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Promoting Inclusive Markets and Financial Systems

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Microfinance Associations: New roles and leadership opportunities.

by on Jan 26, 2015  |  posted in Association Services, Microfinance  |  0 Comments

citi_summary_coverThe Spotlight on Financial Inclusion Leaders series, developed by the SEEP Network with support from Citi Microfinance, profiles four microfinance associations. These case studies showcase the ways in which these associations are supporting their members and meeting the challenges of value-added growth in financial inclusion.

Read the summary and explore the full series now! >>

Microfinance Associations (MFAs) are membership-based organizations comprised of financial institutions serving the base of the pyramid. MFAs are critical market actors and are well-positioned to fill a range of gaps in the financial inclusion and responsible finance arena. While traditionally the role of MFAs has been to support retail microfinance institutions (MFIs) with services that improve their institutional performance and increase the supply of sustainable services, associations are now more actively driving policy initiatives, collecting market data for their respective countries, and building strategic partnerships at an international level. The maturation of the microfinance industry has provided new opportunities for MFAs to provide critical services to their members and support new innovations and technology solutions.

In Azerbaijan, the Azerbaijan Microfinance Association (AMFA) has been working to promote Islamic microfinance by building knowledge and capacity of financial service providers and working to enact legislation. By mid-2015, it is expected that both the legal framework and the requisite support services will be in place to enable wide access to Islamic microfinance. In Peru, ASOMIF, the association of regulated, non-bank financial institutions has been leading the implementation of the new e-money legislation in the microfinance sector. It is expected that 4 million Peruvians will utilize an e-wallet system 5 years after the roll-out. In Ecuador, Red Financiera Rural (RFR) has been leading a mobile banking initiative to bring financial services to rural areas. By serving as an aggregator of services, RFR has been able to substantially reduce barriers to entry into the mobile banking market for its members and has helped provide financial services to over 380,000 rural clients. Finally, in Pakistan, the Pakistan Microfinance Network (PMN) has been working on the development of a microfinance strategy specifically for the low-cost private school (LCPS) sector. Currently, there are around 70,000 LCPSs filling the quality and capacity gaps of public education, but they need greater access to finance to expand and reach their potential. Thanks to PMN’s facilitating role, microfinance providers and other stakeholders in the LCPS sector are now linked and working together to optimize resources across both sectors.

These associations are leaders in implementing innovative and locally-responsive approaches to financial inclusion.  The associations highlighted here have invested in innovation and new technologies in order to continue providing the relevant services their members need. This will also help to ensure the associations’ own sustainability within their respective markets. Representing a combination of direct implementation, service provision, and market facilitation, the work of these MFAs is having a clear and measured impact on the lives of their clients. Their experiences bring valuable new knowledge to the microfinance industry at large and encourage the creation of strategic partnerships to affect meaningful change in the financial inclusion arena.

Explore all articles in the series:

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