Where we need to be

There are billions of people without access to formal financial institutions. Even if not everyone needs or wants access to these institutions, this number needs to get a lot closer to zero. Look back at our pyramid in the Where We Are section. We need to be meeting all of those needs for people all over the world before any attempt at reducing poverty is possible. And people need to begin to move out of poverty and feel capable of making investments in their future before anything can be done to encourage sustainable decisions. This will involve building up profitable microfinance institutions organically.

It is very possible for microfinance to be profitable, although those serving the very poor tend to be less profitable than those serving the less poor. Still, in November 2001, the MicroBanking Bulletin included data from 62 self-suffiecient MFIs with an average return on assets of 5.5%, with even some that serve the very poor returning over 4%. It is possible for them to not be profitable in some situations, but smart investments with even the very poor can be quite profitable. It is important that we begin focusing on what those that are successful are doing to duplicate it all over the world.

Just as important as profitability is the ability of these microfinance institutions to truly reflect the needs of the individuals they are serving. This means growing up these institutions organically, out of the informal institutions that are currently broken, but that are at least providing some services. We need to find a way to get each unique community an ability to have a valuable and stable currency, valuable assets and means of income that can be safely stored, insurance against disasters, lines of credit for making investments in one's future, and connections to the global economy.