MICROCAPITAL.ORG STORY: Peru Ranks First in 2009 Microscope Microfinance Index, A Global Index on Business Environment for Microfinance Developed by the Economist Intelligence Unit (EIU), Released by the Inter-American Development Bank (IDB), the Corporación Andina de Fomento (CAF), the International Finance Corporation (IFC), and the EIU

Peru has been named the best country for microfinance in terms of business climate by the 2009 Microscope microfinance ranking from the Economist Intelligence Unit (EIU), the research arm of the Economist Magazine that provides “country, industry and management analysis” [1,2,3]. The 2009 Microscope was published jointly by the Inter-American Development Bank (IDB), the “main source of multilateral financing” in Latin America and the Caribbean, the Corporación Andina de Fomento (CAF) the primary source of multilateral financing in the Andean region, the International Finance Corporation (IFC), the investment arm of the World Bank, and the EIU [4,5,6]. Last year, Peru was named the best country for microfinance in Latin America and the Caribbean. This was covered by Microcapital in October of 2008 [7,8,9]. This year, the rankings were made globally and Peru still topped the list of 55 countries [1].

Peru’s strong performance was highlighted by a top ranking in institutional development which it shared with Bolivia [1,2]. This ranking was based on its large range of services including “savings, checking, ATM, fund transfer, insurance, and other products,” as well as its “active” and “large” microfinance market that has “portfolio spread across a high number of institutions on a national level” [2]. Peru also tied for third in regulatory framework and ranked eighth in investment climate to complete its strong showing [2].

Cambodia and Philippines tied for first in regulatory framework [2]. Cambodia did well for allowing limited liability companies to provide microfinace services, and its encouragement of non-governmental (NGO) microfinance institutions (MFIs) to become regulated financial institutions [2]. Philippines scored highly because of its “specific provisions for the regulation of microfinance operations,” its willingness to allow MFIs to set their own interest rates, and its straightforward legal process for “forming and operating specialized MFIs,” [2]. Chile scored best for investment climate, a category based on “political stability, capital market stability, judicial system, accounting standards, governance standards, MFI transparency” [2]. Specific information about Chile’s merits are not provided in the report as only top overall countries were examined in detail.

The top two countries, Peru and Bolivia, are both from Latin America [2]. Bolivia tied for first in institutional development and third in regulatory framework, but suffered with a ranking of twenty-first in investment climate due to restrictive practice of private financial funds in particular. The top ranked country outside of Latin America is Phillipines ranked third, followed by India, ranked fourth from a strong showing in institutional development where it was tied for third [2]. Ghana was ranked fifth overall, making it the top ranked country in Africa, finishing in the top eleven for all categories [2].

The Microscope index was first developed by the EIU in 2007 [1]. Microcapital covered its original release in October of that year [10]. Rankings are based on 13 criteria related to the previously mentioned categories of regulatory framework, investment climate, and institutional development [2,10]. The 2009 version was presented at the 2009 Microenterprise Forum (Foromic), a conference in Arequipa, Peru held by the IDB to “provide a platform for all stakeholders in the microfinance and microenterprise development industry to meet their colleagues and exchange best practices, methodologies, and strategies to promote and support the microenterprise sector” [11].

The Economist Intelligence Unit was founded in 1946 [3]. It provides independent research services for “international companies, financial institutions, universities and government agencies” [3]. Its “business intelligence” includes “country analysis on more than 200 markets, industry trends in six key sectors, [and the] latest management strategies and best practices” [3]. It currently has “150 full-time country specialists and economists supported by an unparalleled global network of 600 contributing analysts and editors” [3].

By Christopher Maggio, Research Assistant

Bibliography
[1] Inter-American Development Bank entitled ‘Peru ranks first in new global index on business environment for microfinance’: http://www.iadb.org/news/detail.cfm?lang=en&id=5681
[2] Economist Intelligence Unit Global microscope on the microfinance business environment: http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=2189221
[3] Economist Intelligence Unit: http://www.eiu.com/site_info.asp?info_name=about_eiu&entry1=about_eiuNav&page=noads
[4] Inter-American Development Bank: http://www.iadb.org/aboutus/
[5] Corporación Andina de Fomento (in spanish): http://www.caf.com/view/index.asp?ms=17
[6] IFC: http://www.ifc.org/
[7] MICROCAPITAL STORY: Peru and other Andean Countries Ranked Best for Microfinance within Latin America and the Caribbean, according to the IDB, CAF and EIU’s Microscope Index: https://www.microcapital.org/microcapital-story-peru-and-other-andean-countries-ranked-best-for-microfinance-within-latin-america-and-the-caribbean-according-to-the-idb-caf-and-eiu%E2%80%99s-microscope-index/
[8] PAPER WRAP-UP: 2008 Microscope on the Microfinance Business Environment in Latin America and the Carribean (LAC), (Part one of a two part series), by The Economist Intelligence Unit: https://www.microcapital.org/paper-wrap-up-2008-microscope-on-the-microfinance-business-environment-in-latin-america-and-the-carribean-lac-part-one-of-a-two-part-series/
[9] PAPER WRAP-UP: 2008 Microscope on the Microfinance Business Environment in Latin America and the Carribean (LAC), (Part II of II), by The Economist Intelligence Unit: https://www.microcapital.org/paper-wrap-up-2008-microscope-on-the-microfinance-business-environment-in-latin-america-and-the-carribean-lac-part-ii-of-ii/
[10] MICROCAPITAL STORY: Inter-American Development Bank (IDB), Andean Development Corporation (CAF), and Economist Intelligence Unit (EIU) Present “Microscope,” New Index to Compare Microfinance Climates Across Countries: https://www.microcapital.org/microcapital-story-new-index-provides-benchmarks-to-compare-microfinance-climates-across-countries/
[11] Foromic: http://events.iadb.org/calendar/eventDetail.aspx?lang=en&id=97&OID=35

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