According to the International Finance Corporation (IF C) and the Consultative Group to Assist the Poor (CGAP), the microfinance sector in Myanmar needs to be established quite urgently to support the country’s economic growth. In their approach, the two organisations define microfinance as financial services for low-income people, including savings, credit, transfers, and insurance.
Microfinance in Myanmar – Sector Assessment
A survey with the title “Microfinance in Myanmar – Sector Assessment” published by IFC and CGAP highlights that demand for microfinance currently exceeds supply four times as the country’s economy is expanding at a breathtaking speed after decades of isolation. The report further states that the total of outstanding loans in Myanmar currently stands at roughly $283 billion whereas demand is estimated to be as high as $1 billion. Demand is particularly high among farmers in the country’s rural areas, which is also where more than two-thirds of the total population lives.
In November 2011, a microfinance law was introduced and allowed the development of a nascent microfinance industry. This law offers the opportunity to support existing institutions in Myanmar as well as to establish new organisations with the long term goal of building a commercially sustainable microfinance network that improves access to finance for small and medium entrepreneurs and the rural population.
The report constitutes the first publicly available assessment of Myanmar’s microfinance landscape since the enactment of the microfinance law in 2011.Results clearly point out that the financial sector of the country is highly underdeveloped compared to the rest of the East Asia Pacific region. Myanmar is still one of the poorest countries of this region and increased access to financial services would significantly support its economic development by helping small and medium enterprises, which currently form the backbone of Myanmar’s economy, to grow and create jobs.
While the microfinance law signals government commitment to financial inclusion, authorities and regulators are facing immense challenges in bringing policies and regulations in line with the rapidly growing economic activity of the country. One of the reports co-authors states that “We recommend that Myanmar’s financial regulators and supervisors adopt international good practices for microfinance as quickly as possible.”
Please download the full report here >>