Players Report 2005 - Insights from the Microfinance Private Capital Symposium

This document presents the current and future state of microfinance investment, as discussed by participants at the Microfinance Private Capital Symposium.

Key factors that emerged through official sessions and private conversations with participants about the microfinance sector are:

• Vast range of firms in the sector causes disparities in the data on size of the market and financing needs;
• Top-tier MFIs have achieved the size, professionalism and profitability to attract commercial investment, yet only serve a fraction of the market;
• Firms in the second-tier have the potential to extend their reach given adequate funds;
• Investors who care about poverty can invest in organizations that make small business loans;
• MFI debt is more available than quality MFI equity in the current scenario;
• Microfinance is not immune to cycles that characterize other investments;
• Development agencies and other public entities dominate investment in the sector;
• Governments can encourage private investment;
• Banks have incentives to establish partnerships with existing MFIs.

In conclusion, socially conscious investors should consider holding debt and selective equity investments, especially in second-tier MFIs and small businesses.