A SEEP Network Progress Note says that microfinance institutions need to prepare for commercial investments through creativity, strong leadership, and technical finance skills.
This is especially true as all microfinance firms are considered equally attractive. Tier 1 MFIs are considered are considered a safe investment risk, with professional management and external supervision. Many MFIs in this category are being courted by the same suitors, and most investments are debt deals. Investors will need to widen the range of partnerships, financial instruments, and the kind of microfinance firms they support. Investors should also consider different investment opportunities for Tier 2 and Tier 3 MFIs. While there are always risks, they are ways in those risks can be minimized.
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