The field of Microfinance sector is both old and new - people have always been borrowing, lending and saving for as long as there has been money (and in kind before). They have done this within their own communities, using their own systems and methods, without any external 'assistance' or resources. The sector is new in that it has primarily developed as a response to the inability or apathy of commercial banks and the formal financial system to serve the needs of low-income households and microenterprises.
In order to develop an effective response to the myriad range of challenges facing the microfinance sector today, the Virtual Library on Microcredit (VLM) has developed a framework to tackle these and related issues in the formulation of policy and practice of microfinance. The framework has also largely guided the development of this website.
The basic aim of this framework is three-fold:
The target audience of this framework is kept broad to increase its utility value - microfinance practitioners, government agencies, NGOs, donor agencies, community groups, etc. The key is to emphasize the need for a range of responsibilities to be taken up by a range of actors and the need for networking and sharing of experiences among these actors.
- to develop awareness and educate on issues related to microfinance
- to assist in policy and programme development
- to facilitate research, monitoring and evaluation
The framework is divided into four components - (a) an overarching macro policy environment, (b) long-term financial sustainability of MFIs, (c) increasing outreach by capacity building, and (d) broadbased research and analysis. Each component is presented with a statement and explanation, key actors, related issues and examples.