Is it possible for the microfinance industry to attract enough capital if it refocused its mission and objectives on the overriding goal of reducing poverty? To answer that question, we need to examine microfinance in the context of impact investment.
Microfinance today as impact investment
Microfinance has led the way for impact investing by charting the path to engaging private institutional and individual investors. Debt funds offer a range of returns, reflecting liquidity and currency, and the first full vintage of nine microfinance equity funds is now reaching the 10-year mark, with most likely to achieve positive annualized returns to investors ranging up to the mid-teens.
But the industry’s success in attracting and rewarding capital raises fundamental questions, such as:
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