Unlocking the Potential of Rural Economies
Developed by VisionFund’s Communications Network Manager, Megali Nanayakkara
It’s important not to forget what exactly it is that sets microfinance apart from other credit systems, and those people that should really be benefiting from it. Although intended to be the provision of low interest small loans to small businesses, getting it to those who need it the most remains a challenge. Rural areas continue to be significantly underserved with financial services because of the higher cost of delivery; and as a result, for-profit microfinance institutions concentrate much more in urban areas with larger loans.
Max Robinson, VisionFund International’s Chief Operating Officer, recently visited Myanmar and shared his observations on the country’s need for microfinance, especially in it rural parts. But first, a bit about Myanmar – because lately, it’s the country that everyone is talking about when on the topic of emerging markets.
Myanmar is coming out of five decades of isolation, and is in a period of transition from a centralised to market economy, from dictatorship to democracy, from conflict to peace. Everyone is interested in having a part of its bright future.
Of the country’s 52 million people, 32% live on less than $2 a day, 70% in rural areas, and 70% are financially excluded. The need for capital is strong: the country has $1 billion in unmet need for microcredit whilst being on the verge of strong economic growth. While certain government regulations present challenges to building sustainable rural operations, microfinance institutions (MFIs) in urban areas are rapidly growing and there are now around 300 licensed institutions in the country. VisionFund Myanmar (VFM) is currently the largest private MFI and although second largest overall in the country, has the broadest footprint with a strong social mission.
“Our challenge and vision is to bring financial inclusion including savings and small loans to the more rural and agricultural communities, serving clients in locations other MFIs would find hard to do. While the majority of the market is focusing on profitable urban lending, we are balancing our expansion to enable us to support those with real need,” says Max.
It isn’t easy. But that’s what sets VFM apart from other MFIs and banks. Going the extra mile, off the beaten-track, to take credit facilities to those who need it the most; to empower families and unlock the potential of rural economies.
VisionFund, World Vision’s microfinance arm, has been improving the lives of children in the developing world for more than a decade. By offering small loans and other financial services to families living in poverty, its clients develop successful businesses, enabling their children to grow up healthy and educated.
Last year, VisionFund MFIs provided 1.3 million loans at a 98% repayment rate, with nearly three-quarters of these going to women, and over half to clients actively involved in farming. In 2015, nearly four million children were impacted through its lending network located across more than 30 countries in Africa, Latin America, Asia and Eastern Europe. To learn more about World Vision’s microfinance work at VisionFund please visit: www.VisionFund.org