Improving microfinance regulation to support growth and innovation in micro-enterprise

Project overview

Project lead: Alison Brown, Cardiff University

Start date: 1 November 2012

End date: 31 March 2016

Research Council project page

This research focused on strengthening consumer protection in microfinance (MF) to support growth and innovation in key urban sectors such as street vending, artisanal mining, tourism services, construction, and food processing. It took the format of comparative studies in Rwanda, Tanzania, Kenya, Ethiopia and India.

The hypothesis was that poor regulation of MFIs (Microfinance Institutions) and lack of safety nets limit accessibility and take-up of MF services, creating excessive debt for poor borrowers and inhibiting micro-enterprise innovation and growth.

The objectives were to analyse comparatively:

  • national and local policies on MF consumer protection
  • barriers, benefits and risks to micro-enterprises of accessing MF
  • consumer protection in different MF packages, eg collateral requirements, interest rates, customer support
  • the impact of micro-finance on urban economic growth.

Methods included desk studies and key informant interviews with: government; advisory and regulatory agencies; and formal, semi-formal and informal MFIs; and semi-structured interviews with micro-enterprises in the identified economic growth sectors.