Authors: Harsha Thadhani Rodrigues and Tricia Morente, 2005

As microfinance markets become more competitive, institutions feel increasing pressure to achieve and sustain growth. Microfinance institutions (MFIs) can use a variety of organizational structures to facilitate expansion, including: growing existing operations, legal restructuring, franchising, strategic alliances, mergers, and acquisitions.

Observes one microfinance practitioner, "As microfinance matures and donor funding dries up, MFIs are beginning to look at market forces, such as customer demand and competition. This forces an MFI to consider various expansion strategies beyond growth through existing business."

What options are most appropriate for MFIs operating in different contexts? What frameworks exist to evaluate various expansion strategies? In this focus note, each strategy is explored in the context of a definition and framework and is illustrated by a case study. This document is based on WWB’s research on growth strategies used in the private sector and those used in microfinance.