ACCION's Approach

ACCION's goal is to bring microfinance to enough people to have a significant impact on poverty. It has been estimated that it would cost over $250 billion to reach 500 million poor people with microfinance services – a figure well beyond the reach of donor funds. That is why ACCION is leading the effort to make microfinance financially self-sustaining.

Microfinance programs have the potential to cover their own costs. The interest each borrower pays helps to finance the cost of lending to another. In most poverty alleviation efforts, every person helped brings the program closer to its financial limits. Successful microfinance programs, on the other hand, generate more resources with each individual they help.

As a result, well-managed microfinance programs generate more income than they spend. Once they become economically viable financial institutions, they have the ability to access a virtually unlimited source of lending capital – the billions of dollars invested in the world's financial markets.

Many of ACCION's partners have already made the transition from nonprofit, charity-dependent organizations to banks or other regulated financial institutions. The three largest (Banco Solidario of Ecuador, Banco Compartamos of Mexico and Mibanco of Peru), each reach over 100,000 poor and low-income microentrepreneurs.

These pioneering microfinance institutions (MFIs) have demonstrated that it is possible for a commercial lender to serve the poor while meeting its bottom-line and thriving as an institution. As a result, commercial banks that previously only served the upper class are increasingly opening their doors to microentrepreneurs. ACCION has helped four commercial banks, SOGEBANK (Haiti), Banco del Pichincha (Ecuador), Banco ABN-AMRO Real (Brazil), and Ecobank (West Africa) begin lending to the self-employed poor.

ACCION's emphasis on commercial viability and institutional growth – known as the financial systems approach – has helped our partner MFIs reach scale and financial self-sufficiency. To help our partners attain these goals, ACCION provides technical assistance to improve operations and efficiency, and equity financing  and loan guarantees to enhance financial stability and access commercial capital.