Financing Microfinance: “Transitions to Private Capital” Workshop Proceedings

Transitions to Private Capital is a 2.5 year research project and the first large-scale investigation into the financing of microfinance institutions (MFIs). The project will examine MFI financing needs, trends, and challenges from the perspective of both financial institutions and investors. Managed by the Chemonics International AMAP Consortium with Research Direction provided by Enterprising Solutions Global Consulting, the project’s objective is to produce practical tools and insights to help the microfinance sector gain greater access to local and international capital markets. This microPAPER is a summary of the workshop proceedings held on May 14, 2004. The purpose of the workshop was to elicit input and shape the substance and process of the Transitions to Private Capital AMAP FSKG research agenda.

The event summary highlights the following:

• Main issues outlined in discussion on how MFIs may achieve greater access to private capital
• An investor typology to better describe the interests, needs, and limitations of various MFI investors
• Top ten reasons commercial investors do not invest in MFIs
• A debate over whether or not private capital will replace the majority of donor funding most markets within five years
• A recap of what the microfinance sector needs to know about MFI funding to advance the goals of sustainability and outreach