Key principles

The Netherlands Platform for Microfinance endorses Eleven Key Principles of Microfinance developed by CGAP, a consortium of public and private development agencies working together to expand access to financial services for the poor.

The eleven key principles are:

• Poor people need a variety of financial services, not just loans.
• Microfinance is a powerful tool to fight poverty.
• Microfinance means building financial systems that serve the poor.
• 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 that can attract domestic deposits, recycle them into loans, and provide other financial services.
• Microcredit is not always the answer.
• Interest rate ceilings hurt poor people by making it harder for them to get credit.
• The role of government is to enable financial services, not to provide them directly.
• Donor funds should complement private capital, not compete with it.
• The key bottleneck is the shortage of strong institutions and managers.
• Microfinance works best when it measures—and discloses—its performance.

See www.cgap.org for further information on the Consultative Group to Assist the Poor (CGAP)