The global microfinance market has been experiencing consistent growth from 2014 to 2030, according to a report by ResearchAndMarkets. This growth is primarily driven by lending activities targeting small enterprises, solo entrepreneurs, and micro-enterprises, highlighting the crucial role of microfinance in promoting financial inclusivity and supporting entrepreneurial ventures worldwide.
The report also identifies emerging technologies such as generative AI, applied AI, machine learning, and blockchain as significant investment opportunities within the microfinance market. These technologies are expected to drive growth and help overcome challenges such as inflation and shifting demand patterns.
According to the report, banks are projected to grow at a compound annual growth rate (CAGR) of 13.2% and reach a market size of $295.5 billion by 2030. The non-banking segment is also expected to experience robust growth, with an estimated CAGR of 11.2% over the next eight years.
Microenterprises have emerged as a vital driver of growth for microfinance institutions (MFIs). These small businesses play a crucial role in economic progress and are increasingly becoming the focus of microfinance lending activities.
Digital payments and financial technology are in high demand within the microfinance industry. Mobile payments, in particular, are revolutionizing the landscape, especially in African countries, despite the existing challenges.
Blockchain-based solutions are filling the gap in financing for small and medium enterprises (SMEs), while AI technologies are making access to credit more accessible to a broader population. These technologies hold immense potential for transforming the future of microfinance.
Despite its growth, the microfinance industry faces certain challenges. One such challenge is data security concerns due to the digitization of financial transactions. Additionally, there have been criticisms against the emergence of for-profit MFIs, raising questions about their social impact and mission.
Overall, the global microfinance market is poised for significant growth, driven by advancements in technology and a focus on supporting microenterprises. By leveraging emerging technologies like AI and blockchain, the industry can overcome challenges and pave the way for a more inclusive and prosperous financial future.