Global Asset Building Beyond Microfinance: the Forgotten Bottom and the Missing Middle

On the horizon of this year’s Clinton Global Initiative, I saw the next frontier for pioneers of the global asset-building field. At past CGIs, microfinance (and microcredit in particular) has been centrally celebrated and largely heralded as a panacea to global poverty. However, this year, there seemed to be an undercurrent of recognition the microfinance field, in its current construction, simply can’t do it all. More specifically, there are two very important poor populations that microfinance simply doesn’t reach – those in extreme poverty whose needs are too small for average microloans, and those who own small and medium-sized businesses too large for the average microloan but too small to access finance from formal banks. A big players are lining up to fill the void.

Oxfam has committed to expanding to ever-elusive access to savings services for the extreme and rural poor through its Savings for Change program. Sonal Shah, of the Google Foundation, spoke of its commitment to focus its efforts on expanding Small and Medium Enterprise (SME) development. A central challenge is figuring out how to facilitate “graduation” from microenterprise into small and then medium-sized enterprise, a theoretically natural transition that has unfortunately not materialized for most micro-entrepreneurs, even as microfinance has exploded around the world. Among the most striking commitments to SME development at CGI was the creation of the Aspen Network for Development Entrepreneurs (ANDE), a $300 million public-private partnership that will invest in SME development and technical assistance.

Looking outside of the microfinance box is an important step towards recognizing a more complex and dynamic reality of the needs of poor, low- and moderate-income people around the world. We are so far only skimming the surface of discovering innovations and changes that must be made to reach these very different populations and provide them with the services they need to be included and productive in their economies and societies. The expansive microfinance field just recently began acknowledging (in a significant way) the vast demand for savings among the poor. Now, there seems to be a desire to temper the enthusiasm around reach of the field and its ability to provide global financial inclusion and empowerment for all. Microfinance hasn’t already lost its day in the sunshine, not by a long shot. But I applaud the CGI for reminding the global development community “forgotten bottom” and for including, in a major way, the “missing middle” in efforts to expand financial services and asset-building programs, products and policies for all populations in such desperate need of them.