Promoting Inclusive Markets and Financial Systems
Building microfinance institutions from scratch became the norm in the 1990s for fostering outreach and down reach of financial services to the poor. This MFI building movement was in reaction to lack of interest among traditional financial institutions in the kinds of service delivery innovations needed to engage the truly poor, especially very poor women in rural areas. While motivated by stronger social commitment and greater innovative spirit, the institution-building movement is running into the same cost issues as the traditional institutions have faced. Ironically, many of the new MFIs are reacting in the same self-limiting ways that reduce commitment and innovation to engage the truly poor, especially very poor women in rural areas.