Ottawa, July 13, 2023 (GLOBE NEWSWIRE) -- According to Precedence Research, the microfinance market size accounted for USD 251.41 billion in 2023. The microfinance market is a financial market specifically catering to the needs of low-income individuals, microenterprises, and small business owners with limited or no access to traditional banking services. It involves the provision of small-scale loans, savings accounts, insurance, payment services, and other financial products tailored to the requirements of underserved populations and unique circumstances. Microfinance institutions (MFIs), including microfinance banks, credit unions, and non-governmental organizations, operate within this market to facilitate financial inclusion, poverty reduction, and economic empowerment by extending financial services to those excluded from the formal banking sector. The microfinance market focuses on enabling individuals and small businesses to access affordable credit, build savings, manage risks, and enhance their financial capabilities to improve their livelihoods and contribute to economic growth.
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Regional Snapshots:
The microfinance market is expected to experience the highest market share from the Asia-Pacific region during the forecast period. This is due to the rising adoption of digital technologies, the need for secure and efficient document management, and the presence of major regional players driving the market. The market is driven by government initiatives to reduce poverty and promote financial inclusion. Mobile technology and digital platforms have been instrumental in expanding access to financial services across the region.
Report Highlights:
- On the basis of provider type, the microfinance market is divided into banks, microfinance institutes (MFI), NBFCs (Non-Banking Financial Institutions), and others. The banks have gained a major share of the global market.
- On the basis of the purpose, the microfinance market is divided into agriculture, manufacturing/production, trade & services, household, and others. The agriculture segment has gained a major share of the global market.
- On the basis of geography, the microfinance market in the Asia Pacific is serving as the most dominating region among others. The dominance of the microfinance market is largely due to the increasing adoption of financial inclusion, government initiatives to promote economic empowerment and the need for secure and compliant document management in various industries in the Asia Pacific region.
Microfinance Market Report Scope:
| Report Metrics | Details |
| Market Size in 2023 | USD 251.41 Billion |
| Market Size by 203 | USD 646.25 Billion |
| Growth Rate from 2023 to 2032 | CAGR of 11.06% |
| Base Year | 2022 |
| Forecast Period | 2023 to 2032 |
| Largest Market | Asia Pacific |
| Segments Covered | By Provider Type, By Purpose, and By Regions |
| Regions Covered | North America, Europe, Asia-Pacific, Latin America, and Middle East & Africa |
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Market Dynamics:
Drivers
Poverty remains a persistent challenge in many parts of the world, particularly among low-income individuals and marginalized communities. The microfinance market is crucial in addressing this issue by providing financial services tailored to impoverished people. Furthermore, the lack of access to traditional banking services is one of the leading factor driving the demand for microfinance market. Many people in poverty-stricken areas are excluded from the formal banking sector for low income, lack of collateral, or living in remote areas. Microfinance institutions bridge this gap by offering small-scale loans, savings accounts, and other financial products that are more accessible and flexible than traditional banking services.
Microfinance institutions empower individuals to start or expand their own small businesses by providing microloans. This access to capital allows entrepreneurs to invest in income-generating activities, create job opportunities, and improve their economic well-being. As these businesses grow, they contribute to local economic development, reducing poverty and improving living standards within communities. Moreover, microfinance often targets women and marginalized groups facing additional financial services barriers. Microfinance focuses on these underserved populations and promotes gender equality and social inclusion. It allows women to engage in income-generating activities, gain financial independence, and contribute to their families welfare. Additionally, by extending financial services to marginalized communities, microfinance helps empower individuals traditionally excluded from mainstream financial systems.
The demand for microfinance is also driven by the recognition of its potential to break the cycle of poverty. Governments, international organizations, and NGOs increasingly view microfinance as a tool for sustainable development. They support initiatives that promote financial inclusion and poverty reduction, creating an enabling environment for the growth of the microfinance market.
Opportunities
Governments and regulatory bodies have the power to build an enabling environment that encourages the growth and sustainability of microfinance institutions. By implementing supportive policies and regulations, they address the specific needs and challenges faced by microfinance providers and borrowers, thereby fostering increased demand for microfinance services. In addition, governments often prioritize financial inclusion as a key policy objective, recognizing that access to financial services is essential for poverty reduction and economic empowerment. By developing strategies and initiatives promoting microfinance, governments create a conducive environment for institutions to expand their operations and reach underserved populations. This may generate demand for microfinance services as individuals gain access to credit, savings, and other financial products.
Furthermore, supportive policies can streamline microfinance institutions' licensing and registration processes. By simplifying these procedures, governments reduce barriers to entry and encourage more players to enter the market. This increased competition stimulates innovation and leads to a broader range of microfinance offerings, attracting more borrowers who benefit from the diverse range of financial products available. Effective policy and regulatory frameworks also prioritize consumer protection and prudent financial practices. Regulations that ensure fair and transparent lending practices and mechanisms for grievance redressal build trust and confidence among borrowers. This trust encourages individuals to utilize microfinance services, driving demand for these services.
Related Reports:
- Micro Lending Market: The global micro lending market size reached USD 186.79 billion in 2022 and is projected to surpass around USD 379.44 billion by 2030, growing at a CAGR of 9.26% during the forecast period 2022 to 2030.
- Retail Banking Market: The global retail banking market size was valued at USD 1,963 billion in 2022 and is expected to reach around USD 3,482.41 billion by 2032, registering a CAGR of 5.90% during the forecast period from 2023 to 2032.
- Business Intelligence Market: The global business intelligence market size accounted for USD 27.24 billion in 2022 and is projected to reach around USD 54.9 billion by 2032, growing at a CAGR of 7.26% during the forecast period from 2023 to 2032.
Recent Developments:
- In September 2022, VEON Ltd., a digital operator offering converged connectivity and services, announced the launch of three significant initiatives by its operator, Mobilink Microfinance Bank, in Pakistan. These initiatives aim to empower female entrepreneurs and support farmers in the country.
- In August 2021, the Assam government signed an agreement with microfinance companies for a loan waiver scheme worth Rs 12,000 crore. This scheme is expected to benefit several lakh women borrowers.
- In June 2022, Ananya Finance, one of India's Non-Banking Financial Companies (NBFCs), acquired Prayas Financial Services Pvt Ltd, a Micro Finance company. This acquisition aims to expand Ananya Finance's operational reach and enhance Prayas' ability to serve more women entrepreneurs, particularly those at the bottom of the economic pyramid in rural and semi-urban areas.
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