Edited by Tom Clougherty, published by the Globalisation Institute, Nov 2006, 25 pages, download here: http://www.globalisationinstitute.org/publications/microfinance.pdf
The Globalisation Institute, which published “Harnessing Enterprise to Fight Poverty”, is a British think-tank focusing on how globalization can alleviate poverty. It was founded in 2005 and headed up by Director-General Alex Singleton. The paper summarizes the successes of microfinance and urges the British Department for International Development (DFID) to focus on microfinance as a development tool. It starts with a foreword by former British High Commissioner to Uganda, Mike Cook CMG. He bemoans the fact that the DFID’s fund distribution does not directly involve the poor and contrasts the institution’s projects with the success of microfinance. The report then emphasizes these achievements, arguing that microfinance is a key to establishing better governance and property rights in the developing world, and provides several case studies, including stories from Jamii Bora Trust in Kenya, SKS in India, and ACORD Ethiopia. They note that there is plenty of donor money available to microfinance institutions (MFIs), but ultimately, they must find commercial funding to meet global demand. Finally, the report argues that the DFID has not done enough to support microfinance. It says that development agencies should focus their funds at “contributing to the start-up costs and fostering the establishment of truly self-sustaining microfinance institutions.” However, they warn policymakers to be wary of “throwing money” at microfinance or believing that one variety of microfinance can work globally. Specifically, the Globalisation Institute argues that the DFID should have a team focusing on microfinance, with a head that reports monthly to the Secretary of State. Additionally, they suggest that the government host an “annual summit on microfinance, drawing together the leading figures in the world of microfinance and the major international banks, to encourage greater private funding of microfinance and to promote the exchange of expertise and best practice.” (pg 24) Ultimately, the report laments the fact that the DFID prefers to “support ‘big name’ development charities instead.” Now that microfinance is one of the “big names” we shall see how state development organizations, such as the DFID, react.
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