Microfinance: a selective introduction with special focus on HIV/AIDS

This paper gives a basic overview and understanding of the microfinance (MF) sector. It aims to provide information and tools on microfinance in dealing with the variety of settings where it is, or could be, present. It also focuses on how microfinance relates to the Millennium Development Goals (MDGs), and the effects of HIV/AIDS.

Main conclusions include:

• access to financial services is crucial in reducing the poor’s vulnerability versus income and expenditure shocks
• microfinance institutions (MFI) must be sustainable. Permanency, scale and a long term commitment are key characteristics of successful MF
• financial sustainability for the MFI must be a goal
• MF requires specialisation, unprofessional projects risk destroying the markets for the professional ones and thereby threatening the chances of a long term access to financial services for the poor
• the poorest clients can not always be reached with microcredit, but can and should be reached by providing safe saving services
• direct targeting of those infected with HIV/AIDS with credits is high risk and likely to lead to collapse
• establishing strategic alliances between MFI and other organisations in order to provide additional services, such as education and information, have a great potential.

[adapted from author]