For decades, the promise of microfinance has captured the imagination of development economists, policymakers, and practitioners alike. Yet while microfinance institutions (MFIs) have expanded access to credit for millions, questions persist about how to make their outreach both broader and deeper—especially in diverse and underserved communities. Increasingly, the International Standard Industrial Classification (ISIC) system is helping MFIs move from a scattershot approach to a much more strategic, data-driven model of market segmentation.
At its most basic, ISIC codes classify economic activity with granularity and international comparability. When applied to microfinance, this classification enables institutions to identify which industries—and even sub-sectors—have the highest unmet demand for small loans, insurance, savings, and training products. Instead of a blanket strategy for all “microenterprises,” MFIs can tailor offerings for street vendors (ISIC 4791), smallholder farmers (ISIC 0111), rural transport operators (ISIC 4922), or home-based textile producers (ISIC 1410), among others.
This targeted approach is more than academic. In practice, it means that microfinance interventions are designed with the actual needs and risk profiles of clients in mind. For example, street vendors in ISIC 4791 typically face high working capital volatility and may require daily or weekly loan products, as well as training on inventory management or digital payments. Rural artisans (ISIC 1629) might benefit from seasonal credit and collective savings mechanisms, along with market access support. By mapping their portfolios and local economies by ISIC code, MFIs can prioritize outreach where impact is likely to be greatest.
A case study from Southeast Asia illustrates this approach. A leading MFI undertook a comprehensive mapping of rural microenterprises by ISIC code in two provinces. The data revealed an unexpected concentration of micro-businesses in small-scale agro-processing (ISIC 1079) and retail sale via stalls and markets (ISIC 4781). Existing loan products, geared mainly toward agriculture and traditional handicrafts, missed these entrepreneurs almost entirely.
Armed with these insights, the MFI redesigned its products: introducing smaller, faster loans for market vendors and short-term bridge financing for agro-processors tied to harvest cycles. It also partnered with a local NGO to deliver sector-specific training on food safety (for processors) and basic accounting (for vendors). Savings products were adapted to match the cash-flow patterns identified through ISIC-coded segmentation, with flexible withdrawal and deposit rules. Within two years, the number of active borrowers in these newly targeted ISIC sectors doubled. Repayment rates improved as loan terms better fit business realities, and a survey of clients showed significant gains in business resilience and household income.
The implications go beyond credit. MFIs using ISIC codes can work with governments, banks, and NGOs to deliver more relevant non-financial services—training, insurance, or digital platforms—focusing on those industries where vulnerability is high and capacity for impact is strong. For example, livestock keepers (ISIC 0141) may be especially exposed to climate and disease risk, suggesting opportunities for micro-insurance or weather-indexed savings products. Urban micro-retailers (ISIC 4711, 4781) may benefit from digital payment and inventory management tools.
This ISIC-driven segmentation also supports broader policy goals. National financial inclusion strategies, often criticized for treating the “informal sector” as a monolith, can now be designed with much greater precision. Regulators and donors can track which sectors are underserved, monitor progress over time, and coordinate resources where they are needed most. Development finance institutions (DFIs) and impact investors increasingly use ISIC-coded data to benchmark their portfolios, ensuring capital flows reach the full spectrum of microenterprises—not just those easiest to serve.
Of course, challenges remain. Many microenterprises operate informally or span multiple activities, making precise ISIC classification difficult. MFIs must invest in regular field research, staff training, and data systems to maintain up-to-date sectoral mapping. Local context matters—a street vendor in a provincial market may have very different credit needs from one in a capital city, even if both share an ISIC code.
Moreover, the focus on segmentation should not eclipse broader efforts to build an enabling environment: legal recognition, property rights, basic infrastructure, and digital access all remain critical for true financial inclusion. ISIC data is a tool, not a panacea.
Still, the benefits are clear. By using ISIC codes to guide microfinance interventions, institutions move closer to the goal of client-centric, sustainable financial inclusion. Products and services become more relevant, risks are better managed, and scarce resources are allocated with greater impact. For policymakers and practitioners alike, the lesson is simple: knowing “who does what” in the microenterprise landscape is not just helpful—it is essential for building more inclusive, resilient, and prosperous communities.