For decades, microfinance was celebrated as a tool to scale financial inclusion rapidly. Growth in loan portfolios, client numbers, and outreach metrics became the dominant measures of success. But today, this growth-at-all-costs mindset is being re-examined.
Across fragile economies, emerging markets, and dynamic regions like MENA, microfinance institutions (MFIs) face new realities:
- Rising delinquencies and over-indebtedness
- Public and regulatory concerns about interest rates and recovery practices
- Climate risks and economic shocks that test institutional resilience
- Growing demand for digital access and green financing
The focus is shifting. The future of microfinance lies not in how fast we grow, but in how well we grow — ensuring that expansion is sustainable, ethical, and tech-enabled.
What does this new model look like?
- Sustainable Finance MFIs must balance outreach with sound risk management, client protection, and financial health. This means strengthening credit processes, diversifying products (including Sharia-compliant options), and building institutional buffers to withstand shocks.
- Ethical Practices Aggressive lending and coercive recovery tactics are no longer tolerated. Ethical, respectful engagement is essential — to rebuild client trust, safeguard reputations, and meet evolving regulatory standards.
- Tech-Enabled Solutions Digital finance, fintech partnerships, and climate-fintech innovations are vital for cost-effective delivery, smarter credit assessments, and scaling climate-friendly products. Technology enables us to serve clients better — not just faster.
Why this shift matters
As someone who has worked for over 25 years as a CEO and consultant across Jordan, Syria, Lebanon, Iraq, and the region, I have seen both the promise and pitfalls of unchecked growth. Today, MFIs have an opportunity — and responsibility — to reset the sector’s trajectory.
By focusing on value over volume, we can ensure microfinance continues to be a force for inclusion, resilience, and sustainable development.
