Is Combined Microfinance an Instrument to enhance Sustainable Pro-Poor Public Policy Outcomes?

Product diversification involving simultaneously microcredit, savings or insurance services –also called combined microfinance (CMF)- can both leverage and challenge policy outcomes. This paper reviews two complementary questions in this regard: Which are the possible effects of CMF on public policy? and; How can public policy influence CMF outcomes? A literature review, findings from qualitative assessments and a case study in Barbados highlight the increased challenging environment when supervising, regulating and promoting CMF. When preparing regulation, one has to ensure that the necessary technical and organisational capacity is in place to ensure proper monitoring and oversight. When supporting CMF, policy makers should strive at enhancing smart ways of subsidizing. CMF may stimulate economic and outreach policy outcomes. Still, as it can have adverse effects on the depth of poverty outreach, pro-poor and gender specific policy measures need to be put in place to accompany MFIs engaging in CMF. This paper calls for a more ambitious research agenda to accompany the increasingly complex demand and supply side elements relating to CMF public policy oversight.