PROPOSAL FOR STRATEGIES TO BUILD MISSING FOUNDATIONS OF THE CURRENT MICROFINANCE INDUSTRY

Abstract

As microfinance approaches the status of mainstream asset class, it inevitably starts to entice Socially Responsible Investment. However, precoscious capital inflow can be detrimental to all players involved. The industry is unprepared for global SRI arena. The gap between different microfinance concepts is widening, while identic terms are being used to describe different contents. The term „microfinance“ continues losing its informative value as divergent development foments nomenclative disorder. Microfinance is becoming too varied to be presented under a single term. MIVs, States and multilateral institutions must therefore in a concerted action impose basis of unified definitions, methodologies and coordinates, otherwise different concepts might mislead international public. The lack of standartized set of definitions, social impact reporting, bankruptcy procedures and evaluation infrastructure, while overstating development benefits can discredit microfinance, once SRI systems open their gates.

Keywords

• microfinance
• funding
• inefficiency
• coordination
• centralization
• development
• FX risk
• guarantee
• SRI