Financial products are critical tools that enable people to participate in the formal financial system. They provide opportunity to save for children's education, protect against crop failure, or borrow money to start a business. Today, there are nearly 200 million people2 who are accessing credit through microfinance institutions (MFIs) around the world, and as the sector has evolved, new financial products, offered by MFIs, have been added to enable more people to live stable financial lives. As a result, nearly 80 million3 people are depositing savings into MFIs while 135 million people have microinsurance policies.4
Clearly, a trend has emerged which indicates that more and more low-income people are benefitting by participating in formal financial programs. Despite these gains, ample opportunity exists to increase financial inclusion. However, increasing the flow of capital to MFIs and microentrepreneurs alone is not enough to maintain the growth of the microfinance industry. It is also essential to invest in the capacity of MFIs to manage responsible growth and scale the capital markets available to low-income clients as well as support the development of the human capitalâ€"MFI staff, leadership, and governance—that enable these institutions to thrive and ensure clients positively benefit from their services.
Citi has been supporting the microfinance sector philanthropically for over 30 years. In addition to our long-term commitment to support efforts that help the microfinance industry achieve scale and sustainability, we are distinguished in this field by our on-the-ground presence and partnerships in the countries where microfinance is making a difference. In 2012, the Citi Foundation invested more than $12 million to build the institutional and management capacity of microfinance institutions (MFIs), intermediary organizations and industry networks that are expanding the supply of their new asset building financial products and services. Further, we aim to support research and convenings in the sector and to identify innovations to assist institutions to achieve scale and sustainability.
1 Chaia, Alberto, et al. "Half the World is Unbanked (Financial Access Initiative Framing Note)". Financial Access Initiative, 2009.
2 Larry R Reed. "State of the Microcredit Summit Campaign Report 2011". Microcredit Summit Campaign, 2011
3 MIX Market provides financial data and performance indicators for microfinance (http://www.mixmarket.org/).
4 Lloyd's 360 Risk Insight and the Microinsurance Centre. "Insurance in Developing Countries". Retrieved from http://www.lloyds.com/News-and-Insight/360-Risk-Insight/Research-and-Reports