“The State of Microfinance Investment 2012: MicroRate’s 7th Annual Survey and Analysis of MIVs;” published by MicroRate; October 2012; 17 pages; available at: http://www.microrate.com/downloads/78
This report summarizes the results of the seventh annual survey of microfinance vehicles (MIVs) by MicroRate, an rating agency that aims to objectively evaluate microfinance institutions (MFIs), including the responses from 86 MIVs managing a total of USD 7 billion in assets. The survey indicated that the MIV sector grew 11 percent in 2011, an increase of USD 540 million. Latin America was found to have the largest share of absolute growth, while the pace of growth was faster in East Asia and the Pacific as well as Africa. The survey also noted a trend towards equity investments and away from debt, although there is a more diverse array of debt products. MIVs have also increased non-microfinance investment, including housing and fair trade. The survey also showed a higher rate of competition for investment, with local banks and international financial institutions competing to invest in MFIs. MicroRate found that the top factors increasing performance in the MIV sector were improved portfolio quality, growth in Latin America and Africa, and portfolio diversification. The top factors decreasing performance were the microfinance crisis of 2010 in the Indian state of Andhra Pradesh, foreign exchange volatility and investor unease as a result of the Eurozone crisis. MicroRate identifies the top challenges for the future as lack of investor demand, market volatility and overindebtedness.
“Are Pakistan’s Women Entrepreneurs Being Served by the Microfinance Sector?” published by the World Bank; October 2012; 53 pages; available at: http://siteresources.worldbank.org/EXTFINANCIALSECTOR/Resources/282884-1339624653091/8703882-1339624678024/Format_Pakistan_women_entrepreneurs_10-16-12.pdf
This document summarizes the findings of a study by the World Bank Group on the microfinance industry in Pakistan. The study finds that 59 percent of the country’s microfinance clients are women, a lower percentage than other countries in the region. There is also evidence to suggest that female clients are not the ultimate users of the borrowed credit but that 50 to 70 percent of the loans received by women are passed on to male household members. A second issue is that a low percentage of female clients are entrepreneurs, and the few that are rarely use their loans to invest in their businesses. The study also found a high level of discontent among female entrepreneurs who only qualify to borrow small loans under a group lending model. Individual loans are usually offered exclusively to male clients, and those that aren’t often have restrictive requirements such as signatures from their husbands and two male guarantors. Many women reported finding the regular meetings of the group lending model to be burdensome and of little use, and the loans too small to cover business needs. Of the sample studied, 19 percent of women reported borrowing from more than one microfinance institution (MFI) in order to meet their business needs. The authors state that Pakistan has a very progressive environment for microfinance with strong institutions that can push for change within the sector and suggest that when these factors restricting women’s access to useful microcredit are solved, Pakistan can grow to be a world leader in the industry.
“The Business Case for Life Microinsurance in the Philippines: Initial Findings;” by Richard Koven, Michael J. McCord, et al; published by Microinsurance Learning and Knowledge (MILK); September 2012; 9 pages; available for download at: http://www.microinsurancecentre.org/milk-project/milk-docs.html
This brief examines five life microinsurance programs in the Philippines that provide life, accident and funeral coverage to approximately 10 million clients. Distribution of this coverage takes place through partner-agent models, microfinance institutions (MFIs) and cooperatives. The study took place over the years 2008-2011, and observed growth doubling over the study period with a compound annual growth rate of approximately 30 percent. Four out of the five programs were profitable, although four also demonstrated a steady increase in loss ratios. The authors attribute the growth of premium income to a possible confluence of forces including a growing economy and a growing and increasingly competitive insurance industry. The report also examines the different types of programs such as mutual benefit associations, commercial insurers and cooperatives. Much of the coverage is mandatory and tied to a loan or savings account or employment, although there is evidence of a growing consumer demand for voluntary coverage. Premiums vary widely based among the programs. The authors conclude that more research is being done as an extension of this business case study to answer follow-up questions raised in the preliminary study.
By Charlotte Newman, Research Associate
About MicroRate
MicroRate is a for-profit microfinance rating agency formally approved by CGAP (Consultative Group to Assist the Poor); the Inter-American Development Bank; and Peru’s Superintendency of Banking, Insurance and Pension Fund Managers (SBS). It was founded in the US in 1997 with the intent of objectively evaluating microfinance institutions (MFIs), thereby increasing transparency and driving additional funding into microfinance. MicroRate has completed approximately 600 ratings of approximately 200 MFIs worldwide as of 2012 and claims to perform its evaluations not through “rigid rating formulas,” but through the “evaluation of critical risk.” A private company, MicroRate is based in Washington, DC, with offices in Peru and Morocco.
About World Bank Group
The World Bank Group consists of five institutions, all of which are owned by its member countries. The Group’s mission is to improve living standards for people in the developing world. The World Bank Group encompasses the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); the International Centre for Settlement of Investment Disputes (ICSID) and the World Bank, which consists of the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). For more information on the World Bank Group, visit http://microcapital.org/microfinanceuniverse/tiki-index.php?page=The+World+Bank+Group.
Sources and Additional Resources:
“The State of Microfinance Investment 2012: MicroRate’s 7th Annual Survey and Analysis of MIVs,” http://www.microrate.com/downloads/78
“Are Pakistan’s Women Entrepreneurs Being Served by the Microfinance Sector?” http://
siteresources.worldbank.org/EXTFINANCIALSECTOR/Resources/282884-1339624653091/8703882-1339624678024/Format_Pakistan_women_entrepreneurs_10-16-12.pdf
“The Business Case for Life Microinsurance Learning and Knowledge (MILK),” http://
http://www.microinsurancecentre.org/milk-project/milk-docs.html
MicroCapital.org story, May 21, 2012, “MICROCAPITAL BRIEF: MicroRate Launches Web-Based Impact Investing Platform Luminis,” https://www.microcapital.org/microcapital-brief-microrate-launches-web-based-impact-investing-platform-luminis/
MicroCapital.org story, August 23, 2012, “MICROCAPITAL BRIEF: World Bank Releases Government Electronic Payment Program Guidelines,” https://www.microcapital.org/microcapital-brief-world-bank-releases-government-electronic-payment-program-guidelines/
MicroCapital.org story, August 22, 2011, “MICROCAPITAL BRIEF: MicroRate’s ‘The State of Microfinance Investments 2011’ Indicates Resilience During Economic Downturn,” https://www.microcapital.org/microcapital-brief-microrate%E2%80%99s-%E2%80%9Cthe-state-of-microfinance-investments-2011%E2%80%9D-indicates-resilience-during-economic-downturn/
MicroCapital Universe Profile: MicroRate
http://microcapital.org/microfinanceuniverse/tiki-index.php?page=MicroRate
MicroCapital Universe Profile: World Bank Group
http://microcapital.org/microfinanceuniverse/tiki-index.php?page=The+World+Bank+Group
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