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Ten Groundbreaking Microfinance Providers

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1. ASA

Activists for Social Alternatives (ASA) was founded in 1986 to assist "the poorest of the poor" women in Tamil Nadu, India. It incorporated microfinance into its holistic approach to women's empowerment that includes not only loans, but also provides training, IT support, and encourages poor women to organize politically. The "Grama Vidiyal" microfinance project now reaches over 2.6 million women.

ASA is not to be confused with "Asa," which is another innovative microfinance NGO in Bangladesh that has rapidly and efficiently expanded streamlined microbanking services to over six million poor clients.

Pictured: ASA members at a rally in Tamil Nadu (Photo: Activists for Social Alternatives)

2. Kiva.org

Kiva.org changed the face of microfinance by giving Internet users an easy way to loan money directly to entrepreneurs in 40 countries. The website allows anyone with a credit card to find projects around the world they want to support with no-interest loans.

What started as a simple website in 2005 had generated nearly 28 million dollars in peer-to-peer loans by April 2008. Kiva.org was dubbed the "eBay of microfinance" until eBay itself purchased MicroPlace, a similar website that lets users make for-interest loans to entrepreneurs.

Pictured: Kiva.org Co-Founder Matt Flannery and President Premal Shah (Photo: Kiva.org)

3. IMAGE Program

Can microfinance help reduce HIV/AIDS and gender-based violence? This is what the IMAGE project tried to answer in eight villages in South Africa during 2001-05. Along with training sessions and community activities, around 1,750 loans were dispersed over this period. Improvement was seen on nine empowerment indicators, including financial confidence, perceived contribution to household, and relationship with partner. Domestic violence also fell.

The IMAGE program was conducted by two local NGOs along with researchers from the University of Witwatersrand.

Pictured: Small group meeting of IMAGE program participants. (Photo Courtesy: Paul Pronyk)

4. M-PESA

The popularity of M-PESA in Kenya shows the vast potential of technology to expand access to financial services. M-PESA is a mobile phone money transfer service that had 1.6 million customers just one year after it launched in March 2007 by Safaricom. The mobile banking (or "m-banking") service is particularly useful for poor rural clients who had not been reached by financial services or banking infrastructure.

Next, M-PESA is expanding into Tanzania, a country of around 40 million people, of whom 1.6 million have a bank account, but 7.5 million have access to a mobile phone.

Pictured: A woman uses her mobile phone inside a Safaricom shop in Nairobi (Photo: Reuters)

5. ACCION International

Joseph Blanchard founded ACCION in 1961 to assist South America’s working and urban poor. It began microlending in Recife, Brazil in 1973. The ACCION network now stretches into 25 countries and serves over 3 million clients, most of them in Latin America.

ACCION is credited with pioneering the “commercial model” of microfinance, the idea that microfinance institutions should be sustainable and ultimately profitable. Some of ACCION’s microfinance partners have become commercial banks, including Mexico's Compartamos.

Pictured: Ramona Florentino of the Dominican Republic speaks with three ACCION loan officers. (Photo: Rohanna Merton / ACCION International)

6. Pro Mujer

Pro Mujer is a women's development and microfinance network that now reaches women in Bolivia, Peru, Mexico, Nicaragua, and Argentina. Founded in 1990 by Lynne Patterson and Carmen Velasco, Pro Mujer is known for pioneering integrated services - going beyond microcredit to provide affordable primary health care services, education and training. In Bolivia, the organization built a computer center to teach basic computing skills to the children of microfinance clients.

Pictured: Villagers in Nicaragua attend a Pro Mujer-sponsored health workshop. (Photo: Pro Mujer / www.promujer.org)

7. Bank Rakyat Indonesia

BRI is a commercial bank that has reached massive scale serving low-income regions profitably. BRI is now the single-largest microfinance network in the world.

During the 1970s, when the bank was entirely state-owned, BRI developed the Unit Desas (village banks) system to promote agricultural development. The focus of these banks gradually shifted to financial sustainability and ultimately to profitability. Many consider the expansion of small-balance saving accounts to over 30 million people as BRI's biggest contribution to microfinance.

Pictured: An Indonesian trader walks by a stocks screen in Jakarta, where BRI is highlighted. (Photo: Reuters)

8. Grameen Bank

Even before winning the Nobel Peace Prize, Muhammad Yunus was the most recognizable name in microfinance. After years of successful experimentation and expansion of microcredit in Bangladeshi villages, Yunus founded Grameen Bank in 1983.

As of early 2008, the bank had 7.4 million borrowers, 97 percent of them women. In recent years, Grameen has expanded its services to include pension schemes, insurance, individual savings accounts, and a range of “microfranchises,” such as the Village Phone initiative.

Pictured: Yunus with Grameen Bank representative Mosammat Taslima Begum receiving the Nobel Peace Prize in December 2006. (Photo: Reuters)

9. Opportunity International

Opportunity currently operates in 28 developing countries with the help of over 40 partner organizations, mostly microfinance institutions.

During the early 1990s, Opportunity pioneered the concept of a Trust Bank, a group of 15-40 community members who guarantee each other's loans. Opportunity also promotes the conversion of local NGOs and MFIs into formal financial institutions - regulated commercial banks, development banks, and credit unions that can accept deposits, borrow money, and accept investments that will help them grow.

Pictured: Clementine Uzabakiriho (left) of Rwanda was Opportunity International's one millionth client (Photo: Opportunity International)

10. MicroVest

Microfinance institutions (MFIs) might have local expertise, but many lack funding to put this expertise to work. As an alternative to government and charitable support, MicroVest seeks capital for MFIs through private equity and debt markets. It uses a commercial investing approach to financing MFIs, where the aim is to generate above-average returns for investors.

MicroVest seeks MFIs that are efficient and profitable, which gives MFIs an incentive to improve management and sustainability. By mid-2007, the three-year-old MicroVest I, LP fund had invested over 28 million dollars in MFIs in 16 countries.

Pictured: A microfinance client in her shop in Nicaragua.(Photo: MicroVest)

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