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Microfinance is experiencing an investment boom fuelled by socially responsible investorsMicrofinance is experiencing an investment boom fuelled by socially responsible investors, according to a new CGAP Focus Note by Sarah Forster, Geoeconomics and Xavier Reille, CGAP, the Consultative Group to Assist the Poor, a microfinance industry body housed at the World Bank. Between 2004 and 2007, foreign investment in microfinance institutions that provide loans and savings for poor people in developing countries more than tripled to reach a total of US$4 billion. So far, the vast bulk of this private investment in microfinance is socially motivated, says the paper, entitled Foreign Capital Investment in Microfinance: Balancing Social and Financial Returns. This high level of investment and the growing involvement of private investors is good news for microfinance: "These new investors are introducing investment banking and asset management skills that are helping the sector to develop" says Reille. But the report warns that investment is still highly concentrated in a small number of investment-ready institutions. "While this funding could help reach millions of poor people with financial services, it is still limited to well-developed microfinance markets in Latin America and South Asia, and failing to reach the vast majority of poor people living in Sub-Saharan Africa", says report co-author Sarah Forster. "It´s these more difficult markets that microfinance must reach if it is to have a real impact on poor people´s lives."
The latest trends in international microfinance investment have relevance to the UK. They show how it´s possible to attract private investment into social enterprise if one can create appropriate investment vehicles and scaleable business models which deliver both social and financial returns. CGAP (The Consultative Group to Assist the Poor) is the world's leading resource for the advancement of microfinance. More information: www.cgap.org To download the pdf version of the report, please submit your full name and email address.
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The third issue of Geoeconomics Briefs can now be downloaded from the website. This Brief outlines a new model for sustainable economic development that integrates two paradigms – the Knowledge Economy and the Green Economy. We refer to this model as the “Green Knowledge Economy” (GKE). You can download the Brief here. Green Knowledge Economy Action Plan for Bournemouth, Dorset and Poole MAA Partnership presented to DCLG. Mark Hepworth presentation described as a ‘tour de force’. The MAA Board has now formally adopted the Green Knowledge Economy framework and programmes for its sub-regional strategy. Bournemouth University to launch its new Centre for the Green Knowledge Economy based on Geoeconomics’ report for the MAA in April 2010. Mark Hepworth has been appointed a Visiting Professor at the new Centre and will work with the BU team to develop the GKE paradigm as a framework for technological, organisational and social innovation. Sarah Forster is working with CGAP to develop a guide on how microfinance donors and investors can support savings mobilization. Savings is the most neglected financial service available to the poor. The guide is expected to be a useful tool in helping expand poor people's access to savings services. Taunton’s draft economic development strategy based on the Green Knowledge Economy paradigm was completed in January. This is the UK’s first local economic development strategy which applies the GKE “green and grow” framework. Geoeconomics worked in partnership with Taunton’s economic development team led by Philip Sharratt. Berkshire Economic Strategy Board has commissioned Geoeconomics to refresh its vision for Britain’s leading sub-regional economy outside London. Mark Hepworth is interviewing business leaders and policy makers from across Berkshire and its six local authorities to create a new vision and recommend future strategic directions. Geoeconomics will prepare a local economic assessment for the London Borough of Bexley. The assessment will follow DCLG Guidance and provide an opportunity for Bexley to create a powerful evidence base for its economic development activity, in the context of the Mayor’s new spatial and economic development strategies for Outer London and the Thames Gateway. All past Geoeconomics news items can be found in our news archive
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