Report Criticizes Microfinance Groups’ Management

A new report urges microfinance groups, organizations that make small loans to poor people, to improve their management and corporate governance, reports the Financial Times.

The report, written by the Center for the Study of Financial Innovation, a think tank, said, “Microfinance institutions tend to be dominated by ‘visionaries’ who are strong on charisma but less so on management skills and strategic flexibility.” The report was based on a survey of microfinance analysts, investors, and practitioners.

Analysts who contributed to the report were concerned about the growing number of for-profit groups offering such loans, as well as about rising costs incurred by the microfinance programs, and about the potential for them to make irresponsible loans and take on too much debt.

The number of microfinance lenders has increased by 25 percent each year from 2004 to 2006, the report says.

See The Chronicle’s report on microfinance.

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