MicroRate, a microfinance rating agency, has released its fifth annual survey evaluating trends in microfinance investment – “State of Microfinance Investment: The MicroRate 2010 Microfinance Investment Vehicle (MIV) Survey.” The 2010 MIV survey indicates that investor interest in microfinance funds and similar intermediaries remains strong despite the global recession. However, strong interest from investors is being offset by weaker demand for funding from microfinance institutions (MFIs). In 2009, MIVs grew by 22 percent, but assets actually deployed to MFIs only grew 11 percent. This leaves MIVs with rapidly increasing levels of liquidity. By the end of last year, competition forced rates below the minimum level that some MIVs deem necessary in order to be compensated fully for the risk involved.

In 2009, investment in Latin America and the Caribbean (37 percent of microfinance assets) surpassed that in Eastern Europe and Central Asia (35 percent), giving it a larger share of MIV investment than any other region. The share of investment in South Asia remained constant in 2009 at 9 percent. East Asia and the Pacific showed the highest growth (124 percent), but the region still only represented 7 percent of microfinance assets. Sub-Saharan African investment, with 6 percent of microfinance assets, also grew at an impressive rate of 45 percent during the year 2009.

By Conner Brannen, Research Assistant

About MicroRate:

MicroRate was founded in the US in 1997 with the intent to objectively evaluate microfinance institutions (MFIs), thereby increasing transparency. As a result, MicroRate hopes to drive additional funding into microfinance. MicroRate has evaluated approximately 500 MFIs worldwide and claims to perform its evaluations not through “rigid rating formulas,” but through “evaluation of critical risk.” As of 2010, the organization had offices in the United States, Peru and Morocco.

Sources and Additional Resources:

MicroRate: “State of Microfinance Investment: The MicroRate 2010 MIV Survey”: http://microrate.com/wp-content/uploads/2010/07/The-MicroRate-2010-MIV-Survey-Report.pdf

MicroCapital Universe Profile: MicroRate: http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=MicroRate

MICROCAPITAL BRIEF: LuxFLAG and MicroRate Announce LUMINIS Microfinance, Internet-Based Microfinance Investment Vehicle Information Service, May 18, 2010: http://www.microcapital.org/microcapital-brief-luxflag-and-microrate-announce-luminis-microfinance-internet-based-microfinance-investment-vehicle-information-service/

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