Microfinance in indonesia
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Microfinance in indonesia Document Transcript

  • 1. Economics and Management in Developing Countries INSEAD P4 Assignment MICROFINANCE in INDONESIA By Dewi BRAMONO Ming CHUNG Yoonmi EOM Kevin LAM Yenn Khan Executive Summary• Microfinance in Indonesia can be traced back to more than a century ago, where village credit organizations (BKDs) offered small loans to villagers.• Today, BRI unit desa of Indonesia is one of the most successful and profitable microfinance institutions in the world with more than 3.1 million borrowers with a gross loan portfolio of more than USD 1.7b as of Dec 2003.• Indonesia’s successful experience in microfinance is further shown during the hard-hitting Asian Financial Crisis in 1997 to 1998. At a time when commercial banks were collapsing, savings in microfinance institutions rose from IDR 8 trillion in 1997 to about IDR16 trillion in 1998, as depositors sought the stability of these institutions.• There are however some outstanding issues: o Inadequate outreach to the rural community o Politics impact the microfinance efforts negatively o Lack of awareness of microfinance among stakeholders o Microfinance may not be the answer for the poorest of the poor.• Recommendations include: o Greater co-ordination required with the NGOs to target the poorest of poor, especially in the rural areas(through aid, training and provision of the infrastructure) o Increase the awareness of the benefits of microfinance, and to educate stakeholders accordingly. Page 1 of 12
  • 2. Economics and Management in Developing Countries INSEAD P4 Assignment TABLE OF CONTENTSSCOPE .................................................................................................................31. Introduction .....................................................................................................3 1.1 What is Microcredit? .................................................................................3 1.2 From Microcredit to Microfinance............................................................32. Why Indonesia? ..............................................................................................3 2.1 Overview of MicroFinance in Indonesia ..................................................4 2.1.1 Definition of MicroFinance in Indonesia ...........................................4 2.1.2 Needs for Microfinance in Indonesia ................................................4 2.1.3 History & Key Players.........................................................................53. Economic Crisis in Indonesia and meltdown of financial system..............6 3.1 Maintaining stability in Crisis: Microfinance Institutions ......................7 3.2 Maintaining stability in Crisis: Microfinance Institutions ......................7 3.3 How could they do that?...........................................................................7 3.3.1 External Factors..................................................................................8 3.3.2 Internal Factors...................................................................................84. Current Challenges and Recommendations.................................................8 4.1 Inadequate outreach to the rural community..........................................9 4.2 Impact of Politics on Microfinance Efforts............................................10 4.3 Lack of Awareness of Microfinance Policies ........................................10 4.4 Effects on Poorest of the Poor...............................................................115. Conclusions ..................................................................................................12 Page 2 of 12
  • 3. Economics and Management in Developing Countries INSEAD P4 Assignment SCOPEThe scope of this paper is about microfinance in Indonesia. There is a differencebetween microcredit and microfinance, and this is explained in paragraph 1.2. The papergoes on to provide a brief history of microfinance in Indonesia. We have also chosen tohighlight one important success of microfinance in Indonesia: how the microfinanceindustry maintained its stability during the Asian financial crisis. Finally, we take a criticallook at some of the issues facing microfinance in Indonesia, and then end with somerecommendations on how Indonesia might overcome these outstanding issues.1. IntroductionThe success of Grameen Bank in improving the economic conditions of the poor inBangladesh propelled the role of microcredit into the limelight. Since then, manyinternational agencies have looked into the use of microcredit as a tool to combatpoverty in countries.1.1 What is Microcredit?Microcredit involves the loaning of small amounts (typically USD 10) of money to thepoor. It is characterized by group lending, rigorous monitoring and progressive lendingsto lower the risks of default, and to lower the costs of monitoring and administration.Group lending lowers the risks of default for two reasons: the peer selection process bygroup members ensure that trustworthy and creditworthy individuals are admitted intothe group. After all, the group members know their fellow villagers best, and would notwant a “bad apple” to jeopardize their chances of obtaining loans.Loan repayments are also due fairly quickly and frequently (e.g. every week or onceevery two weeks). This kind of meticulous monitoring enables the lender to establish thecreditworthiness of their clients very quickly.Progressive lending means that borrowers are given increased borrowing limits afterthey establish a good credit record of prompt repayments. Hence, progressive lendingprovides an incentive for borrowers to repay their loans on time, so that they would beeligible for increased loan amounts.1.2 From Microcredit to MicrofinanceMicrofinance is a wider definition as compared to microcredit. In addition to microcredit,microfinance also includes other value-adding activities like the provision of businessand financial advice, and also the provision of savings and insurance services. Theinclusion of savings is important, as it allows the microfinance institutions to recycle thesavings from the community into loans, thereby creating a more sustainable form ofbanking.2. Why Indonesia?The reasons why our group chose Indonesia as the target of this study are as follows: Page 3 of 12
  • 4. Economics and Management in Developing Countries INSEAD P4 Assignment Among all ASEAN countries, Indonesia has the largest total GDP and population. Therefore, we believe most economic impact will be brought to the ASEAN region if poverty in Indonesia can be alleviated. Indonesia is one of the developing countries that successfully run sustainable microfinance in a relatively large scale. For example, Bank Rakyat Indonesia (BRI) unit network is now the largest and one of the most profitable rural microbanking networks in the developing world. Therefore, this makes microfinance in Indonesia an interesting research subject from which we hope to learn some best practices in this area.2.1 Overview of MicroFinance in Indonesia2.1.1 Definition of MicroFinance in IndonesiaMicrocredit is defined by Bank Indonesia, the central bank, as a loan below Rp.50 million(US$5,373), a financial product provided by formal and semi-formal financial providers inIndonesia.2.1.2 Needs for Microfinance in IndonesiaAs of 2003, 31.2 million poor people were living in Indonesia, and represented 17.4% ofthe population. Approximately 20% of Indonesias 214 million people depend on micro-and small-scale businesses to earn a living, but only 10 million out of 42 millionmicroenterprises have access to credit from formal financial institutions.After the financial crisis of 1997-98, poverty alleviation became one of the first prioritiesof the government engaged in wide-range financial reforms, which also sought to reducegrowing income disparities between people, and between regions. Page 4 of 12
  • 5. Economics and Management in Developing Countries INSEAD P4 AssignmentSeveral studies have demonstrated that there is still an unmet demand for microfinanceservices, as a majority of rural households still do not have access to a source of fundsfrom a semi-formal or formal institution. The regulated microfinance providers, BRI Unitsand BPRs, tends to cover mostly the upper levels of the microenterprise market, indistrict and sub-district towns, with loans of more than Rp. 3 million (US$320), whileNGOs, cooperatives, and village-based institutions village-based institutions – BadanKredit Desa (BKDs) – reach a lower end of the market but still have a limited outreach inrural areas.2.1.3 History & Key PlayersIndonesia has a long history of commercial microfinance, starting a century ago with theBadan Kredit Desa (BKD or Village Credit Organisation), village-owed banks offeringmicrocredit on commercial terms. Approximately 5,000 BKDs operate in Indonesianowadays. Sustainable microfinance in the banking sector began in 1970 with theopening of Bank Dagang Bali (BDB), a private bank in Bali specialised in commercialmicrofinance, which built it success on the knowledge of microfinance clients and onstate-of-the art savings products. BDB was closed by Bank Indonesia in 2004 due togovernance and liquidity problems.The generic term for small financial institutions in Indonesia is Bank PerkreditanRakyat (People’s Credit Bank, or BPR), which were introduced by Bank Indonesia in1978. After the 1988 financial reforms of PAKTO 88, new secondary banks wereestablished, also called BPRs. Specific requirements for the licensing of pre-existingBPRs (capital, size of deposits) were set but never fully respected. Today, BPRsincludes licensed financial institutions, mostly privately-owned, that meet the criteriaspecified in the 1992 Banking law, and number 2,148 in 2004 (accounting for 15% of themicrofinance market), and almost 9,000 public rural financial institutions that are notlicensed, and can be categorised as generic BPRs, which include village-owned BKDs ofJava and Madura, and the Lembaga Dana dan Kredit Pedesaan (LDKPs) or Rural Fundand Credit Institution, owned mostly by provincial governments (or in some cases byvillages).In 1984, in the wake of new financial reforms undertaken by the government, BankRakyat Indonesia transformed its sub-branches (‘Unit Desa’) network operating atsubdistrict level. The outlets were transformed from loss-making channelling agent forthe government subsidised credit program for rice cultivation (BIMAS) into commercialmicrofinance intermediaries. The unit network is now the largest and one of the mostprofitable rural microbanking networks in the developing world.During the 1997-98 financial crisis, most of BRI microfinance clients kept their trust in thefinancial services offered by BRI units; clients maintained and even increased theirsavings levels. The BRI Unit Desas unaffected success during the crisis were in sharpcontrast with BRI heavy losses on its corporate portfolio, which meant that BRI becametechnically bankrupt, and had to be rescued by a public restructuring and refinancingprogram, as for the rest of the banking industry.Another significant player in the formal microfinance market is the state-owned pawningcompany, Perum Pegadaian, serving million of low-income people. With these threemain players (BRI, BPRs, and Pegadaian), the formal financial sector is the dominant Page 5 of 12
  • 6. Economics and Management in Developing Countries INSEAD P4 Assignmentforce in microfinance, and outperforms the semiformal and informal sectors by a largemargin.The semi-formal financial sector has had a much smaller role in the provision ofmicrofinance in Indonesia. Traditionally in Indonesia NGOs have not play a significantrole in financial intermediation, but focused on social mobilisation, at times partneringwith government poverty reduction programs. In recent years, a few NGOs haveventured into commercial microfinance, with the establishment of their own BPRs, or intwo specific cases: a commercial bank in Central Java and a cooperative in Lombok.During the Suharto regime, the cooperative system was highly politicised and used asvehicle to disburse cheap credit to targeted groups. The cooperative sector still suffersfrom political interference and also from weak regulations.In addition, government programs have provided subsidised credit financing to targetedpopulations, using the commercial banking system to channel the funds. To assist poorfarmers, the Income Generating Program for Small Farmers and Fishermen(Pembinaan Peningkatan Pendapatan Petani-Nelayan Kecil, or P4K), provides softloans through self-help groups. To reach women, the Prosperous Family Programimplemented by the National Family Planning Coordinating Board (Badan KoordinasiKeluarga Berencana Nasional, or BKKBN) has a network of village outlets and operatesthrough women’s groups, by encouraging savings mobilisation and disbursingsubsidised credit.Finally, Indonesia has also a long history of informal credit and savings schemes,comprising Rotating Savings and Credit Associations (RoSCAs) or Arisan in Indonesian,and other forms of traditional finance. However, most of these schemes have limitedoutreach and sustainability prospects.3 . Economic Crisis in Indonesia and meltdown of financial systemThe East Asian Crisis hit Indonesia in 1997. For economic and political reasons, thecrisis hit Indonesia the hardest in the region. The exchange rate soared up fromUSD1:IDR 2,450 to 1:14,900 in June 1998. Currency devaluation caused sharpincreases in interest rates and inflation, as well as deep contraction in GDP.Consequently, social disorder and severe political instability rose and forced theresignation of President Soeharto in May 1998 after 32 years in office.In addition to it, with the fall of the rupiah, massive amount of foreign debt broughtunmanageable debt burdens. Foreign debt in commercial banks reached about 3 timestheir equity, and 70% of bank loans were in default by 1998. The private sector’s foreigndebt was more than twice the government’s. Corporations went bankrupt and financialsystem melted down. By early 1999 the Indonesian banking system had a negative networth of nearly $23B. Banks had ceased lending, and deposits declined as depositorslost confidence in banking system. In mid-2000 Indonesian corporate debt wasestimated at about $120B. Page 6 of 12
  • 7. Economics and Management in Developing Countries INSEAD P4 Assignment Exchange Rate in Indonesia Consumer Price Index in Indonesia(Number of Rupiah to 1USD) Index: 1995=100 16000 250 14000 12000 200 10000 8000 6000 150 4000 2000 0 100 Dec Jun Dec Jun Dec Jun Dec Jun Dec Dec Jun Dec Jun Dec Jun Dec Jun Dec 96 97 97 98 98 99 99 00 00 96 97 97 98 98 99 99 00 00 3.1 Maintaining stability in Crisis: Microfinance Institutions In contrast to the disastrous meltdown of financial system in general, Indonesia’s Micro Finance institutions survived the crisis well; they kept their outreach to the poor as well as maintained their profitability. Badan Kredit Desa (BKD), the oldest microfinance institution, kept its outreach remaining stable in terms of number of outstanding loans and savings accounts, as well as value of those. In 1998, when Indonesia was in deep trouble, BKD served more than 807,000 clients, managing to stay profitable. As a small private bank, Bank Dagang Bali (BDB) faced more difficulty during the crisis and took a different approach from other institutions. It decreased the number of outstanding loans, primarily large loans in order to keep the efforts towards the poor, and concentrated its microfinance efforts mainly on savings to maintain its profitability. As a result, although its profitability dropped as compared with the pre-crisis period, it could stay profitable during the crisis. Bank Rakyat Indonesia (BRI) Unit Desas continued its nationwide financial intermediation for low-and lower-middle-income clients and proved that their operation can remain extraordinarily stable even in times of severe crisis. The number of loans and savings accounts increased throughout the years, and profitability also soared up from 417 billions of rupiah in 1997 to 1,190.3 billions of rupiah in 1999. Value of Loans Outstanding Value of Savings (Millions of Rupiah) (Millions of Rupiah) 5000000 18000000 4500000 16000000 4000000 14000000 3500000 12000000 3000000 BKD 10000000 2500000 BDB 2000000 8000000 Unit Desa 1500000 6000000 1000000 4000000 500000 2000000 0 0 1996 1997 1998 1996 1997 1998 3.2 How could they do that? Page 7 of 12
  • 8. Economics and Management in Developing Countries INSEAD P4 AssignmentIt is counter-intuitive that microfinance institutions could stay stable and profitable whilewhole country went through such turmoil. Indeed, “by examining the BRI unit desas’performance, it would be impossible to learn that the country had been in deep crisis”.13.2.1 External FactorsSeveral external factors contributed to this miraculous success of microfinanceinstitutions during the crisis. First of all, the unconventional nature of clients helped: Mostmicro finance clients operate in the domestic economy and were not directly affected bythe currency crisis.Second factor was the efforts of the Indonesian government to quickly instituteemergency antipoverty programs. With help from the IMF and other donors, governmentprograms supplied food, created employment, and kept children in school. Theseprograms, along with the stabilization measures, ensured that most of the economicallyactive poor could stay economically active and therefore were able to make use ofcommercial microfinance services during the crisis.3.2.2 Internal FactorsHowever, more unique success factors can be found in the institutions:First, borrowers greatly valued the option to re-borrow in times of difficulty and thusmade loan repayment a high priority. Savers also tried to save more and consume less.Thus, the behavior of the clients was the driving force behind the stability, and thisbehavior was the result of the education that the institutions had provided, directly andindirectly. The institutions provided trainings and education on the basic economicconcepts and skills (direct), but the learning also came from the experience of usingmicrofinance institutions (indirect).Also, savers valued the security, convenience, liquidity, confidentiality, products, andservices offered by these institutions, and some savers moved their accounts from failingbanks to the unit desas or other microfinance institutions.Finally, the institutions had built a record of trust. They had good, committedmanagement, friendly and motivated staff, and products appropriate for microfinanceclients. As they had successfully provided what clients could not find or afford elsewherein a professional and friendly way, clients remained loyal during the difficult time.4. Current Challenges and RecommendationsAs mentioned earlier, Indonesia has created some successful and sustainable projectssuch as the BRI Unit Desa, BDB and BKD. But there still remain some outstandingissues and challenges that microfinance programs need to address.1Marguerite S. Robinson, The microfinance revolution, Vol.2 - lessons from Indonesia, The World Bank and OpenSociety Institute, 2002 Page 8 of 12
  • 9. Economics and Management in Developing Countries INSEAD P4 Assignment4.1 Inadequate outreach to the rural communityMost of the programs that have been relatively successful have been located in the Javaand Sumatra islands. Furthermore, the bulk of the microfinance institutions andprograms in Indonesia are located in the urban area. The reasons for such limitedscope are as follows:• The successful program, BRI Unit Desa, was initially evolved from BIMAS (Government Mass Guidance) which was a subsidized program targeting the rural rice farming industry; the majority of the rice farming industry in Indonesia are located in Java island• The majority of the Indonesian population is actually located in these two islands: 60% in Java and 20% in Sumatra. It made sense that most of the programs will be initiated in the most populous regions.• In order to remain sustainable, the successful program, such as the BRI Unit Desa, needed to cover its operations costs. One way to achieve this is by making sure that there is a large base of customers to spread its expenditures and makes sure that it is located closer to the consumer’s home and workplace. Therefore, during the restructuring of BIMAS to BRI Unit Desa in 1984, many of these units relocated from rural rice productions centers to the urban commercial centers or district capitals• Government created new laws to improve overall banking regulation and supervision due to a large proliferation of privately owned banks in Indonesia. The law’s reach encompasses BPRs operation. The effect is increased minimum paid-up capital requirements to set up new BPRs and minimum capital assets for existing ones. This caused many BPRs to move up from village/desa levels to district/kecamatan levels which reduce service for rural areas (e.g. BKDs)Greater efforts are still needed to expand the reach of the microfinance programs. Oneway to address this is to let BRI Unit Desa to continue serving the district levels andreturn the BKDs to the village levels and the more rural areas. Concerns such as set upcosts for rural areas perhaps can be addressed by creating a mobile microfinance outlet.Some experiments have been made to have a staff from a more populated village areato have a weekly trips to the surrounding more rural villages to offer microfinanceservices, and this had indicated some promise. Government coordination will berequired to incentivize BKDs to be more active in rural areas (e.g. provide infrastructure,initial subsidies). Government also need to revisit the 1992 laws and made a distinctionbetween larger BPRs operating in a more economically active urban areas and thesmaller ones in rural areas; adjust the law to protect microfinance initiatives in the ruralareas.NGOs on the other hand can play a role in pushing for a wider outreach of themicrofinance program to rural area. NGOs can provide initial efforts and grants to start aprogram that specifically target the rural poor and then push the government to aid inproviding the right environment to grow and sustain these initiatives. Withoutgovernment support, it will still be difficult for NGO programs to morph into a moresustainable form of microfinance because they have limited resources for propersupervision and regulation. Page 9 of 12
  • 10. Economics and Management in Developing Countries INSEAD P4 Assignment4.2 Impact of Politics on Microfinance EffortsMost of the microfinance programs in Indonesia are still operated or funded by thegovernment. Although BRI Unit Desa is run by a commercial bank, BRI itself is stillowned by the government. The positive impact of this is that with the support of thegovernment, the projects can receive initial funding. Initially private commercial banksdo not see the profitability of microfinance and thus steered away from it. Successfulgovernment led programs had created interest in the public sector to develop suchservices for the poor, such as the BDB (Bank Dagang Bali). But there are negativeimpacts also that can threaten the future of microfinance, whether it is the sustainableones or not:• Since most are government owned or operated, there are many political pressures that can jeopardize the various microfinance programs. One example is that during the election periods, these microfinance institutions faced pressures to reduce their underwriting and collections efforts which undermine its sustainability. Another is that in order to satisfy local government demand, certain programs were overstaffed and became inefficient.• The government has many programs rolled out from different ministries, and due to political and communication issue, there are conflicting programs. One example is the efforts from the Ministry of Cooperatives to discontinue plans too expand the BKD system which was quite successful. The reason was that the Ministry was worried that the BKDs will compete with the microfinance activities of its own program called KUD (Village Cooperative Units). Yet since the cooperative is outside of the banking regulations, it has not always adhere to prudent banking standards in its operations, therefore became less sustainable than the BKDs.Since the government resources is strained and many times decision to pursue povertyalleviation measures is politicized, NGOs need to come and put more pressure andawareness to the plight of the poorest of the poor. Better communications between thedifferent ministry departments will also help to assure that one project does notjeopardize the others.4.3 Lack of Awareness of Microfinance PoliciesThere is still lack of awareness of sound principles of microfinance within theorganizations that developed and provided microfinance initiatives in Indonesia, whetherit is the government officials, NGOs or privately owned institutions (formal or semi-formal). As of yet, there is no centralized training centers where the different players inmicrofinance can go and get additional training and support.This lack of understanding and training produced the following problems:• In order to satisfy public concerns or to address political pressures, the government developed directed and subsidized microfinance programs. The intention is well, but some programs were created within the space of the sustainable microfinance initiatives. This created an unfair competition for the sustainable microfinance institutes such as the BRI Unit Desa and can jeopardize its operation Page 10 of 12
  • 11. Economics and Management in Developing Countries INSEAD P4 Assignment• There were a series of abuses of the non-profit organizations that prompted the government in 2001 to pass a law on foundations (the common form of NGOs in Indonesia) that restricts its operations. Under this new law, foundations may only provide social, humanitarian and religious services and are prevented from being involved in income-generating or economic activities, such as microfinance. This restricts the ability of future NGOs to engage in microfinance activities which jeopardize new efforts that is targeted for rural areas and the poorest of the poor. Existing foundations either have to cease their microfinance operations or to become BPRs or cooperatives. It is a difficult challenge for some of the foundations that had became specialized microfinance providers. They either lack funds or qualifications to become BPRs, or are reluctant to adopt an unadapted cooperative status.• As mentioned earlier, in order to better regulate the banks in Indonesia, the government created the 1992 laws that included the BPRs. This has caused great difficulty for new BPRs, especially in the rural regions, to be created and operatedHere the government has to be more proactive in providing a centralized traininginstitution to allow government workers, NGOs and some private operators to gainknowledge of proper microfinance principles. This will not only help improve theefficiency of their operations, but also help them realize the inter-relation and effects ofthe various programs on each other. It will help them understand the wider impact to thepoor so that new untested programs will have minimal negative impact on an existingsustainable one. Of course better communication systems among the different playerswill also improve the total impact of microfinance in Indonesia, and for this the centralgovernment again has to play a crucial role as a regulator.4.4 Effects on Poorest of the PoorFinally, there are concerns that the impact of microfinance in Indonesia is only benefitingthe better-off of the poor. What about the poorest of the poor? They are people who areliving below the extreme poverty line, people who has no means of income, whether it isskill or asset.Microfinance works by allowing people who are already economically active to takeadvantage of greater economic opportunities. It helps people with microenterprise toborrow money to purchase assets that can help improve its operations and profits. Ithelps people with a working income source to weather financial shocks or shortages bygiving them a more flexible and smoothed finance, give loans or provide means forsavings to tie them up till the next stream of revenue comes along. It helps people withthe skills and knowledge to create a business to start one by providing loans to acquirethe necessary assets and equipments.What microfinance does not do is to create new opportunities. The poorest of the poortypically have limited skills and assets to create stable income source. Their immediateand main concern is to fulfilling basic needs such as food, shelter and clothing. Manylive in remote rural areas where there is no viable market for them to becomeeconomically active. For them microfinance is not the answer to get them over thepoverty line.For this group of people, instead of microfinance, aid programs might be more suitable.They need assistance in gaining skills to be productive before even purchasing assets to Page 11 of 12
  • 12. Economics and Management in Developing Countries INSEAD P4 Assignmentcreate income. Then in some rural areas, they need infrastructure built in order to beable to find a market for their products or services that they created. For this targetedaid will be necessary before microfinance can be effective.5. ConclusionsMicrofinance activities in Indonesia has shown that with proper incentives and goodoperating principles that adhere to market economy principles, providing financialservices can not only become sustainable, but even profitable. The sustainablemicrofinance program, BRI Unit Desa, was so well executed that it ended up performingbetter than the large commercial banks during the 1997 Asian economic crisis. This isnot just because the economic activities of the BRI Unit Desa’s consumers is in domesticmarket, but also because the system has taught the poor people the advantages ofhaving proper credit history, due to the progressive loan system, and good savings, toweather them through shocks and slow time.As an institution, microfinance has been successful in help improve the economicallyactive poor to maintain and grow their source of income and increase their livingstandard. Unfortunately in order to be sustainable, there are certain conditions that needto be met that made expansion to rural and less populated area difficult. To address this,government and NGOs need to start by initializing subsidized programs, then nurtureand grow it until it can become sustainable. Innovations will also be needed to assurethat rural regions will be served, such as mobile microfinance outlet.From studying Indonesian microfinance initiatives, in such a disperse and expansivecountry, government involvement is crucial in making sure that the programs can besuccessful. Only the government has enough power and resources to provide theneeded infrastructure, supervision and regulation. Better communications amongst thevarious players and better understanding of the microfinance principle will also aid thegovernment to regulate and supervise the various programs.Finally, care should be taken in addressing the poorest of the poor. Microfinance workswell for the economically active poor that have access to market. For others in thelowest strata of economy, where there is limited or no economic opportunity available, aprogram that includes aid, training and infrastructure development might be the betterchoice. Microfinance is not a cure all; its strength is in allowing the poor to takeadvantage of economic opportunities, not in creating them. ----- Page 12 of 12