CFI Blog

Fostering Responsible Finance in Myanmar’s Infant Industry

On 1st February 2011, the Myanmar military swept away power from the democratically elected government, imposing military rule. The military did away with most democratic rights, including free speech and assembly. The army also misused its power and arrested all democratically elected representatives and other human rights violations, including violently suppressing protests and assemblies. 

However, Mynamar’s situation wasn’t always like that. Before 2011, Myanmar went through a period of change and transformation. During this period, through some bold and audacious social and economic reform, Mynamars was progressing towards peace and stability by the year 2011 hit. But securing such strong economic growth wasn’t easy, and they still have a long way to go. Myanmar must renovate its economic infrastructure to sustain steady growth and wealth generation. 

Further, it also needs to navigate complex financial obstacles specific to that country. Some problems might be short-term, and some long-term. The progress accelerated during the administration of President U Thein Sein, who came into power through the first election in two decades. During this time, the focus was on national unity, political and institutional reform, and implementing economic reforms. 

A central bank was established to unite the currency and centralize the country’s banking system. The administration removed unnecessary bureaucracy at the same time. We established a unified regulatory framework to keep the system in check and provide the legal foundation for financial investment. The government also invested heavily in social security and infrastructure spending. 

In fact, the gross domestic product increased in response to these measures, and industrial production boomed consecutively for many years. The growth rate hovered around 7% for 2 years for a country that has faced multiple economic and financial sanctions from foreign governments. With the foreign investment influx, Myanmar has seen an upsurge in tourists’ visits for the country’s natural scenic beauty boosting the tourism industry. 

Well, it is true that Impact investors learn from microfinance. Moving on from this fact, modernizing an economy is a monumental task. All the social and economic indicators show the government is committed to economic upliftment. However, not everything has painted the picture with a rosy road. There are multiple landmines that authorities have to navigate. An integrative development trajectory will need a robust policy change. 

More Than Economic Growth 

More Than Economic Growth 

Myanmar will need sustained economic growth if it wants to alleviate its citizen from financial constraints and poverty. Once, Myanmar used to command one of Asia’s highest living standards owing to its rice export, which accounted for 40% of its export. However, it went through massive political instability, civil wars, and a military takeover of a democratically elected civil government. 

On the contrary, Myanmar had the lowest per capita income among Asian nations reported by the Associations of Southeast Asian Nations (ASEAN). It is also the poorest country in Asia, whose poverty level is higher than Cambodia (21%) and Vietnam (21%), with a poverty rate of 25%. 

However, if Myanmar wants to bring people out of poverty, it will need more than just economic growth. The country must ensure the country’s wealth is more equitably distributed. Myanmar is uniquely situated, sandwiched between two of the most influential and significant economies in the world–India and China. But Myanmar has 61 million strong and diverse people, accounting for 135 ethnic groups. In many cases, using microfinance as a tool to fight corruption can be beneficial. 

Ensuring Economic Stability

Economic stability can only be brought about by effective economic governance. The governance has to derive power from a legal and democratic institution that does not switch arbitrarily and works according to a specific and objective rule of law. A robust financial framework and institution must be needed to deliver social and public programs. 

Hence, public institutions must be strengthened to make economic growth sustainable and stable. Myanmar also needs to have a robust macroeconomic structure. The presence of heavy industries like construction, manufacturing, and service sectors boosts and gives the economy some legitimacy. Manufacturing provides jobs for an unprecedented number of low-skilled workers to uplift themselves from poverty and bring about stability. For example, in China’s microfinance landscape nonprofits microcredit companies, and Alibaba also has been boosted significantly.

But for them to thrive, financial institutions must be vital. The country should have a central bank to control the interest rates, check inflation, and have stable banking systems to keep investing in the economy. The government needs to lay out an equitable budgetary plan to conduct public spending and allocate government resources. There must also be a regulatory body to ensure an amiable exchange rate of the currency. 

And so, the government of Myanmar should ensure a favorable environment for the growth of private sectors and upcoming startups. Upcoming startups require a support system from governments, banks, and authorities to thrive. There should also be an environment of social and financial investment.

Seeking Sectoral Advantages

Not all economic sectors of a country can be equally strong, which is the concerned authorities have to figure out the strengths and weak points of a country’s economy. The road forward is paved by correctly identifying sectoral strengths and developing strategies. Tapping in the potentially critical strategic sectors can ensure rampant economic sustainability. 

Although it is not sure what Myanmar’s trajectory regarding its economic growth will be, the country can take excellent lessons to learn from its more economically successful neighbors like India, China, and other developed nations like South Korea, Japan, and Singapore. However, not everything is perfect in those countries, like Japan’s blooming debt crisis or the failure to design financial services for China’s marginalized section of consumers.

Despite all these facts, Asian economics has undergone a massive transformation from an agricultural-based economy to an industrial-based economy and eventually to a service-based economy with export-oriented manufacturing. However, that took a lot of years to transform the economic structure of the nations. It will take even more time for Myanmar because it has never had anything close to a stable government. 

In order to achieve its goals, Myanmar will need a massive infrastructure shift from agriculture to an industrial and manufacture-oriented economy. Nevertheless, opportunities exist in agricultural sectors for innovations and growth. For instance, recent studies have found asset-based financing and flexible repayment schedule to better serve Africa’s smallholder farmers.

Building Human Capital and Infrastructure

Building Human Capital and Infrastructure

Myanmar is over 60 million people strong, so it has a demographic dividend that it can capitalize on, building productivity and an increasing consumer base for its country to boost its economy. Recent studies have found that human capital is indispensable for the sustainable growth of the economy.  

Myanmar still has a few obstacles: insufficient funding of education and health services, lack of social security, and lack of banking infrastructure. Without any amiable education system, much of the labor force remains unskilled and uneducated. The government established Comprehensive Education Sector Review and the National Skills Standards Authority. 

Still, substantial investment in education needs to be made to improve the quality of the labor force to have a high-income population. Proper education and degree will enable the population to have white-collar jobs. The country would also need other infrastructure like transportation, road, highway, and power infrastructure. 

Frequently Asked Questions (FAQs)

Q1. What are the obstacles facing microfinance institutions in Myanmar?

Myanmar is a country that has faced colonization, political strife, military coup, and financial sanctions, shaking the heart and science of client assessment. The country’s lack of a centralized system of financial institutions and a stable banking system has led to a shortage of microfinance. The country also lacks education and basic infrastructure. 

Q2. What is the interest rate for microfinance in Myanmar?

The government of Myanmar has changed its rules and regulations regarding microfinance. The current interest rate is over 2.8%.

Q3. How many MFIs are there in Myanmar?

In recent times, there are 130 MFIs have been working in Myanmar. The country currently lacks a proper banking system and other basic infrastructure for the microfinance industry to thrive.


Myanmar may have several challenges which can hinder its economic growth for a long time. However, none of these challenges are insurmountable. The country has an ample number of people which can be used as human capital. But for it to be used, it must build infrastructure to accommodate the upliftment of poor people. Recent studies have found that human capital is indispensable for the sustainable growth of the economy. 

However, Myanmar has a few obstacles: insufficient education and health services funding, lack of social security, and lack of banking infrastructure. Without any amiable education system, much of the labor force remains unskilled and uneducated.

The government established Comprehensive Education Sector Review and the National Skills Standards Authority. Still, substantial investment in education needs to be made to improve the quality of the labor force to have a high-income population.

Author Profile

Jonas Taylor
Jonas Taylor
Jonas Taylor is a financial expert and experienced writer with a focus on finance news, accounting software, and related topics. He has a talent for explaining complex financial concepts in an accessible way and has published high-quality content in various publications. He is dedicated to delivering valuable information to readers, staying up-to-date with financial news and trends, and sharing his expertise with others.

Leave a Comment