Paper

Microfinance Investment Funds: Objectives, Players, Potential

Are the microfinance investment funds following the same path as the microfinance institutions?
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This paper draws a parallel between the development of microfinance institutions (MFIs) and that of microfinance investment funds (MFIFs) using the following as bases:

  • Social and development objectives;
  • Potential and necessary financial returns along with social return;
  • Institutionalization and professionalization;
  • Social return and financial return balance;
  • Funding and investors.

The paper states that:

  • MFIs are evolving from donor funded institutions to true commercial entities;
  • MFIFs are slightly less developed in their move towards greater commercialization.

Further, the document analyzes the various actors in the field of microfinance investment funds:

  • Key players:
    • 43 existing and new MFIFs;
    • 16 development agencies, foundations and NGOs acting as investors.
  • Types of investors:
    • Private donors;
    • Development agencies;
    • Private individuals;
    • Institutional investors.
  • Distribution of MFIFs based on:
    • Overall risk profile;
    • Objectives;
    • Size.

The document analyzes:

  • The increasing commercialization of microfinance;
  • The new structures being established;
  • The gradual interest of the traditional financial sector.

The paper concludes by summarizing the main benefits of microfinance investment funds.

About this Publication

By Goodman, P.
Published