Microfinance institutions

The term “microfinance institutions” (MFI) refers primarily to organisations which were created specifically to provide credit and other financial services to low income clients. Most have evolved from non-government organisations (NGO) working in poor communities with a strong social service orientation. Credit was often used by these NGOs as a tool to support the income-generating activities of their clients and for some, it became their main method of intervention.

“Nowadays there is a bewildering variety of types and combinations of clients, delivery systems and institutional structures that shelter uneasily together under the big tent known as microfinance. It may be helpful to characterize the diversity of microfinance practitioners as lying along a continuum from traditional business (a purely financial bottom line) at one end to traditional social service (a purely social bottom line) at the other end. In the middle is the emerging phenomenon of the ‘social enterprise’ which manages to have a double bottom line, seeking to achieve a productive balance between business objectives and social objectives.” (C.Dunford, 2000)

Library Resources

resource title type year resource
Microfinance Barometer 2018 - Microfinance and Profitabilities 2018

view page
This resource appears in: Microfinance institutions

Entitled “Microfinance and Profitabilities”, the 9th edition of the Microfinance Barometer presents the key figures of the sector and explores the topic of profitability in its multiple aspects. Should microfinance be profitable? If so, can it be profitable while remaining socially responsible? From case studies, expert analyses and investor interviews, this edition presents an overview of the profitability of microfinance, and provides important takeaways on the dual return – social and financial – of microfinance.

Building the Business Case for Housing Microfinance (in Sub-Saharan Africa) Paper 2018

view page
This resource appears in: Microfinance institutions

In the absence of affordable housing solutions and accessible financing options, the majority of lower-income families resort to building incrementally based on their needs and available resources. Increasingly, financial institutions serving BOP markets have come to realize how microfinance loans tailored to these incremental building patterns hold great potential for addressing housing needs and building financially high-performing portfolios. These housing microfinance loans represent relatively small sums, borrowed for a much shorter term than a mortgage, to match both the income streams of low-earning clients and the construction costs of their incremental building steps. A critical feature of housing microfinance is that loans are not typically secured with a mortgage lien, and in many cases, possession of a formal land title is not a requirement.​

Author Christy Stickney
Publisher Habitat’s Terwilliger Center for Innovation in Shelter |
Number of Pages 44 pp,
Primary Language English (en)
Region / Country Global
Uganda, Kenya
Keywords Access To Finance, Microfinance, Housing Finance
Related Resources
Conocer a la microempresaria mexicana para atender mejor sus necesidades financieras y empresariales Journal Article 2016 Spanish (es)

view page
This resource appears in: Microfinance institutions

En distintos países se han venido realizando esfuerzos para identificar y analizar a las distintas poblaciones y sus hábitos para ofrecerles mejores soluciones a sus necesidades. En este caso, quisiéramos destacar el caso del Programa Nacional de Financiamiento al Microempresario y a la Mujer Rural (PRONAFIM) del gobierno mexicano. Ellos han realizado una alianza con  la firma de consultoría A.T. Kearney México y han presentado los resultados en este artículo. En él presentan una segmentación de la población por su nivel de desarrollo y de formalización de los negocios. En este caso identificaron cuatro segmentos, supervivencia, crecimiento, pre-graduados y consolidación. 

Link del articulo  -  Spanish (es)

Author PRONAFIM
Number of Pages 1
Primary Language Spanish (es)
Region / Country Global, Americas, Central America
Mexico
Keywords Investigación de mercados y desarrollo de productos, Microcrédito, Segmentación de acreditados, Necesidades financieras
Related Resources
Baromètre 2015 de la microfinance Report 2015 French (fr)

view page
This resource appears in: Microfinance institutions

Entre 2010, année de la première édition de notre Baromètre et 2014, plus de 700 millions de personnes sont devenus titulaires d’un compte bancaire dans une institution financière ou utilisateurs d’un compte d’argent mobile, faisant baisser le nombre de personnes adultes non-bancarisées à 2 milliards aujourd’hui. C’est ce que montre la nouvelle étude Global Findex de la Banque mondiale, publiée en avril 2015. Même si le défi reste immense, les progrès des 5 dernières années ont donc été substantiels et la microfinance y a joué un rôle important, notamment auprès des populations les plus pauvres, auprès des femmes, dans les zones rurales et dans les pays les moins avancés.

Le Global Findex montre également que la finance numérique et la mise en oeuvre de nouveaux canaux de distribution utilisant la téléphonie mobile et internet jouent un rôle croissant pour répondre au défi de l’accès aux services financiers pour tous.

Le Baromètre de la microfinance 2015 vous propose donc un aperçu de cette (r)évolution en cours. Mobile bankingmobile money, réseaux d’agents de distribution, utilisation du numérique pour l’accès à différents services essentiels, nous sommes à l’aube d’une nouvelle ère dans notre manière de gérer, dépenser ou transférer notre argent. Et il semble que les pays du Sud et de nombreux acteurs de la microfinance soient parmi les acteurs les plus innovants sur ces nouvelles approches.

Cette « digitalisation » de la microfinance offre donc des perspectives formidables mais n’est bien sûr pas une fin en soi.

Les Nations Unies s’apprêtent à approuver en septembre 2015 les nouveaux Objectifs du développement durable (ODD). L’accès universel à des services financiers responsables et équitables figurera dans ces objectifs, en tant que condition d’éradication de l’extrême pauvreté d’ici 2030.

Dans ce monde de la microfinance en évolution, Convergences renouvelle donc son appel à tous les acteurs, qu’ils soient des banques, des institutions de microfinance, des opérateurs technologiques, investisseurs ou encore des régulateurs, à garder au cœur les valeurs de performance sociale, de responsabilité et de lutte contre la pauvreté, qui guident tous les jours nos actions.

Lien vers la publication  -  French (fr)

Author Convergences
Number of Pages 12
Primary Language French (fr)
Region / Country Global, Africa, Americas, Asia, Europe, Oceania
Keywords Agricultural Microfinance, Agricultural Microinsurance, digital finance, Rural Outreach, Social Performance
Related Resources
Practical Issues in Local Saving Mobilization by Microfinance Institutions Brief 2014 English (en)

view page
This resource appears in: Microfinance institutions

Practical Issues in Local Saving Mobilization by Microfinance Institutions:- Summary of Research (over 60 FGDs, and more individual interviews)

Article  -  English (en)

Author Getaneh Gobezie
Number of Pages 4 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Making Microfinance Work: Managing Product Diversification Book 2011 English (en)

view page
This resource appears in: Microfinance institutions

This book, and the accompanying course, is designed to assist MFIs that have already diversified and are looking for ways to manage their diversification more effectively, as well as institutions that are looking for guidance on where and how to begin.

The content includes chapters on various product options, including savings, insurance, leasing, money transfers and even grants and non-financial services. It also explores how to combine different product menus to serve specific market segments, such as the ultra-poor, youth, women, SMEs and persons in rural areas and post-crisis environments. The book concludes with discussions about managing partnerships and strategies to overcome the challenges of delivering a diverse product portfolio. It provides specific suggestions for managing diversification, including adapting the institutional culture, redistributing responsibilities, empowering staff, communicating with clients, reengineering systems and managing change.

See special section on Rural Microfinance, pg. 410. 

Making Microfinance Work: Managing Product Diversification  -  English (en)

Author Frankiewicz, C., Churchill, C.
Publisher International Labour Office (ILO)
Number of Pages 623 pp.
Primary Language English (en)
Region / Country Global
Related Resources
State of the Microcredit Summit Campaign Report 2009

view page
This resource appears in: Microfinance institutions

The State of the Microcredit Summit Campaign report 2009 discusses the human face of global poverty, reviews microfinance breakthroughs in helping slum dwellers move out of the slums, and highlights the innovation of bringing renewable energy to some of the poorest communities in the world. These issues will be part of a larger discussion focused on how microfinance can serve as a platform for other services.

The report also looks at renewed calls for embracing commercialization and a new initiative to bring truth-in-lending to interest rate pricing. The report outlines the need for the World Bank to increase its outreach to the very poor with microfinance, reviews the Campaign’s work to measure progress above the US$1 a day threshold, and takes a deeper look at 2007 data.

Finally, the report looks at the effects of the financial crisis and fluctuating food and fuel prices on MFIs and their clients, the Campaign’s work on integrating microfinance with health education, and discusses the recent and upcoming Summits.

Author Sam Daley-Harris
Number of Pages 76 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Overview of Microfinance in Asia/Pacific and selected experiences from WSBI members Report 2008

view page
This resource appears in: Microfinance institutions

Microfinance is the provision of small-scale financial services to the poor or the poorest among the poor. Although there is no standardized number to define different “micro” products in quantification, it needs to be understood in its broadest sense, covering a whole range of low value financial products,

including savings, credit, insurance, transfer and payments services, etc.

The report shows how WSBI members in Asia/Pacific are involved in microfinance activities and presents best practices developed by a selected number of member microfinance institutions in Sri Lanka, Vietnam, India, China, Thailand and Malaysia.

Author World Savings Banks Institute (WSBI)
Publisher World Savings Banks Institute (WSBI)
Number of Pages 24 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Foreign Capital Investment in Microfinance: Balancing Social and Financial Returns Technical Note 2008

view page
This resource appears in: Microfinance institutions

According to a new CGAP Focus Note microfinance is experiencing an unprecedented investment boom. The past five years have seen remarkable increases in the volume of global microfinance investments. Between 2004 and 2006, foreign investment in microfinance institutions more than tripled to reach a total of US$4billion, says Foreign Capital Investment in Microfinance: Balancing Social and Financial Returns, written by Xavier Reille and Sarah Forster.

This Focus Note:

  • describes the new landscape of cross-border investments and presents an overview of who is investing and why.
  • presents the first ever published data on the performance of microfinance investment vehicles (MIVs).
  • provides an analysis of the latest developments and issues confronting both the microfinance debt and equity markets.
  • explores how the influx of private-sector investment might influence the social focus of microfinance development.
Author Reille, X.; Forster, S.
Publisher CGAP
Number of Pages 24 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Corporate/MFI Partnerships that are Profitable for the Corporation, the MFI, and the Clients Paper 2007

view page
This resource appears in: Microfinance institutions

The purpose of this paper is to present examples of how microfinance institutions, corporations, and private sector strategies can be applied to overcome the challenges of poverty alleviation. Examples from corporate/MFI relationships will be provided as well as an in-depth analysis of how micro-franchising, as a solution to poverty alleviation, can work and should work in concert with existing service and product platforms. These platforms include: microfinance institutions, consumer products providers, information services providers, among others. Examples are drawn primarily from the experiences of Scojo Foundation, a leading social enterprise which utilizes a micro-franchise approach to product and service distribution.

This paper has argued that micro-franchising and macro-franchising have the potential, and in some cases have proven that they are capable of adding tremendous value to development efforts. Through streamlined delivery mechanisms, bundled products and services, and new forms of financing, micro-franchising and macro-franchising should be considered as a valuable tool in the fight against poverty which microfinance institutions, their clients, and other partners should consider.

Author Macmillan, G.
Number of Pages 17 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Do Microfinance Institutions Really Need to Worry About Their Brand? Paper 2006

view page
This resource appears in: Microfinance institutions

This paper argues that the brand of an organisation is the essence of what the institution stands for in the market: the organisation’s personality and business aspirations. It states that brands are the perceptions, emotions and attitudes others have towards your product or service. It also suggests, however, that there is a collective lack of corporate brand experience in the microfinance sector, which may be due to a limited understanding of what a brand is and how it can be leveraged to attract more clients and build client loyalty, while helping an institution to work more effectively.

This paper documents some of the experiences of MicroSave’s Action Research Partners (ARPs) in strategically building a corporate brand to reach more clients, increase profitability and become more market-led. The principles outlined are drawn from MicroSave and Women’s World Banking (WWB)’s Corporate Brand and Identity Toolkit. The paper provides insights on the brand building process that can assist other financial service providers in designing a strategy for brand development, implementation and monitoring. Following a discussion about what a brand is, using real life examples to illustrate the points raised, the paper sets out why brands are important to MFIs. This section is based around 7 key areas in which brands can assist:

  • facing competition
  • maintaining market leadership
  • mobilising savings
  • unifiying stakeholders around a common vision
  • enhancing market effectiveness
  • increasing profitability
  • building credibility

The paper then sets out steps for developing a brand. It suggests beginning from any brand that may already exist and offers a number of tools that may be used in assessing this starting point. The next stage is to consider where the institution wants to be, before moving into the actual design process.

Following a successful design, the brand then needs to be implemented, requiring communication both internally and externally. The paper suggests ways in which this can be undertaken in an effective manner. Finally, the paper discusses the importance of monitoring the brand’s success.

Author Parrott, L
Publisher MicroSave
Number of Pages 28 pp.
Primary Language English (en)
Region / Country Global
Related Resources
MFI Rating Tool Guideline 2006

view page
This resource appears in: Microfinance institutions

In India, SHG movement is fast expanding and emerging as the most cost effective micro credit delivery units. NGOs are turning into MFIs. Rating of MFIs will enable them to tap the commercial sources of funds. Rating services are limited and beyond the reach of small MFIs in India. Grants for rating is available only when the portfolio size of MFI is 1.11 lakh US dollars.

MICROSOP foundation has come out with a simple MFI rating tool based on GOOHAP (Governance, Outreach, Operations, Human resources, Asset quality & disclosure and Profitability and Efficiency) parameters. Our objective is to help the small MFIs develop the professional management capacity with in the MFIs and internalize the process of rating.

The tool is in the form of a checklist which, when completed will give a total score out of 100 for the specified criteria. It is targeted at Indian MFIs but could be adapted for other contexts.

Author Jeyaseelan Natarajan
Publisher MICROSOP Foundation
Number of Pages 8 pp.
Primary Language English (en)
Region / Country Global
Related Resources
How MFIs and their Clients can have a Positive Impact on the Environment Paper 2006

view page
This resource appears in: Microfinance institutions

The paper aims to discuss the following questions - can microfinance, which contributes to achieving MDG No.1 (eradicating extreme hunger and poverty), harm the natural environment? Or, more positively, can microfinance be a means to achieve MDG No.1 and MDG No.7 (ensuring environmental sustainability) at the same time?

Microenterprises can have a negative impact on the environment for different reasons. Some because of the nature of their inputs (inorganic fertilizer, pesticides), some due to the type of production methods (burning or mining), some because of the inefficiency of their production technologies (leading to overutilization of natural inputs), some because of their waste (litter, diesel smoke) and others by their outputs (lumber, sale of endangered species). These microenterprises create waste and litter, cause air and water pollution, damage riverbanks, ruin soils, and deplete forests and wildlife.

The authors note that it is true that the size and scope of microenterprises limits their negative impact. On the other hand, their sheer numbers, ubiquitous presence, extended hours of operation, lack of supervision by regulatory and environmental agencies, low technological level, and lack of supporting infrastructure and services (trash collection, enclosed marketplaces) all heighten their negative impacts. Some examples of microenterprises that have obvious negative impacts include charcoal production, livestock grazing, timber harvesting, tanneries, textile dyeing, slaughter of animals, and small mining operations.

It is, of course, also noted that microeneterprises can have a positive impact on the environment. Microenterprises that use green inputs for production, such as certified (sustainably grown) lumber, organic seeds, compost or green fertilizer, and organic dyes, can contribute to a healthier environment. Sustainable production techniques such as reforestation, controlled water usage, natural pesticide applications, and environmentally friendly technologies, including micro drip irrigation systems, solar water pumps, all conserve environmental resources. Microenterprises that recycle trash or used goods, and those that utilize recycled materials as inputs, are helping the environment.

The paper then looks at why the environmental impact of microenterprises is important for microfinance institutions. This bulk of the paper then considers how MFIs can make a difference. Furthermore, it seeks to answer the question of how MFIs can make a difference without affecting their own profitability and without passing on extra costs to their clients. This section is based around the actual MFI operations as well as environmental lending.

Author Hall, J and Lal, A, with contributions from Israel, E
Publisher Green Microfinance
Number of Pages 13 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Renforcement des capacités des Institutions de Microfinance en Afrique : enjeux et perspectives Article 2005

view page
This resource appears in: Microfinance institutions

Alors que la microfinance, à ses débuts dans les années 80, avait une orientation sociale dominante, la mise en place de règlementations à partir du milieu des années 90 a contribué à une spécialisation financière accrue et a contraint les Institutions de microfinance (IMF) à une professionnalisation progressive. L’objectif de cet article est de définir les enjeux et les perspectives liés à la problématique de renforcement des capacités des IMF, en Afrique particulièrement. Après une analyse de l’ampleur et de la portée du phénomène, les auteurs esquisseront une évaluation des besoins essentiels auxquels les parties prenantes doivent faire face. La dernière section du document fournit quelques éléments de recommandations. Les auteurs concluent que le renforcement des capacités des institutions de microfinance est devenu une industrie très florissante, dans la mesure où les autorités gouvernementales et les partenaires au développement s’intéressent fortement à la microfinance et sont pleinement disposés à accompagner le développement du secteur en vue d’augmenter l’accès des populations démunies aux services financiers de proximité.

Author Gerald MACHARIA, Abdoul Anziz Said ATTOUMANE
Primary Language French (fr)
Region / Country Global
Related Resources
Ethical Treatment of Clients Article 2004

view page
This resource appears in: Microfinance institutions

Recognizing Freedom from Hunger as a champion for microfinance clients, the Small Enterprise and Education Promotion (SEEP) Network asked them last year to lead an effort to develop a network-wide set of principles to protect clients with ethical standards of service. Freedom from Hunger has, therefore, developed a Statement of Ethical Treatment of Clients, in consultation with its in-country partners.

The Statement, which was approved by trustees in June 2004, recognizes that poor people need access to financial as well as non-financial services that are provided in an ethical, dignified, transparent and equitable way. Freedom from Hunger is now committed to working with its partners over the next year to ensure that their delivery of services meets the standards outlined in the Statement. The Statement is posted here to promote its role as setting an industry standard.

Author Freedom from Hunger
Primary Language English (en)
Region / Country Global
Related Resources
Guiding Principles for Microenterprise and the Environment Article 2004

view page
This resource appears in: Microfinance institutions

The Guiding Principles for Microenterprise and Environment were developed by participants attending The Microenterprise and the Environment Conference held at Valley Forge, Pennsylvania, during 2004.

The conference brought together leaders in the field of microenterprise and the environment. Participants came from India, Nepal, South Africa, Kenya, Guatemala, Indonesia, El Salvador, Canada, Puerto Rico, Haiti, Bolivia, Nicaragua, as well as the United States. On the second page of the document is a list of 'signatories'.

If you or your organization is supportive of the Guiding Principles for Microenterprise and the Environment, please contact Green Microfinance (info@greenmicrofinance.org). Green Microfinance (GMf) is made up of environmental and microfinance practitioners and exists because of the ecological impacts and opportunity to improve the environmental performance of microenterprises globally. GMf focuses on this area because microenterprise and the informal sector constitute the vast majority of businesses in developing regions.

Author Green Microfinance
Number of Pages 2 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Microfinance Institutions Moving into Rural Finance for Agriculture Document 2004

view page
This resource appears in: Microfinance institutions

The majority of microfinance institutions (MFIs) have, until now, tended to rarely extend their services to marginal rural areas dependent on agriculture, due to higher transaction costs, price and yield risks, seasonality and collateral limitations associated with the agricultural sector. This Agriculture Investment Note produced by the World Bank details how a few innovative MFIs, including Bolivia’s PRODEM and Caja los Andes, and El Salvador’s Calpiá, have been successful in expanding to provide financial services to poor rural households. Through the adoption of a financial systems approach, which has recognised that financing for agriculture requires not only an emphasis on credit, but also a wide range of financial services, including savings, short and long term finance, insurance, money transfers for remittances and leasing.

Due to the diversity of activities, and sources of income and financing within rural households, successful MFIs have been required to:

  • implement flexible methodologies and products to serve the diverse, often seasonal needs of their clients, such as offering flexibility on the timing, amount disbursed and repayment schedules which match agricultural production cycles,
  • apply prudent risk management techniques to ensure strong financial sustainability and stable portfolios,
  • use new technologies to increase operational efficiency and lower transaction costs, while improving access to financial services for their rural clients.

The benefits of increased MFI activity in rural areas and in financing agriculture are also described. For instance, it can lead to increased competition, higher volumes of finance, and a wider range of financial services becoming available to farmers and their households. Moreover, the rapid growth of the agriculture portfolio of some MFIs suggests that there is significant unmet demand from rural households for agricultural finance.

The Note also emphasises the urgent need for the public sector to play a role in creating a suitable enabling market and policy environment for rural finance to continue to grow. It concludes by setting out the principle lessons that have been learnt in supporting MFIs that move into agricultural finance and recommendations for practitioners involved.

Author Pearce, D.; Goodland, A.; Mulder, A.; Brar, A.
Publisher World Bank Group
Number of Pages 5 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Matching supply by MFIs and the needs of family agriculture Paper 2001

view page
This resource appears in: Microfinance institutions

This is the first synthesis paper from the Dakar International Workshop in January 2002. It addresses the key issues: "What is the current nature of supply and demand for the financing of family farms, and how can microfinance services be best adapted to the financing requirements of family farms?" The paper starts by examining the diversity of types of family agriculture and what methods can be used to understand their financing needs, e.g. income and family budget analysis or accumulation paths. Path analysis makes it possible to set in context the credit from MFIs in relation to other sources of credit and financing in general. For example one study in Burkina Faso emphasizes the importance of emigration income in the accumulation process.

The paper continues by summarizing the results of studies that examined the financial requirements of farms and the strategies they used to meet those financing needs. The importance of self financing is clear and the authors suggest that MFIs could provide more support for these strategies by promoting savings services and responding to solvent demand for credit. They note that the fungibility of financial services and the multi-activities of farmers suggest the need for services that are not necessarily specific to agriculture. The financing of agricultural activities should, therefore, be closely interwoven with the other components of the family budget (non-agricultural economic occupations, social transfer, savings in kind).

The second part of the paper reviews the financing for agriculture that is available from the main categories of MFI. It is generally assumed that MFIs primarily finance activities which generate regular, comparatively reliable income with rapid capital rotation that reduces risks and allows high rates of profitability. However, studies conducted within the framework of the CIRAD-CERISE research project show that certain institutions have innovated and that the supply of services for agriculture is not totally absent but it is limited and depends on the origins of the organization or network. The role of Farmers' Organizations and changes in sector financing are discussed.

The third section examines the constraints that limit the supply of financial services for agriculture and, in particular, medium term credit. With regard to the latter, the authors note that as for all credit, the central problem is the evaluation of the quality of the borrower, the profitability of the investment and the risk. However, if the investment is profitable, the risk can be better mastered than with short-term credit because fixed assets can serve as collateral and it is easier to award partial moratoriums in a bad year. The failures observed for certain medium-term loans are often the result of insufficient investment profitability, technology that is poorly mastered by the borrower, a non-functioning maintenance and spare parts service, inefficient, non-existent or insufficiently available veterinary services, bad adjustment of the loans to the production calendar or to the social characteristics of the environment.

In the final sections the paper suggests answers for the financing of agriculture. They emphasise that loan and savings products often enable households to finance agriculture without being directly targeted at that activity. Pre-approved credit lines enable farmers to respond more quickly to unplanned events such as pest invasions or climate changes. Hire purchase and leasing may facilitate medium term borrowing. MFIs also need to ensure they have a diversified loan portfolio to reduce risk.

This paper is well illustrated with examples that are separated from the main text by boxes. It is a challenging read but makes a valuable contribution to this vital aspect of rural finance. Some of the issues raised are covered in more detail in the other synthesis papers.

Author Lapenu, C.
Publisher CIRAD; CERISE
Number of Pages 43 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Commercialization and Social Mission Drift - the transformation of microfinance in Latin America Article 2001

view page
This resource appears in: Microfinance institutions

This paper addresses the impact of commercialization on the strategy and performance of microfinance institutions (mfis) in Latin America. It explores the key elements of a commercial approach to microfinance and examines the microfinance landscape in Latin America and the different players in the field. It evaluates the profitability of Latin American microfinance and the impact of, as well as the responses to, competition. Finally, an important objective of this paper is to evaluate the major achievements of microfinance in Latin America not only against the initial mission of many microfinance institutions in the region—to generate employment and develop entrepreneurship—but also against the mission of providing financial services to a target group composed of the poorest of the working poor.

This paper will deal with following issues:

  • Does the substantially larger average loan balance of regulated microfinance institutions represent a natural evolution toward a maturing target group, or does it represent mission drift? or
  • Are today’s unregulated NGOs aiming at a target group poorer than the target group of the pioneering institutions that have transformed themselves into regulated entities?

These and other important issues are addressed on the basis of recent information from Latin America, attempting to provide a sense of the state of the industry in the region and the challenges it faces.

Author R. P. Christen
Publisher CGAP
Number of Pages 24 pp.
Primary Language English (en)
Region / Country Global
Related Resources
MicroBanking System Software English (en)

view page
This resource appears in: Microfinance institutions

The FAO-GTZ MicroBanking System is a reliable, scalable and multilingual banking software. It provides:

  • real-time front office functionality
  • back office batch-posting functionality
  • a fully integrated general ledger
  • a wide range of reports and other functions

It caters for the needs of most financial institutions that offer savings, current accounts, deposits, shares and loan services.

The FAO-GTZ MicroBanking System for Windows is the successor to the FAO MicroBanking System for DOS. A number of enhancements have been added, including:

  • improved management of microfinance groups
  • built-in report generator
  • user friendly configurator
  • user designed balance sheet and profit and loss account

The product can easily be translated into languages other than English. Currently it is being operated in French, various south-east Asian languages and Arabic. It is possible to operate the system with Chinese characters and use up to three different languages simultaneously.

The Standard Run Time Edition of the FAO-GTZ MicroBanking System costs US$1000 per site. This price includes the Base Module and one add-on Application Module. The Base Module provides the general ledger and customer maintenance, together with configuration and transfer of existing data. The following Application Modules are available at a price of US$ 250 each: savings account, current account, time deposit, share account, loan account.

Institutions who wish to customise the software to specific individual requirements can purchase an Extended version (EXTE). Customisation and installation of an EXTE version requires substantial technical assistance. The access licence for the Windows-based EXTE is US$ 12,000, which covers the cost of the Base Module and one Application Module. Additional EXTE Application Modules cost US$ 2,500 each. Site licences are also required: first 10, US$ 800 each; 11-100, US$ 600 each; over 100, US$ 400 each.

The older DOS based product is still available. It is technically reliable, easy to adapt to local conditions and runs on small PCs. These features may suit the needs of small scale financial institutions in rural areas. The current Standard Run Time Edition (STRE) 2.6b of the DOS-based system is available as an off-the-shelf package at a price of US$ 800 per site, which provides a low cost approach towards automation for financial institutions that are able and willing to standardize their operations within the range of options it provides. The DOS-based EXTE currently costs US$ 8,000 as an access fee plus the purchase of additional site licences: first 10, US$ 400 each; 11-100, US$ 250 each; over 100 US$ 200 each.

The FAO-GTZ MicroBanking System is promoted not simply as a computerisation exercise but as a manpower development programme for improving the efficiency of banking operations by lowering transaction costs, increasing staff training and introducing better, standardised banking practices which conform to the rules and regulations of governments and supervisory bodies. These are important factors when dealing with small scale transactions in scattered rural locations.

A user guide and evaluation edition is available which gives institutions the opportunity to explore and evaluate the FAO-GTZ MicroBanking System. It allows someone to set up the system as if it were for an office, using the activation keys and branch details of the Demo System, and run it for a period of time for testing purposes.

microbanking system website  -  English (en)

Publisher FAO / GTZ
Primary Language English (en)
Region / Country Global
Related Resources

Search Library Resources