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FDC / The Microfinance Phenomenon, 2000

The Microfinance Phenomenon, 2000

In the 1990s, microfinance captured the imagination of opinion leaders, governments and donor agencies. Supporters have argued that microfinance institutions (MFIs) can not only have a major impact in the fight against poverty, but can do so on a sustainable basis. At the same time, a number of critics have emerged. This paper considers the achievements of microfinance to date. It finds that most, but not all, of the evidence suggests that microfinance can play a role in reducing poverty. On the other hand, while it has become generally accepted that MFIs can and should become financially self-sufficient, few have actually done so. There is a continuing role for donors in the development of microfinance, but it is important that donors focus on quality rather than quantity.