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Povertyisaglobalphenomenon.AccordingtotheWorldTradeOrganization,thenumberofpeoplelivingonlessthanUS$2perdayhasrisenbyalmost50percentsince1980toalmostonehalfoftheworld’spopulation.Inaddition,thenumberofpeoplelivinginextremepov-erty,lessthanUS$1perday,isalsogrowinginallregionsoftheworldexceptChina.
Infifty-ninecountries,theaverageincomeislowertodaythanitwastwentyyearsago.From1980to1996,onlythirty-threeofonehundredandthirtydevelopingcountriesincreasedgrowthbymorethan3percentpercapita,whilethegrossnationalproductpercapitaoffifty-ninecountriesdeclined.Around1.6billionpeopleareeconomicallyworseofftodaythanfifteenyearsago.
Overthelastfortyyears,thegapbetweentherichandthepoorhasdoubled.Therichestfifthoftheworld’spop-ulationhas80percentoftheworld’sincome,whilethepoorestfifthhaveonly1percentoftheworld’sincome,accordingtotheWorldTradeOrganization.Manypeopleseemicrofinanceasaviableandsustainablemethodtocombatpoverty.Microfinanceistheextensionofsmallloanstoimpoverishedindividuals,typicallywomen,toprovidethemwiththecapitaltostartupsmallbusinessesandtoliftthemselvesandtheirfamiliesoutofpoverty.ThesizeofmicrofinanceloanstendstobebetweenUS$50andUS$100.
DeMAND For MICroFINANCe
Seventy-fivepercentoftheworld’s550millionpoorfami-liesdonothavesufficientaccesstoaffordableandappro-priatefinancialservices.MarketdemandformicrofinanceservicesisestimatedatmorethanUS$300billionwhilemarketsupplyisonlyUS$15billion.Formicrofinancetocontinuegrowingataverageratesof15to30percent,US$2.25toUS$5billioninnewportfoliofinancing
andUS$300toUS$400millioninnewequitywillberequiredannually.Tomeetthisdemand,microfinanceinstitutions(MFIs)willneedtoaccesscapitalmarketstoclosethesupply-demandgap.MFIleadersandpotentialinvestorsneedtoknowaboutthemarketmechanismsthatareemergingtohelpthemlearnacommonlanguagethatwillfacilitatefunding.
INForMAtIoN INterMeDIArIeS
BridgingthegapbetweenMFIsandcapitalmarketsarethreemainintermediaries:ratinginstitutions,theMIXMarket,andfinancialintermediaries.RatinginstitutionshelpidentifyandassessthestateofMFIoperations.TheMIXMarketisaglobal,Web-basedmicrofinanceinforma-tionplatformthatlinksMFIswithinvestorsanddonors.MFIfinancialintermediariesarespecializedprivateinvest-mentfundsthatspecificallytargetMFIs.
Rating Institutions
OneofthegreatestchallengesMFIsencounterwhenseekingaccesstocapitalmarketsislegitimacyandproofofstability.ItisthereforenecessaryforMFIstoutilizereliableratingandassessmentserviceslikethefinancialmarkets.TheMicrofinanceRatingandAssessmentFundwasestablishedin2001asajointinitiativeoftheInter-AmericanDevelopmentBank(IDB)andtheConsultativeGrouptoAssistthePoor(CGAP).TheprimaryobjectivesoftheRatingFund,aslistedonitsWebsite,are:
• TobuildmarketsforMFIratingandassessmentservicesbyencouraginggreaterdemandfromMFIsforprofessionalexternalevaluations,aswellasbystrengthen-ingthequalityofsupply.
• ToimprovetransparencyofMFIfinancialperfor-manceasabasisforimprovedperformanceandincreasedflowofcommercialfunding.
by Isaac H. Smith, Michael A. Broderick, and Richard G. Winsor
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Thefundwillfinance80percentofthecostofarat-ing/assessmentofanMFIbyapreapprovedinstitution(SeeTable1).
ForanMFItoqualifyforrating/assessmentfunds,ithastohaveprovidedfinancialservicesforclientsforatleastthreeyears.HundredsofMFIshavealreadyreceivedratingsandassessments—lendingcredencetothenotionofMFIsasanemergingassetclassbyimprovingthe
reliabilityandavailabilityofinformationontheriskandperformanceofMFIs.
The MIX Market
TheMIXMarketservesasaWeb-basedlinkbetweenMFIsandthepublicatlarge.Itprovidesinformationonpublicandprivatefundsthatinvestinmicrofinance,MFInetworks,ratersandexternalevaluators,advisory
Table 1: ApprovedRatingAgencies[1]
NameofAgency PrimaryProduct Regions
apoyo & asociados Internacionales
Saccredit rating Latin america
brc Investor Services credit rating Latin america
class & asociados S.a. credit rating Latin america
crISIL credit rating, risk assessment South asia
Ecuability credit rating Latin america
Equilibrium credit rating Latin america
Feller rate credit rating Latin america
Fitch ratings credit rating Latin america
Global credit rating co. credit rating Sub-Saharan africa
Jcr-VIS credit rating company
Limitedcredit rating South asia
M-crIL credit rating, risk assessment Europe, asia, and the Pacific
Microfinanza Srl risk assessmentSub-Saharan africa, Europe,
asia, and Latin america
Microfinanza Srl (ES) risk assessmentSub-Saharan africa, Europe,
asia, and Latin america
Microfinanza Srl (Fr) risk assessmentSub-Saharan africa, Europe,
asia, and Latin america
Microrate risk assessmentSub-Saharan africa, Europe,
asia, and Latin america
Microrate Latin america credit rating, risk assessmentSub-Saharan africa, Europe,
asia, and Latin america
Pacific credit rating Holding Inc. credit rating Latin america
Planet rating afrique risk assessmentSub-Saharan africa, Europe,
asia, and Latin america
Planet rating Perú Sa risk assessmentSub-Saharan africa, Europe,
asia, and Latin america
Planet rating SaS risk assessmentSub-Saharan africa, Europe,
asia, and Latin america
Standard & Poor’s credit rating Latin america
[1] agencies are approved by the rating Fund. See http://www.ratingfund.org/rater_compare.aspx for more information.
�� ESR— Fall 2007
firms,andgovernmentalandregulatoryagencies.ThegoaloftheMIXMarket,aswordedontheirWebsite,is
“toattractmorepublicandcommercially-orientedinves-torstomicrofinancebypromotingfinancialtransparency,accountability,andincreaseddisclosurestandards.”ItprovidesMFIswithanopportunitytopostaprofileontheWebtomarkettheirorganizationtoinvestorsanddonors.Likewise,investorsanddonorscanpostprofilesinanefforttodeveloppotentialmicrofinanceinvestmentopportunities.AsofJuly2007,theMIXMarkethaspro-filesof973MFIs,93investors,and163partners.
Financial Intermediaries
MFIfinancialintermediariesarespecializedinvestmentfundsthatspecificallytargetMFIs.Privateinvestorsaregiventheopportunitytoinvestinafund,whichinturn,ismanagedbyathird-partyorganizationthatinvestsinmultipleMFIs.
TheACCIONBridgeFundandtheWisconsinCoordinatingCommitteeforNicaraguaFundwerepioneeringMFIfinancialintermediaries,providingdebtfinancingtopartnerMFIsbysellingpromissorynotestothepublic.Later,in1995,ProFundwascreatedasaprivateequity,venturecapitalfundthatinvestsinfifteenLatinAmericanMFIs.In1999,LA-CIFwascreatedandismanagedbyCyranoManagement.CyranohassincelaunchednumerousfundsthatofferdifferenttypesofcapitaltoMFIsanddifferentinvestmentriskportfoliostoinvestors.
AnotherinnovativeMFIfinancialintermediaryisBlueOrchardFinance.Itwasincorporatedastheworld’sfirstinvestmentcompanythattargetedMFIsexclu-sively.Bysolicitinginvestmentsfromsocialinvestors,BlueOrchardmanagesmillionsofdollars,whichitisabletoinvestinMFIs.
OneofthemajorconstraintsofanMFIinreachingtheestimated2billionpeoplelivingbelowthepovertythresholdisthelackofcapital.Historically,capitalwasonlyaccessedthroughprivateorgovernmentdonations.Inthelastdecade,MFIshavepushedtolimitthedepen-dencyondonorcapitalandtoaccessfundingthroughthecapitalmarkets.
FUNDING veHICLeS
Microfinance Funds
Approximatelyseventy-fiveprivatesocialinvestmentfundsraisemoneytodistributetoMFIs.Manyfundsareaffiliated,invaryingdegrees,withestablisheddevel-opmentorganizations—mostlyNGOs.
Historically,thesefundsreliedsolelyonphilanthropicfunding.Currently,mostfundsarenotanddonotseektobeself-sustaining.However,afewsuccessfulfundsareemergingthatofferreturnsatornearmarketrates,andanotherfifteentotwentyoffermodestorbelow-marketreturns.
Theleadingexampleofamarket-sustainablemicrofi-nancefundistheDexiaMicro-CreditFund.DexiaBankInternationalofLuxemburgcreatedthefundin1998;itwasthefirstcommercialinvestmentfunddesignedtorefinancemicrofinanceinstitutions.Investorsinthefundrangefromretailbankingcustomerstoinstitutionalinves-tors.ThefundisactiveintwentydevelopingcountriesinLatinAmerica,Asia,andEasternEurope,andfinanc-esfortyinstitutions.
Tomanageitsmicrofinanceportfolio,DexiaAssetManagementreliesontheSwissfirmBlueOrchardFinance.BlueOrchardselectstheMFIsthroughacompre-hensivenetworkofcontacts.InorderforBlueOrchardtoselectanMFI,theMFIfirstmusthaveanindependentexternalrating.ThenBlueOrchardinitiatesafieldvisitandadatacollectionprocessfortheprospectiveMFI.OnthebasisofBlueOrchard’son-siteevaluation,thefinanc-ingcommitteedecidestoinvestornot.Iftheydoinvest,theselectedinstitutionreportsonamonthlybasisoverthewholelifeoftheinvestmentandisvisitedeveryyear.
Asset-Backed Securities
Anotheremergingassetclassinmicrofinanceisasset-backedsecurities.Amicrocreditasset-backedsecurityisabondthatiscollateralizedbythefuturecashflowsofprin-cipalandinterestrepaymentsfromanMFI’sclients.Thenatureofthisfinancinginstrumentdoesrequiretheset-tingupofanewspecialpurposecompanytomanagetheloanportfoliothathasbeensetasidetomakepayments.
OnesuchspecialpurposecompanyisBlueOrchardMicrofinanceSecurities(BOMFS)I,formedbyDevelopingWorldMarketsandBlueOrchard.InwhatwasthelargesttransactionintheUnitedStatescapitalmarketstofundmicrofinance,BOMFSI,inJuly2004,issuedaUS$40MMbondtosupportMFIsinninedevelopingcountries.InFebruary2005,BOMFSIIraisedanotherUS$47MMinthecapitalmarkets.
JPMorganhelpedplaceBOMFSIsecuritiesonWallStreet.Microfinancedebt,aswithothernewassetclasses,allowsWallStreettoprofithandsomelyfromunderwrit-ingthesenewsecuritiesandsellingthemtobrokerageclients.BOMFSIwasnoexceptionandpaidfeesaround3percent,fallinginthemiddleofthetypicalspandemandedbyinvestmentbanks.
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Bond Issues
In2002,threemicrofinanceinstitutionsinthreedif-ferentcountriesinLatinAmericaissuedbondsinlocalcapitalmarkets,raisingapproximatelyUS$25millioninnewdebtfinancingontermsmorefavorablethanthoseavailablefrombanks.OneoftheseMFIs,Compartamos,issueda100millionMXP(approximatelyUS$10MM),three-year,13.1percentcouponbond.In2004,CompartamostappedthecapitalmarketswithaUS$44MMbondratedAAbyFitchandS&P.Bothbondplace-mentswereissuedtoindividualandinstitutionalinvestorsandbothplacementswereoversubscribed(i.e.,investordemandexceededthesupplyofbonds).
Strategic Partnerships with Commercial Banks
In2003,CASHPOR,anMFIworkinginthepoorestregionofIndia,andICICIBank,India’ssecondlargestbankandlargestprivatebank,enteredintoamutuallybeneficial,strategicpartnershipagreementtoprovidemicrofinanceservicestothepoor.CASHPOR,withitsmarketknowledgeofpoorcustomers,originatesandservicesloans,whileICICI,withitsstrongbalancesheetandvastfinancialresources,providescapital—includingworkingcapital—forCASHPORtocarryoutitswork.UnderpinningthisagreementisCASHPOR’sapprovalofloanproposals.Inthefirstyearofjointpartner-ship,CASHPORrecruitedsixthousandnewcustomersanddistributedUS$650,000.Theat-riskportfolio(i.e.,greaterthanthirtydayspastdue)was0.02percent.ForICICI,thisinvestmenthasbeenveryadvantageous,andICICIplanstocommittheequivalentofUS$1billiontothissectoroverthenextfiveyears.
LooKING ForWArD
“Wearechangingtheperceptionthatmicrofinanceinstitu-tionsarefundedonlybycharitabledonations,”saidDrewTulchin,managerofGF-USA’scapitalmarketprograms.Currently,onlyanestimated20percentofmicrofinancefundingismadebycommercialoperators,accordingtoGF-USA.“Thissuccessexpandstheequationtoincludeinvestorsasviablepartnersthroughcommercialfinancing.”
For INveStorS: A UNIQUe CoMBINAtIoN
of SoCIAL and FINANCIAL retUrNS
Oneimportantdistinctionbetweenmicrofinancedebtandotherassetclassesisthatmicrofinancedebtofferswhatiscalleddoublebottomlinereturns—whichmeansthatmicrofinancenotonlyoffersanattractivefinancialrisk-returnprofile,butitalsooffersasignificantsocialreturn.Microfinanceiswidelyrecognizedasoneofthemosteffectivepovertyreductiontools.In2005,theUnitedNationsdeclared2005astheYearofMicrocredit.
Social Returns
Microfinancehasproventobeaveryefficientwaytoalleviatepoverty.Ithasstimulatedgrassrootsentrepre-neurship,jobcreation,andcommunityandfinancialinfrastructuredevelopment;ithasraisedfamilylivingstandardsandgrowthofsmallbusinesses;andithasenhancedsocialandeconomicdevelopmentbyfacilitatingaccesstocapitalmarkets.
Appealing Financial Risk-Return Profile
WallStreetisknowntobeheartlesswhenitcomestoinvestmentdecisions.Investorslookforhighreturnsbalancedwithpotentialriskforaninvestment.Inordertointerestinvestors,microfinancedebtmustprovideanattractivereturnbasedonitsrisk.
BlueOrchardestimatesthatmicrofinancedebtoffersabetterreturnthanmonetaryinstruments.Specifically,itestimatesmicrofinancedebttohaveearnedanadditional150to200basispointswithonlyaslightlyhigherlevelofriskandconcludesitisanexcellentalternativetofiduciarydepositsorcertificatesofdeposits.
Theasset-backedsecurityBOMFSIisanexampleofavariedrisk-returnprofileinthemicrofinanceinvestmentclass.BOMFSIissuedaseven-yeardealthathasfourlayersofvariousrisksortranches.TheseniordebtportionaccountsforUS$30MM,or75percent,andisguaran-teedbyOverseasPrivateInvestmentCorporation(OPIC),
Table 2: S&P�00ReturnonInvestment[1]
SharePrice ��0�.��
CumulativeReturn ��%
2000 roI -2%
2001 roI -17%
2002 roI -24%
2003 roI 32%
2004 roI 4%
2005 roI 2%
[1] Statistics found on Yahoo!Finance in april 2006.
�0 ESR— Fall 2007
anagencyoftheU.S.federalgovernment—thusmakingthisportionarisk-freeinvestment.Thereturnontheseniortrancheisbetween0.25percentand0.5percenthigherthansimilarrisk-freetreasurysecurities.
Weak Correlation
Anotherattractiveprospectofmicrofinancedebtisthelowcorrelationthereturnshavewithotherassets.Akeystrategyforinvestorsistotrytodiversifytheirinvestmentportfoliosinanefforttoreducetheiroverallrisk.Astheworldbecomesmoreglobal,marketsbecomemoreheavilycorrelated—thusmakingitincreasinglydifficultforinves-torstodiversifytheirportfoliorisk.
Microfinanceweaklycorrelateswithpolitical,eco-nomic,orevenclimaticevents.Theinformalsectorisbyitsverynatureathrivingplaceofpermanentbusinesscreation,whichislessdirectlylinkedtothefateoftheformaleconomy.Similarly,itweaklycorrelateswithglobalfinancialmovementsonthemajormarkets.Table2andFigures1and2showthereturnsofDexiaMicro-CreditFundandthereturnontheU.S.marketasmeasuredby
theS&P500.Theperiodinquestion,September1998toJune2005,wasasevererecessionfortheU.S.economyfollowingthebustofthedot-combubble.AsseeninthegraphtheDexiaMicro-CreditFundperformanceshowsnocorrelationwiththemarket,withacumulativereturnfortheperiodof34.3percentcomparedtoan18percentreturnfortheS&P500.
Attractive, Fast-Growing Industry
Themicrofinanceindustryisdevelopingfast,bothinsizeandquality.Firstandforemost,thesizeofdemandisgrowingexponentially,drivenbythemillionsofmicro-entrepreneurswhoarestilllongingforbasicfinancialservices.Iftheyaretomeettheirprojecteddemand,microbankersestimatethatinthenextfiveyearsalone,theywillneedbetweenUS$10toUS$20billion.Second,newandincreasinglysophisticatedproducts(e.g.,creditanddebitcards,leasing,housingandeducationfinance,andinsuranceandtransferpayments)arebeingintro-ducedastheindustrymatures,andtheexistingclientsneedtoevolvewiththegrowthoftheirbusinesses,which
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pushesstillfurtherthefundingrequirementsofthisindustry.Competitioniscurrentlylimitedornon-existentinmostmarkets,particularlyinAsiaandAfrica,creatingauniqueshort-termgrowthopportunityformicrofinanceserviceproviderstocapitalizeontheindustry’sattractivereturns.
Theindustryhasadocumentedtrackrecordofmorethanfifteenyearsthatshowsaglobalassetqualitystrongerthanotherfinancialassetclasses.Overthelastfiveyears,
“winners”haveemergedfromtheindustry’sfragmentedmarketplace,settingstandardsforbestpractice.
reASoN Not to INveSt
Withanyuniqueemergingassetclassthereisalwayssomeuncertainty.Investorsanduncertaintydonotlikeeachother,andthereexistrealquestionsaboutthequalityandsafetyofmicrofinanceinvestments.
Someofthecriticismsofmicrofinancedebtinclude:• Themajorityofmicrofinancedebtisnottradedin
aliquidmarketandisthereforedifficulttoprice.• Thereiscurrentlynotalargeenoughamountof
microfinancedebtforinstitutionalinvestorstouseasakeyinvestmenttodiversifyrisk.
• Thelevelofformalfinancialdisclosureisnotasfor-malizedasothertypesofinvestments,whichcouldleadtoexaggeratedperceptionofdefaultrisk.
• InvestorsdonothaveanyexpertisewithMFIsandmicrofinancedebt.
Thelistpinpointsareasofconcernmainlyfromaninstitutionalinvestor’sperspective.Thepositivenewsisthattherearenotunderlyingweaknessesintheessentialsofthemicrofinanceindustry.Rather,mostitemscanbeovercomethroughbettercommunicationofthemarket’sfundamentalsandthroughchangesinthewaytheindus-trypresentsitselftoinvestors.
For MFIS: BreAKING into the GAMe
MFIstraditionallyhavereliedondonorstoprovidefundingformicrocredit.Manyarenotsurehowtoaccesscapitalmarketsthemselvesandmaynotevenseeareasontopursuethissourceoffunding.
reASoNS to ACCeSS CAPItAL MArKetS
ThemerenotionofaccessingcapitalmarketsmaybecompletelyforeigntomanyMFIs.Whatisthepurposeofaccessingcapitalmarkets?MFIsarecurrentlysatisfyingonlyanestimated10percentofthedemandformicro-
credit.ThefullsizeofthemarketisroughlyUS$300bil-lion,whiledonorsonlyaccountforlessthanUS$1billionperyear.Meetingdemandwillrequireanever-increasinginfluxofcashflows.Privateinvestorsviacapitalmarketsarethemostrealisticsourceforsuchanimmenseamountofneededfunds.
AsecondaryreasonforMFIstoworktowardsaccessingcapitalmarketsisthatitwillinevitablyleadtoincreasedoperationalefficiency,financialaccountability,andtrans-parency.Justtobeconsideredbyprivateinvestors,anMFIwouldneedtoproveitselfasaviableorganizationwithcompetentmanagementandsustainableoperations.
HoW to GAIN ACCeSS
WeofferfourkeyrecommendationsforMFIsseek-ingtoaccesscapitalmarkets.First—andmostdiffi-cult—anMFImustbecomeprofitableandself-sufficient.Otherwise,privateinvestorswillbereluctanttorisktheircapital.Second,getaratingandassessmentfromanaccreditedorganization.Third,registerontheMIXMarket.Fourth,network.
Become profitable:FormanyMFIs,thenotionofprofitabilitymaybedaunting,intimidating,andseeminglyoutofreach.Toeffectivelyaccesscapitalmarkets,however,MFIsmustbecomesustainableorganizationsthatinvestorscanhaveconfidencein.Thefirststeptowardprofitabilityislearningthelanguageofbusiness.MFIsmustbecomefamiliarwithbasicbusinessterminologytoleveltheplay-ingfieldwithinvestors.Thesecondstepistoincorporatebasicbusinesspractices(e.g.,financialmanagement)intostandardoperations.AsimpleInternetsearchcanpro-videcountlesssourcesofinformationtohelpMFIsbetter
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ABOUTTHEAUTHORS
Issac H. Smith, Michael A. Broderick, and Richard G.
Winsor put their minds together for a field study in early
2006. For an academic course available to MBa and MPa
students at Brigham young university, smith, Broderick,
and Winsor conducted research for the EsR Center. as part
of their research they gathered many key players in the
field of microfinance together for a focus group—including
John hatch of FINCa, Ellen Vor der Bruegge of Freedom
From hunger, Mushtaque Chowdhury of BRaC, and louis
Pope and troy holmberg of yehu Microfinance. smith
and Broderick earned MBa degrees from Brigham young
university in 2007, and Winsor graduated from Brigham
young university’s MPa program in 2006.
managetheirorganizationandworktowardprofitability.Forexample,athttp://www.managementhelp.org/finance/fp_fnce/fp_fnce.htm,aWebsitetitled“BasicGuidetoFinancialManagementInFor-Profits,” adviceisgivenonbasicbookkeeping,budgetmanagement,financialstate-mentdevelopment,andmuchmore.
Thereisarisktofocusingonprofitability:atheorycalledmissiondrift.Asthetheorygoes,assoonasanon-profitorganizationbeginstofocusonsustainabilityandprofitability,theybegintolosesightoftheverymissionandpurposeforwhichtheycameintoexistence.Itmustbeunderstood,however,thatifthelong-termgoalofmicrofinanceistohelpalleviatepovertybyprovidingthepoorwithaccesstocapital,thenbillionsmoredollarsneedtoberaisedtomeetthemassivedemand.Becomingprofitableandmorebusiness-likeinordertoaccesscapitalmarketsisoneofthemostpromisingoptionsfortheMFIcommunitytomeetitsultimategoalofofferingcapitaltoallwhoneedit.MFIsmaythereforelookataccessingcapitalmarketsascentraltotheirmission,notasadetrac-torfromit.
Get a rating: Informationaboutratingandassessmentscanbefoundathttp://www.ratingfund.org,theofficialWebsiteoftheMicrofinanceRatingandAssessmentFund.Aformalratingandassessmentfromapreapprovedratingorganizationservestwopurposes.Firstofall,anassessmentcanincreasethelikelihoodofanMFIbecom-ingprofitable.Theratingandassessmentwillhelpidentifyareasofconcernandareasofneededimprovement.Forexample,inDecember2004,FINCAMexicoreceivedaratingfromMicroRate,amicrofinanceratingagency.Theratingincludedathirteen-pagereportdetailingtheoperations,portfolioquality,managementandorganiza-tion,personnelandproductivity,operatingefficiency,governanceandstrategicpositioning,andfinancialdata.Aratingandassessmentcanprovideinvaluableinforma-tionforanMFIthatisonthebrinkofprofitability.
Second,foraprofitableMFIthatisseekingcapitalmarketfunding,aratingprovidesinvestorswithneededinformationtomakeanestimateoftheriskassociatedwithinvestinginthatMFI.Reliableratingsallowinves-torstobenchmarkMFIsagainsteachotherandmakeinformedinvestmentdecisions.OvertwohundredMFIratingandassessmentreportsarepostedontheMicrofinanceRatingandAssessmentFundWebsite.
Register on the MIX Market:AnMFIcanregisterontheMIXMarketthroughitsWebsite:http://www
.mixmarket.org.AccordingtotheWebsite,“TheMIXMarketstrivestofacilitateexchangeandinvestmentsflows,promotetransparency,andimprovereportingstandardsinthemicrofinanceindustry.”Byregistering,MFIsexposetheirorganizationtopotentialdonorsandinvestors.
Network:Althoughobvious,itshouldnotbeunderem-phasizedthatoneofthebestwaystoaccomplishagoalistolearnfromsomeonewhohasalreadyaccomplishedthatgoal.NumerousMFIshavesuccessfullyaccessedcapi-talmarkets.Networkingwiththeseorganizationsisanimportantopportunitytolearnfrompastfailuresandsuc-cesses.TheConsultativeGrouptoAssistthePoor(CGAP)regularlypoststheMicrofinanceCapitalMarketsUpdateonitsWebsite.ThereportliststherecentdebtandequitydealsbetweenMFIsandinvestors.NetworkingwithorganizationscurrentlyintheprocessofaccessingcapitalmarketscanalsoprovideMFIswithvaluableinformation.
CoNCLUSIoN
Povertyamidstgreatprosperityhasalwaysexisted,inlargemeasurebecausemanyoftheworld’spoorwereshutoutofthesamemarketsthatmadeotherswealthy.Microfinancerepresentsatoolthatcanbringtheworld’spoormorefullyintoexistingmarkets.Wehavesuggestedhereanumberofreasonsandwaysthatmicrofinanceorganizationsandinvestorscanworktogethertobringthevirtuesandfruitsoffinancialmarketstomicrofi-nanceinstitutions.
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