The market for foreign investment in microfinance : opportunities and challenges
Abrams, Julie | Ivatury, Gautam
Many microfinance institutions (MFIs) in developing and transition economies have received foreign funding, especially the larger MFIs, and, in recent years, bilateral and multilateral donors have provided grants, and soft loans for microfinance by the Consultative Group to Assist the Poor (CGAP) estimates. Since 2000, there has been a rapid growth in foreign investment by various agencies, and funds that tend to be more commercially oriented. The equity, loans, and guarantees they offer to MFIs, are typically less subsidized than grants and loans from traditional donors. These "foreign investors" and the demand for their services are the subject of this paper, which surveys the market, and addresses some key questions. In general, unregulated MFI and cooperative institutions may have a relatively greater interest in foreign debt investment, than the 166 regulated MFIs that have received the bulk of foreign debt investment from International Financial Institutions (IFIs), and private funds to date. The results of the CGAP survey, and other research suggest that these regulated MFIs are increasingly seeking domestic deposits to fund their liabilities, leaving only a limited role for foreign debt investment. Three practical recommendations seem to emerge from the data reported above. 1) Foreign investors would add more value to the market if they were able to tolerate more risk, and thus work with less-well-established MFIs. 2. Regulated MFIs should be helped to access more local funding. 3. MFIs and investors need to be alert to the foreign exchange risk entailed by hard-currency loans.
اظهر المزيد [+] اقل [-]الكلمات المفتاحية الخاصة بالمكنز الزراعي (أجروفوك)
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