Promoting MF in Emerging Markets and MF Development in China

Publication Date: 21 Mar 2006
Published by: International Finance Corporation (IFC)
Document Type: Presentation

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A look at the role played by private capital in the growth of microfinance

This presentation discusses the growth of the microfinance market in China, with a special focus on the role of the “International Finance Corporation (IFC)”.

The presentation begins by detailing IFC’s relationship with microfinance in the following areas:

• Microfinance philosophy, strategy, implementation tools and portfolio;
• Double bottom line of developmental impact and financial sustainability;
• Microfinance investment program;
• Different methods of supporting sustainable microfinance;
• Support to all microfinance delivery models;
• Experience with credit delivery models.

The presentation identifies the following reasons for most successful microfinancial institutions (MFIs) being in high-density areas:

• Lower cost of servicing clients;
• Time tested monitoring systems;
• Easier staff hiring/training;
• Assured information technology (IT) connectivity.

It also identifies the following reasons why successful MFIs have been slow in moving to rural areas:

• Smaller markets;
• Significant difficulties in monitoring;
• Difficulties in finding and retaining good staff;
• Unavailability of IT connectivity.

The presentation then discusses the Government’s role in the promotion of microfinance in China as follows:

• Introducing conducive legal and regulatory frameworks;
• Supporting prudent, growth-driven MFI regulation and monitoring;
• Being a facilitator for MFIs;
• Allowing MFIs the full range of financial services.

The presentation concludes by stressing the role of private capital in:

• The scaling-up of microfinance operations in the most difficult environments;
• Delivering meaningful developmental impact in a relatively short period of time.