With the passing of the Microfinance Law in 2011, Microfinance in Myanmar is growing at an incredible pace. The increasing numbers of MFIs are all competing to win over the estimated 33 million unbanked residing here. Today, Microfinance in Myanmar is being hailed as the most important tool to wipe out poverty stricken societies. The poor borrowing at exorbitant rates from informal money lenders will turn to microfinance when given the opportunity. Over 99% of Myanmar's businesses are small and medium enterprises (SMEs) and many of those are micro-businesses.
Microfinance is often targeted at women to help them rise from poverty as empowering women to grow their businesses will allow them to secure their families' finances and improve education and quality of life for their children.
Microfinance in Myanmar is trying to align existing players with new market entrants, technology, investment and reform to bring about a modern and sustainable sector. For decades, microfinance in Myanmar was the domain of international NGOs and the Myanmar Agricultural Development Bank (MADB), which offered small loans, forcing the majority of the population to seek informal and unregulated sources of credit at very high rates.
Today, microfinance is being offered for a diverse range of needs, with over 250 licensed local and international microfinance institutions (MFIs) registered as companies. With the commercialization of the microfinance industry, Myanmar will also bring in investors offering a range of funding sources to MFIs where credit can be tailored, to take care of different needs.
As Myanmar moves forward, it needs to improve branch penetration and have well-governed MFIs capable of adhering to stricter regulations. These MFIs should have the privilege of offering a diverse menu of products and services to the people of Myanmar.
Microfinance has immense potential in Myanmar to help lessen poverty, with ongoing reforms, industrialization, export promotion and investment in health and education. The new government trying to eradicate poverty through smart policy and intelligent use of technology with Microfinance being a valuable tool to address poverty in Myanmar.
In June, the World Bank in its economic projections for Myanmar, estimated growth to rise to 6.5% this fiscal year and accelerate to 6.7% by 2021. With the risks from several factors to sustainable growth, MFIs are especially important in countries like Myanmar which have inefficient financial markets. MFIs are supporting social businesses run by women and young entrepreneurs. They can create domestic markets and infrastructure to strengthen the economy from the ground up. So far, more than 5 million borrowers have received loans through MFIs in Myanmar, letting them start businesses or pay debts.
Myanmar still has a low overall penetration of MFIs but businesses are beginning to benefit and there are a lot of success stories. Microfinance companies have been a boon and have opened up a world of opportunity for traders and small businesses to start or grow their businesses further.