Good practice in microfinance: The challenges of a poverty focus in an evolving industry

The awarding of the 2006 Nobel Peace prize to Grameen Bank founder Muhammad Yunus has further highlighted how microfinance has come to be regarded as a significant and effective tool in making finance available to the poor. However, much debate still centres on both how microfinance should be delivered and its effectiveness measured. Microfinance funding is not something that should be undertaken lightly, and an awareness of all the cogent issues is essential for any donor looking to undertake effective microfinance programming. This chapter will outline some of the key arguments in the contested debate on effective microfinance programming. It will focus on a discussion of poverty and impact assessments and argues that the effective funding of microfinance is dependent on the ability of an NGO to recognise the many forms which microfinance can take and direct their funding accordingly.