By Guest Author, Robert Lowry, Unitus
As I discussed yesterday, Unitus focuses on two kinds of microfinance institutions (MFIs) for partnership: emerging microfinance institutions, which serve more than 2,500 clients and are in the early stages of growth; and commercial startups, which may not have a track record of growth but are well-capitalized and have a clear plan for expansion.
Within these parameters there are other important factors Unitus looks at when assessing an MFI as a candidate for partnership. These include:
Commercial startup MFIs have some further requirements:
An additional consideration is geography. Unitus wants to be present in those countries with the greatest potential to support large-scale growth. The Selection Team ranks developing countries using a framework based on demand (including poverty and informal activity), supply (penetration, competition, quality of outreach, and financial market integration), regulation, and macroeconomic and political stability.
India, for example, is a great market for microfinance precisely because there is a large population of poor people, there’s still a huge need for financial services and the macroeconomic climate is quite stable.
As one can imagine, taking all of the above factors into account results in a selection process that is time-intensive and rigorous. Our Selection Team usually takes about six months to investigate a potential partner, and of hundreds of candidates only a handful are selected for partnership (Unitus has 16 partners chosen from over 500 MFIs under consideration). But the diligence is worth it. For Unitus—or any microfinance organization—the strength of our partners is the bedrock of our future growth. Only with capable, committed and visionary MFIs will the microfinance industry achieve the kind of broad-scale impact millions of people in poverty around the world are waiting desperately for.
This segment is part 2 in the series : Selecting Great Microfinance Partners