Microfinance

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poverty reduction by enhancing the ability of poor people to increase incomes, build assets, and reduce vulnerability in times of economic stress.

V Microfinance fits well into Norwegian development cooperation's rights-based approach to poverty reduction and private sector development.

V The vision of building permanent pro-poor financial systems through donor coordination and harmonisation is coherent with the principles behind new development cooperation practices.

How to promote pro-poor financial systems?

V Listen to and understand poor people's need for and use of financial services.

V Be sensitive to MFIs' various needs, as well as location-specific and socio-cultural factors.

V Focus on building local markets, including local providers of technical and support services.

V Assess carefully the role of donors and the role of subsidies.

V Acknowledge governments' role in promotion of an enabling environment and coordination of stakeholders.

V ...

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clarity through discussing microfinance's role in poverty reduction and in Norwegian development cooperation, and (ii) outline the future principles and focus of NORAD's involvement in microfinance. While the paper is written first and foremost as a position paper for NORAD, the guiding principles outlined nevertheless apply for the entire Norwegian development cooperation system.


2. NORAD's principles and focus

NORAD sees microfinance as one of many necessary interventions for poverty reduction and private sector development. NORAD does not intend to expand its microfinance portfolio substantially, but rather to improve the quality of and consolidate the current portfolio and ...

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