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Monthly Archives: December 2009

ProCredit Statement

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We read this recently from ProCredit’s website and agree with their sentiments and approach. We do not want to minimize nor exaggerate the social impact of microfinance, but want to use it for what it can do best calling upon other approaches and parties to bring their efforts to bear toward poverty alleviation.

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Microfinance and our expectations

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Microfinance has gained an increasingly high profile; the UN’s “International Year of Microcredit” in 2005 and the Nobel Peace Prize awarded to Mohammad Yunus in 2006 attracted considerable media attention. ProCredit Holding consciously chose to make few appearances at the activities surrounding these events. We found the claims and hype regarding what microfinance can achieve to be excessive.

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In principle, we welcome efforts to highlight the challenges and opportunities faced by neglected target groups. We fear, however, that the importance attached to microfinance – presented as the cure-all to eliminate poverty – will raise expectations that cannot be fulfilled. If these expectations are disappointed, the public may be disillusioned and lose interest.

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In contrast to this mostly short-lived rash of activity, we focus on building stable institutions that make vital contributions to building the financial sectors of the countries in which we operate. This long-term orientation calls for patience, tenacity and moderate expectations based on realism.
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Microfinance is hardly the solution to problems of abject poverty. However, a functioning and inclusive financial system makes a contribution to a country’s development. Stimulating and accelerating such processes takes time. It requires stable institutions whose owners take a long-term view and whose staff are well-trained and can win customers’ trust. This is precisely the focus of our efforts.
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