MICROCAPITAL BRIEF: Microfinance Invesment Vehicles’ (MIVs’) Total Assets Reach $3.6b in 2009 Despite Decreasing Yields and Stalled Industry Growth

Total assets of the top ten microfinance investment vehicles (MIVs) grew by 23 percent in 2009, reaching USD 3.6 billion, while MIVs’ investments in microfinance institutions (MFIs) grew by only 12 percent, according to a report by CGAP (Consultative Group to Assist the Poor), an independent policy and research center.

Furthermore, yields decreased in 2009 to 3.08 percent in USD and 2.06 percent in EUR, compared to 5.95 percent and 5.55 percent respectively for 2008. CGAP attributes this to three main factors: MIVs had to build loan loss provisions to cover potential defaults in distressed markets; currency volatility increased MIVs’ costs of hedging foreign exchange risk; and the high levels of cash holdings produced close to no interest returns.

CGAP argues, “MIVs may need new investment approaches, such as expanding to new markets (e.g., Africa and Asia), funding in local currency, taking equity positions, or reaching beyond the top tier of MFIs.”

By Stefanie Rubin, Research Associate

About CGAP (Consultative Group to Assist the Poor):

Housed at the World Bank Group, CGAP (Consultative Group to Assist the Poor) is an independent policy and research center dedicated to providing financial access for the world’s poor. CGAP is supported by over thirty development agencies and private foundations. Its mission is to provide market intelligence, to promote standards and to offer advisory services to governments, microfinance providers, donors and investors.

Additional Resources:

Source Article: CGAP: “Challenging Times: Do MIVs Need A New Investment Strategy?”

MicroCapital Universe: CGAP (Consultative Group to Assist the Poor)

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