ASEAN KEY DESTINATIONS
Microfinance increases in Asian economies
The newly minted Smile Microcredit Bank in South Korea illustrates the growing demand for microfinance in the world’s emerging economies in the wake of the global financial crisis, according to a recent seminar reported by ucanews.com
“For 30 years, the microfinance industry has witnessed explosive growth and now counts 80 million borrowers around the globe,” World Bank sector manager, Tunc Uyanik, told a June 15 international conference in Seoul on the “Global Financial Crisis and Microfinance”.
“However, the need for microfinance is still huge,” Uyanik continued, noting that almost 70 percent of adults in emerging markets, or close to 3 billion people, still lack access to basic formal financial services.
Moreover, the economic crisis is driving more people into poverty and increasing economic polarization, Uyanik said.
Microfinance is not a panacea, however, and complementary social welfare programs are also required, he added.
Kwon Hyouk-se, vice-chairperson of the Financial Services Commission (FSS) of Korea, acknowledged that the global financial crisis has caused deeper economic polarization. “Microfinance can become a social safety net for the financially alienated,” Kwon said, pointing to the role played by the Smile Microcredit Bank in reducing economic polarization.
Founded in 2008 with money from dormant accounts and contributions from Korean banks and companies, the Smile Bank had loaned 59.7 billion won or US$48.5 million to 15,789 people by the end of 2009.
As the effects of the finance crisis bite, the microfinance industry will continue to grow, panelists told the conference.
More international cooperation is also needed and regulation is increasingly required to protect borrowers.
The conference was organized by the World Bank, Financial Services Commission (FSS) of Korea and the Korea Development Institute.