Microfinancing and Norwegian Agency for Development Cooperation
CONTENT
1. What is microfinance?
2. NORAD's principles and focus
3. Microfinance and Norwegian development cooperation
4. Principles for building pro-poor financial systems
Annex 1: Microfinance and poverty reduction
Annex 2: Microfinance market niches and approaches
Annex 3: Background papers
1. What is microfinance?
Microfinance can be defined as provision of a broad range of client-responsive financial services to poor people through a wide variety of institutions. This definition reflects a growing recognition that poor people need and use financial services beyond credit to expand their choices and better manage their financial lives. Microfinance includes rural finance through cooperatives, credit schemes to small-scale fisheries, and credit components in larger projects such as integrated rural development projects. Microfinance is not a panacea for poverty reduction, but one among many necessary interventions to reduce poverty and reach the Millennium Development Goals (see annex 1).
The purpose of this position paper is two-fold: (i) obtain strategic clarity through discussing microfinance's role in poverty reduction and in Norwegian development cooperation, and (ii) outline the future principles and focus of NORAD's involvement in microfinance. While the paper is written first and foremost as a position paper for NORAD, the guiding principles outlined nevertheless apply for the entire Norwegian development cooperation system.
2. NORAD's principles and focus
NORAD sees microfinance as one of many necessary interventions for poverty reduction and private sector development. NORAD does not intend to expand its microfinance portfolio substantially, but rather to improve the quality of and consolidate the current portfolio and level of engagement.
NORAD's focus outlined in this chapter builds on:
Microfinance and
1. What is microfinance?
2. NORAD's principles and focus
3. Microfinance and Norwegian development cooperation
4. Principles for building pro-poor financial systems
Annex 1: Microfinance and poverty reduction
Annex 2: Microfinance market niches and approaches
Annex 3: Background papers
1. What is microfinance?
Microfinance can be defined as provision of a broad range of client-responsive financial services to poor people through a wide variety of institutions. This definition reflects a growing recognition that poor people need and use financial services beyond credit to expand their choices and better manage their financial lives. Microfinance includes rural finance through cooperatives, credit schemes to small-scale fisheries, and credit components in larger projects such as integrated rural development projects. Microfinance is not a panacea for poverty reduction, but one among many necessary interventions to reduce poverty and reach the Millennium Development Goals (see annex 1).
The purpose of this position paper is two-fold: (i) obtain strategic clarity through discussing microfinance's role in poverty reduction and in Norwegian development cooperation, and (ii) outline the future principles and focus of NORAD's involvement in microfinance. While the paper is written first and foremost as a position paper for NORAD, the guiding principles outlined nevertheless apply for the entire Norwegian development cooperation system.
2. NORAD's principles and focus
NORAD sees microfinance as one of many necessary interventions for poverty reduction and private sector development. NORAD does not intend to expand its microfinance portfolio substantially, but rather to improve the quality of and consolidate the current portfolio and level of engagement.
NORAD's focus outlined in this chapter builds on:
Microfinance and