2. 2
Access to Finance is a Human Right
A chain is no stronger than its weakest link
Why Over Indebtedness Matter This Much for
Microfinance
Socially ; challenge to the infamous notion of the
double bottom-line
Financially ; challenge to financial and operational
sustainability
3. 3
Access to Finance is a Human Right
The Definition in Microfinance Context
Impact Approach
A microfinance customer is over-indebted if he/she
is continuously struggling to meet repayment
deadlines and repeatedly has to make unduly high
scarifies to meet the obligations..
4. 4
Access to Finance is a Human Right
Over Indebtedness;
An Old Wine in New Bottle..
Outside Influences
External Shocks, Macro economic instability
Lack of Credit Bureaus; A-symmetric information
Lender Behavior
Aggressive Growth
Product Design
Limited Awareness of Microfinance Plus
Lending Methodologies
Borrower Behavior
Low financial literacy
Cognitive and Psychological Biases
Sociological Influences
Socio-demographic and Economic Characteristics
5. 5
Access to Finance is a Human Right
Myth or Fact?
• Does Commercialization a Hidden Best for
Microfinance?
• Is Competition Really Good for Borrowers?
• Consumer Loans Need and Risks Related
• ‘’Over Indebtedness is not generally related to
insufficient information’’ Wrong but……
• Early Warning Systems, Are we There Yet
• ‘’You can lead a horse to water but you can't make
him drink’’: Degree of Regulation & Supervision
and the Need for the State of Industry
6. 6
Access to Finance is a Human Right
The Resolution
• As sure as eggs is eggs ;
▫ Just like microfinance is not a miracle tool to
eradicate global poverty alone, there is no one size
fits formula to prevent over indebtedness.
▫ Microfinance is extremely local and influenced by
diverse social, physiological and demographic
factors. Even more factors differ from region to
region rural vs. urban lending in one country.
▫ Everyone/all stakeholders have a role in preventing
over indebtedness
7. 7
Access to Finance is a Human Right
The Resolution
Everyone/all Stakeholders Have a Role in
Preventing Over Indebtedness
Investors MFIs
Building Synergic
Local Level
Microfinance Strategy
Donors/International
Government
Development Agencies
8. 8
Access to Finance is a Human Right
Every Cloud Has a Silver Lining..
Introduction to Principles for Investors in
Inclusive finance
Range of Services
Client Protection
Fair Treatment
Responsible Investment
Transparency
Balanced Returns
Standards
9. 9
Access to Finance is a Human Right
Thank You for Your Attention