For-Profit Microfinance Matures, India and Africa Lead the Way

African microfinance

Microfinance is growing rapidly. We’ve recently reported on Habitat for Humanity’s MicroBuild and Kiva’s higher education loans. But the biggest growth is occurring in India and Africa among microfinance institutions (MFIs) that you’ve probably never heard of before. And a new report indicates that for-profit MFIs in India are performing exceptionally well.

Four billion dollars is being loaned to 26.7 million borrowers in India, according to the report by a group of Indian MFIs. The country is now home to a majority of Grameen Bank-style MFIs, catering only to women. And the focus on India’s cities is also increasing, with 20% of MFIs having 75% of their clients in urban centers.

Meanwhile, The Africa Microfinance Network (AFMIN) and the global institution MFTransparency are partnering to promote the “Transparent Pricing Initiative,” where members will receive training on pricing transparency and interest rate calculations. The Mastercard Foundation was an early funder of the APR & EIR Program (enabling Africa to Price Responsibly & Educate on Interest Rates), which is piloting in Uganda, Rwanda, Ghana, Tanzania, Zambia, South Africa, and Mozambique, and out of which the Transparent Pricing Initiative was born.

“AFMIN, has brought together more than 1,000 microfinance institutions to form a strong voice on performance standards, best practices, innovations for capacity building and the adoption of pro-poor policy measures across the continent,” Microfinance Focus Reports.

As the field of microfinance matures, standards and expectations of professionalism are becoming a necessity, creating a more sophisticated microfinance profession as a whole. How much longer will it be until we see a stock market dedicated to microfinance?

[Image: flickr user hdptcar]JN