Infrastructure development can be a daunting challenge, involving regulatory and legal issues, environmental impacts, financing, intellectual property, and other domains that usually require considerable collaboration between governments, universities, private development corporations, construction companies, financial institutions, and other disparate stakeholders. This collaboration shares the risks as well as allows the agencies best able to deal with specific problems the scope to do so. Do microfinance institutions have a role in this complex process?
As infrastructure development has become more complex, agencies have found ways of sharing the work by allowing those institutions who are best able to deal with specific issues the structure to do so. Universities who have developed proprietary information needed for a new power plant development, for example, can contribute through their intellectual property rights. Microfinance institutions are understood to have specific skills and experience in areas of financial development, specifically in credit, savings, and insurance products for small income generating enterprises. But microfinance institutions have been working in the field of infrastructure development for some time.
Two types of loans, housing and education, have a different payment structure than small business loans for income generating opportunities. These loans, like other types of infrastructure development, are understood to be longer term, with perhaps greater risk. Smaller infrastructure development projects, such as water projects in villages and small power plants, transportation options such as financing buses and farm trucks, are all structured for the long term, and involve the collaborative process that characterises infrastructure development.
Habitat for Humanity International has sponsored several collaborative meetings to discuss the role of microfinance institutions in infrastructure development in slum communities, specifically housing, sewage systems, and water systems. Microfinance institutions have specific experience in providing financial services to these low-income communities, and many are stepping up to meet the needs of more complex and expensive development opportunities. Infrastructure development may be the next logical step in the mature growth of microfinance institutions to provide financial services to their communities.
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