Paper
Partnership Approach in Microfinance
Can the partnership approach solve the problems of microfinance?
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5 pages
This paper discusses the partnership approach and its significance in the microfinance industry.
The paper states that:
- As the microfinance industry matures and becomes integrated within the formal financial sector, it will become increasingly important for institutions to strengthen their existing alliances and to form new ones;
- The partnership approach brings together complementary resources from diverse organizations to address complex development problems;
- There are two such problem areas in microfinance, namely the need to:
- Rapidly broaden outreach of rural financial services in a sustainable way (supply);
- Maximize the impact of these services on economic development, poverty reduction and the improvement of people's lives (demand).
- It is important for partnership approaches to bridge the gap between microfinance demand and supply.
The paper concludes that:
- Partnerships are not a panacea;
- They are not appropriate in all circumstances, carry significant risks, are rarely easy, and can take time and resources to establish and maintain;
- However, when implemented well, the resulting win-win solutions can have profound effects;
- Commercially-driven partnerships in microfinance are driven primarily by the market;
- Rapid scaling up of partnership approaches in microfinance is unlikely to occur without active leadership by organizations and individuals in a position to facilitate the process;
- A commitment is needed to build the capacity of organizations, especially of small MFIs, to actively broker and enter into partnerships on an equitable basis.
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