ALFI speaks to Damian von Stauffenberg, Founder and Chairman of MicroRate, the first micro finance rating agency, about trends within the micro finance industry.
Mr von Stauffenberg discusses how a temporary slowdown in the growth of the industry during the financial crisis was a blessing in disguise as the pace of growth had been too fast. The wave of interest in microfinance on the back of initiatives such as the UN's 'Year of Microfinance' in 2005 meant that the role of microfinance was overplayed by some. It is a financial product and can play a crucial role but cannot alone solve world poverty. Damian explains the challenges facing microfinance funds during the crisis and the ultimately positive impact on micro finance institutions who have emerged as more professional financial intermediaries.
He explains that social rating is a necessary complement to microfinance as there is a need to ensure promises are being fulfilled and that microfinance is helping people. Microfinance provides a means for poor people to become productive and thereby less poor. As such it is a hugely attractive product and the industry is once more growing rapidly with over $1billion of private money flowing into micro finance institutions. Private money represents less than 25% of the flows which demonstrates the size and enormous potential offered by the microfinance industry.
