Funding the Risk Frontier in Microfinance

> Posted by Michelle Romeu
In her latest Huffington Post contribution, Elisabeth Rhyne discusses how public and private funding for microfinance can be used to its full potential in bringing about financial inclusion.

The recent IPO of SKS Microfinance, India’s largest microfinance institution (MFI), was a watershed event whose ripples are affecting the public perception of microfinance. When an organization originally founded as a nonprofit first attracts some $75 million in successive waves of private equity capital and then raises $358 million in a public offering of stock, it seems natural to ask: is there any remaining role for donor funding — or for nonprofit engagement — in this industry?

Despite the fanfare associated with public listings that attract commercial money into microfinance, only a handful of the largest MFIs are traded on stock exchanges. Moreover, outside the MFIs’ home exchanges (Mexico for Compartamos, Kenya for Equity Bank, or India for SKS) these shares are generally only available to institutional investors. The vast bulk of the microfinance industry relies on socially motivated funding in a mix that includes grants, loans and equity investments. Anyone who wants to support microfinance can select from a multi-hued array of funding opportunities to find one that matches his or her wishes. Read more >