New Report: Tapping the Financial Markets for Microfinance

Posted by on November 26, 2004

[posted from Community Development Banking listserv]

Grameen Foundation USA Capital Markets White Paper

Dear Colleagues,

I am pleased to share with you ?Tapping the Financial Markets for Microfinance?, a white paper commissioned by Grameen Foundation USA that explores the opportunities and challenges micro-finance institutions face in tapping capital markets for financing their growth. It was written by Jennifer Meehan, a consultant with deep insights into the micro-finance movement and the mainstream financial sector.

The paper is available for free download online at: http://www.gfusa.org/programs/capital_markets/

As you may know, micro-finance industry?s outreach and impact on world poverty is growing. More than 60 million poor families are now participating with a micro-finance institution; the estimated world portfolio is valued in the billions, and industry growth has averaged 30% a year (according to Virtual Library of Microcredit). However, the estimates of the total demand being met range between 10% and 20% in terms of client outreach, and less than 5% in terms of amount lent. The estimated capital requirements are billions more than the current supply that historical donor funding can fulfill. Therefore, the question of leveraging scarce philanthropic resources to attract much larger amounts of commercial capital becomes critical.

The paper details case studies of recent successful capital market transactions, identifies barriers to replicating these deals more widely, seeks to de-mystify the issue of attracting commercial investment to micro-finance institutions (primarily for the benefit of micro-finance institution managers), and provides action items for the industry to accelerate recent progress in this direction.

Please feel free to circulate this paper to others, and we welcome your thoughts on the subject.

Sincerely,
Andrew (Drew) Tulchin
Grameen Foundation USA
dtulchin@gfusa.org
202-628-3560 x123