Few sectors tell Myanmar’s boom-bust story this last decade better than the microfinance industry.
One of the first wins that Myanmar’s newly empowered civilian government put on the scoreboard in 2011 was an ambitious microfinance law. Before the legislation came into force, only a handful of institutions were permitted to lend to low-income Burmese, ensuring that few people had access to the service. But within five years, Myanmar had approved more than 250 microfinance licences.
It was “a race to capture the country’s vast untapped market”, recalls industry veteran Jason Loughnane, director of operations at currency risk solutions firm MFX who previously worked in microfinance and digital lending in Myanmar.
By 2016, when Aung San Suu Kyi took power, it was clear that microfinance had become an economic success story, by providing credit to tens of millions of unbanked Burmese.
Then came the dual crises now shaking the industry to its core. First, the pandemic tested microcredit outfits everywhere: funding became scarce while clients were unable to repay their loans as their sources of income vanished.
Naysayers wondered if the industry could even survive. Then in February 2021, a military coup in Myanmar upended everything that bankers and investors thought they knew about one of Asia’s premier frontier markets.
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