This paper is a seminar report of the First African Investment Fund for Commercial Microfinance. It deals with the development of commercial financial institutions has not limited itself to one model. Around the world, you can see a variety of approaches to formalizing microfinance, many replicable in other countries. The first and best known involves the transformation of an NGO into a commercial financial institution – started over 10 years ago in Bolivia with BancoSol, a microfinance commercial bank. Now we find transformed NGOs in many countries, for example, Kenya, Peru and India, with others currently transforming in Benin, Uganda, Guatemala, and elsewhere. A second model consists of small commercial banks, which have also evolved to focus on microfinance, either changing their market or starting this way from the beginning. In Ecuador, Uganda, Eastern Europe, Tanzania and the Philippines, for example, we find microfinance institutions that fit this model for scaling up and becoming sustainable. Large, traditional banks have also looked for ways to enter the microfinance market and they present a third model. These banks have formed subsidiaries, or created separate private service companies specialized in microfinance, as we see happening in a growing number of countries, such as Brazil, Haiti, Tanzania, Nigeria, India, and others. Credit unions have also emerged as important players in microfinance, operating as regulated institutions in their own country. This fourth model is very relevant in Africa, where the credit union has evolved more than in other regions. They are termed “social investors,” that is, providers of equity capital with an eye to a double bottom line – financial and social returns.
Authors: Maria Otero. Organization: AFRICAP: The first African investment fund for commercial microfinance. Format: PDF. Date: April 2003.