Microfinance 3.0: Reconciling Sustainability with Social Outreach and Responsible Delivery

Fifteen years ago, microfinance was looked upon as one of the most promising concept to lift poor people out of poverty. Microfinance was perceived to be “good per se”. Many institutions proved successful both in development and in financial terms. Today, after an impressive pushing of the “financial frontier”, financial inclusion seems to have a mixed record: While it is true that many people in developing countries still lack access to finance, we have also witnessed the opposite “too much/easy access” led to over indebted clients, unable to serve their several microcredits offered by (too) many institutions. In some markets, this implied a move into pure consumer lending, partly replacing the traditional lending to micro-entrepreneurs. “Good” responsible microfinance institutions were not able to continue to operate in these “contaminated markets”. In this context, the question (re-)emerged: isn’t it, after all, unrealistic to believe that pursuing a development mission can go hand in hand with financial success, particularly in the context of commercial microfinance?