Lessons Learned from 20 Years of Microfinance Projects in IFC

IFC is the World Bank Group’s main investor in microfinance, working with around 300 microfinance institutions (MFIs) and SME-focused financial institutions, which provide financial services in 91 countries. IFC is also one of the leading global investors in terms of volume. In fiscal year 2014, we committed $519 million in 43 projects with MFIs. Our cumulative investment portfolio in microfinance exceeded $3.5 billion, with outstanding commitments of $2.0 billion. In fiscal year 2014, IFC advisory services comprised $74.2 million, representing advisory assistance for 86 projects. We have taken an active role in advising microfinance institutions and building or strengthening comprehensive and robust credit reporting systems such as credit bureaus, which are critical to avoiding over-indebtedness and supporting responsible lending practices. In addition, IFC’s work has been critical in post conflict countries: we have engaged in 32 IDA and 10 post-conflict countries, including Bosnia and Afghanistan, and with a particular emphasis on Sub- Saharan Africa, where we supported the creation of greenfield microfinance institutions in 33 countries. This SmartBook, titled From Small Beginnings to Great Opportunities, presents practical lessons learned from the work that we have been doing on microfinance projects over the last twenty years. From launching the Microfinance Enhancement Facility to help the industry stay afloat during the time of crisis, to working on a project to support microfinance clients to fulfill their housing dreams, these narratives are both engaging and insightful and we hope you will learn from them. We would also like to acknowledge the efforts made by IFC staff in not only working on microfinance, but also documenting some of these lessons for others to learn.

Serving China’s Frontier Regions through Sustainable, Prudent Financial Inclusion
Responsible finance—the pragmatic way forward in the global microfinance community today—is helping IFC have an impact on its clients’ operations and bottom lines, as well as influence on the markets where they operate. Responsible finance brings the focus back to clients and encourages financial institutions to build client-centric operating practices that support prudent and sustainable financial growth over the long term. This Smart Lesson uses recent projects in China to show how responsible finance is breaking new ground for IFC in microfinance, enhancing IFC’s relationships with its existing partners, and providing demonstration results to share with potential new partners, within the microfinance sector and beyond.