But to focus solely on them causes two risks

The Nobel Prize for peace of Muhammad Yunus has just reward a practice that has been proven: the microfinance. Nearly 100 million people in the world, the conventional banking sector, excluded today have the opportunity to borrow, saving, investing. These financial services of proximity are issued by organizations called 'microfinance institutions' (MFI). To further increase the number of beneficiaries, the challenge is to strengthen and grow these institutions. And for this, mobilize both private and public funding.

Financing microfinance already exists. Indeed, on the MFIS in the world, 10,000 a few hundred are profitable to date. To face a huge claim for microcredit, they make more and more private funds (banks, markets financial, investors capital).

Why are an increasing number of banks, in developing countries, happy to the IMF Simply because these institutions are to good customers, cost-effective and safe, because their risk is spread over thousands of small credits. In addition, commercial banks see microfinance an extension of their own business to new markets. Thus, the "privatization" of microfinance, which drains private capital to those who most need, opens up unprecedented prospects.

Can however fear that this privatization incentive commercial MFIS towards less and less poor clients, assumed to be more cost effective: that of small traders, already installed, in urban areas. Certainly, financing these traders who do not have access to banks, is very useful. But to focus solely on them causes two risks. The first is to waive a much wider audience, which would be left. The second is to build strong competition between IMF too reduced market. Shopkeepers can be tempted to borrow from more institutions both. If they do, they become over-indebted and the IMF are undermined. This scenario occurred in Bolivia, Uganda and Benin.

Another risk associated with private funds is excitement. If capital to invest in microfinance too quickly, leading to the IMF in a race to the disbursement may aggravate the phenomenon of competition. Moreover, experience shows that MFIS must control their growth and structure gradually. To invest wisely, private funders must be aware of these risks and the actual opportunities that microfinance offers today.

At the same time, entire populations still not have access to microfinance. It estimates the number of potential beneficiaries at least 500 million, five times the current number of clients. Achieve, to push the boundaries of microfinance and target new audiences. Is often neglected rural areas. Also include other than today referred merchants urban populations. There is one side urban in even smaller circles, whose needs are immense. And on the other, SMEs too small to be of interest to banks but with great potential.

A mobilization of the public development aid is necessary to accompany microfinance initiatives to the public, less profitable. Grants will experiment with new methods and to cope with the early years of deficit. Some programs will become a profitable day, and the private sector will then take the relay. Others remain deficit; It will be justified to subsidize permanently those who effectively used a very social vocation.

However, public donors should avoid three pitfalls. The first, in contexts where microfinance is commercial in nature, would be to provide public funds to some MFIS, creating a distortion of competition. Eventually, it would discourage private investment. The second, in the euphoria following Mr. Yunus Nobel Prize, would identify too quickly actors too little prepared massive resources. This would cause a mess that it accused then to microfinance. The third stumbling block would be Conversely, past the euphoria, to opt out of microfinance, on the grounds that a part of its activities is of a commercial character. On the contrary, must be a strong, informed and long-term commitment on the part of public funders.