Key principles of microfinance

Key principles of microfinance were developed in 2004 by Consultative
Group to Assist the Poor (CGAP) and endorsed by the leaders at the G8 Summit on
June 10th, 2004. Among the key principles, are the following:

– Poor people need a variety of financial services, not just loans.

– Microfinance can pay for itself, and must do so if it is to reach very
large numbers of poor people.

– Microfinance is about building permanent local financial institutions.

– The job of government is to enable financial services, not to provide

– The key bottleneck is the shortage of strong institutions and managers.

The Principles assert that “Microfinance means building financial
systems that serve the poor.” Financial systems include strong financial
institutions but also much more: more competitive financial markets, better
government regulatory services and better complementary services (practitioner
education, auditing, etc.)

Community of Practice on
Inclusive Entrepreneurship