Access to Commercial Capital
Microfinance providers need capital in order to grow and achieve financial self-sufficiency. Given the limited level of donor funding available, microfinance institutions (MFIs) need to take the necessary steps to attract commercial capital, both debt and equity. Since 2003, USAID’s Microenterprise Development office (MD) has been working to improve the ability of the microfinance industry to access commercial capital. MD has supported the transformation of microfinance non-governmental organizations into regulated institutions licensed to mobilize savings, sponsored the use of credit enhancements such as the Development Credit Authority (DCA) to encourage greater bank lending to microfinance institutions, and invested in several global debt/equity funds as a way to attract commercial investment to the industry.
MD’s knowledge generation agenda under this theme focuses on tools and strategies for facilitating MFI transition to private capital. These include a series of case studies to assess the impact of DCA guarantees on expanding domestic bank lending to MFIs, and a guide and template to help MFIs develop their financing strategies.