Publications

	Table of Contents
p. 3 of 24 BACK | NEXT Introduction Need for a Development Strategy for Microfinance Microfinance in the Asian and Pacific Region Demand for Microfinance Sservices Supply of Microfinance Sservices Major Achievements in Microfinance Challenges ADB’s Microfinance Experience Other Agencies’ Microfinance Experience ADB’s Microfinance Development Strategy Implementation of the Strategy

Microfinance Development Strategy

---

Microfinance in the Asian and Pacific Region

Over 900 million people in about 180 million households in the Region live in poverty. Most of the Region’s poor (i.e., those who earn less than $1.00 a day) or more than 670 million people, live in rural areas (footnote 1), although urban poverty is also a growing problem in virtually all DMCs. Most rural poor people are engaged in agricultural or related activities as laborers or small-scale farmers. Many are also involved in a variety of microenterprises. In many countries, women, who are a significant proportion of the poor and suffer disproportionately from poverty, operate many of these microenterprises.

Most formal financial institutions do not serve the poor because of perceived high risks, high costs involved in small transactions, perceived low relative profitability, and inability of the poor to provide the physical collateral usually required by such institutions. The business culture of these institutions is also not geared to serve poor and low-income households. Lacking access to institutional sources of finance, most poor and low-income households continue to rely on meager self-finance or informal sources of microfinance. However, these sources limit their ability to actively participate in and benefit from the development process (Appendix 2). Thus, a segment of the poor population that has viable investment opportunities persists in poverty for lack of access to credit at reasonable costs. The poor also lack access to institutional credit for consumption smoothening and to other services such as payments, money transfers, and insurance. Most of the poor households also find it difficult to accumulate financial savings without easy access to safe institutions that provide deposit services.

Back Need for a Development Strategy for Microfinance	Next Demand for Microfinance Sservices