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Microfinance in Myanmar


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 >>


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The importance of social entrepreneurship in Myanmar

Entrepreneurs in Myanmar increasingly take a commercial approach to charity through small social enterprises that sidestep NGO and government bureaucracy and ensure that help reaches those in need directly.

Social Enterprises in Myanmar

Yangon alone is home to several businesses with a social focus. One example is FXB Myanmar, a company that provides vocational training and business opportunities to HIV positive workers and women that were rescued from the Thai sex industry.

Another company is Proximity Designs, a manufacturer of affordable foot pumps for irrigation. They have a well-developed network of distribution channels to upcountry farmers that NGOs and other government organisations cannot match and won the 2012 Skoll Award for Social Entrepreneurship.

A third successful enterprise is BusinessKind-Myanmar. The company sells low-cost mosquito netting in malaria and dengue fever regions and half of its workforce is also HIV positive.

A last example is Myanmar Business Executives. This organisation provides low microcredit and networking outlets to needy organisations and individuals.

For-profit business models with social focus

All the above presented initiatives use for-profit business models. They produce a variety of products, have sales strategies, target markets and make a profit that is then mainly redirected to social causes. Some of them also receive grants by international NGOs or aid agencies but rarely in the form of donations. The grants mainly take the form of products that are low-cost necessities accompanied by community-based education.

Many of Myanmar’s social ventures were launched after the Cyclone Nargis in 2008, the biggest natural disaster the country has ever seen. Conventional government and NGO outlets were insufficient to support the hundreds of thousands affected, which motivated charitable individuals and organisations to come up with more innovative relief methods.

Such social initiatives are equally relevant in today’s Myanmar, which is taking rapid steps towards democracy and is experiencing an easing of sanctions by the US and Europe.

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