institutional intermediaries with clear repayment mechanisms and market rates of interest, addressing a broader range of financial needs.
Interest Rate Flexibility:
Principle: Interest rate ceilings can hinder access to financial services, especially for the poor.
Approach: We advocate for the removal of interest rate ceilings and support the establishment of operational efficiencies to reduce costs, allowing microfinance institutions (MFIs) to offer competitive rates.
Role of Governments:
Principle: Governments should facilitate, not directly provide, financial services.
Approach: We work with RMC governments to create an enabling environment for microfinance within the formal financial sector, while discouraging direct government funding to microfinance clients.
Complementary Funding:
Principle: Funding agencies should complement, not compete with, private-sector capital.
Approach: We offer selective support for initiatives that build inclusive financial systems, ensuring a clear exit strategy to encourage private-sector investment.
Building Institutional Capacity:
Principle: The lack of institutional and human resource capacity is a major constraint.
Approach: We focus on strengthening the capacity of financial intermediaries to provide effective and sustainable financial services to underserved populations.
Transparency:
Principle: Transparency in financial and outreach matters is crucial.
Approach: Our support ensures transparency at all levels and by all institutions involved in microfinance, fostering trust and accountability.
By adhering to these principles, we strive to create a robust and inclusive microfinance ecosystem that empowers individuals, supports economic growth, and ultimately contributes to poverty alleviation.