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Microfinance for Microenterprise: A Source Book for Donors
Schreiner, M. & Leon, J.
Publication Date: Nov 2001
Published by: Microfinance Risk Management
Document Type: Paper
How donors can help in developing a sustainable microfinance sector?
This source book is meant for donors and summarizes the state of the art in the field of microfinance for microenterprise, with a focus on Latin America.
It reviews lessons learned and offers practical guidelines for donors who want to use their resources wisely to speed the evolution of the types of institutions and services that micro enterprises find useful. This husbandry encompasses three areas of action:
- Improving the overall economic environment,
- Reconciling the goal of financial self-sustainability vis-a-vis that of outreach to the self-employed poor,
- Encouraging experimentation with organizations and services.
According to the author, donors can help in the formation of an efficient microfinance sector by:
- Displaying the clout, motivation, and vision to lobby for systemic economic reform,
- Instilling a long-term vision against harmful market and regulatory distortions,
- Building incentive structures that encourage self sustainable financial institutions,
- Donors providing technical assistance to build institutional strength for both self-sustainability and outreach to the poor,
- Enlarging the pool from which healthy institutions may emerge,
- Encouraging experimentation, providing funds, in evaluating progress, and in disseminating resultsm
- Assisting in replicating financial institutions that have successfully served large numbers of microenterprises.
Without donors to guide them, microentrepreneurs would have to go through a much more difficult and costly learning process. Donors with the support of financial institutions, can encourage speedy discovery of mistakes and thus also successes.
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