Challenging the Industry: Poverty-focused Microfinance in CEE and the NIS
This paper presents an action research framework aimed at exploring opportunities for MFIs in Central and Eastern Europe (CEE) and the New Independent States (NIS) to reach more poor people with high-quality microfinance services. These services will have a positive impact on their lives and will enhance the role of sustainable microfinance in reducing poverty in the region.
As per the paper, some important reasons for introducing poverty focused microfinance agenda are:
- Poverty is increasing in most of the transitional countries across the region;
- As global experience shows, innovating microfinance systems and products can be of great benefit to the poor;
- Microfinance services can be delivered to the poor in a sustainable manner;
- The depth of outreach of microfinance interventions in CEE and the NIS is shallow compared to other parts of the world.
The paper emphasizes that the development and promotion of poverty-focused microfinance (PFM) should be done in a comprehensive framework including:
- Developing a holistic regional poverty profile, including financial needs and capacities of the poor;
- Linking specific microfinance products and services to the new needs and capacities of the poor and adapting to existing socio-economic environment;
- Creating an institutional system that works efficiently to serve the poor;
- Creating an appropriate legal environment and encouraging information exchange between all MFIs operating in the same area.
The paper concludes that the action research work should be undertaken taking into consideration all the aspects of poverty focused microfinance.
