By Symbiotics, published by CGAP (Consultative Group to Assist the Poor), August 2010, 42 pages, available at:
http://www.cgap.org/gm/document-1.9.47373/CGAP_2010_MIV_Survey_Report.pd…
CGAP (Consultative Group to Assist the Poor) has recently published its fourth annual survey of microfinance vehicles (MIVs) offering two levels of analysis: (1) key market trends from 90 microfinance investment intermediaries (MII) and (2) market data, benchmarks and performance analysis of 73 MIVs, a sub-group of the MIIs, organized into six peer groups. MIIs are defined as investment entities that have microfinance as one of their core investment objectives. MIIs provide debt, equity and/or guarantees (directly or indirectly) to microfinance service providers. A microfinance investment vehicle (MIV), a type of MII, is defined as an independent investment entity with more than 50 percent of its non-cash assets invested in microfinance.
The survey collected data from 90 MIIs (73 MIVs, 7 microfinance holding companies and 10 other MIIs, which mainly were funds not open to multiple investors), with combined assets under management of USD 7.7 billion. The 73 MIVs surveyed have a combined asset base of USD 5.9 billion, representing 93 percent of the estimated MIV assets under management (USD 6.2 billion). In total, those surveyed represent 93 percent of the estimated market-wide MII asset base of USD 8.2 billion.
Highlights from the survey include the following:
– 11 new MIVs were created in 2009.
– MII asset growth was 21 percent in 2009, down from 31 percent in 2008.
– The average net portfolio yield for MIVs reached a historic low of 7.9 percent during 2009.
– Debt investment accounts for 72 percent of total outstanding microfinance investments.
– Equity investment by MIVS grew by 46 percent while debt investment grew by 15 percent in 2009.
– MIVs are increasingly committed to reporting on their environmental, social and corporate governance (ESG) practices: 40 percent are using an environmental exclusion list; 69 percent report to their investors on ESG issues; and 81 percent have endorsed the Client Protection Principles, a set of borrower-protection guidelines established by the US-based, nonprofit Center for Financial Inclusion.
– Microfinance assets remain concentrated in two regions: Eastern Europe & Central Asia (45 percent) and Latin America & Caribbean (36 percent).
MIV asset growth slowed for the second consecutive year to 25 percent in 2009 (against 34 percent in 2008 and 86 percent in 2007), and survey respondents forecast growth of 15 percent for 2010. MIVs account for 76 percent of total MII assets, followed by microfinance holding companies with 16 percent. Private institutional investors account for 49 percent of MII funding sources, and retail investors and high-net-worth individuals account for a total of 30 percent.
Local-currency investments jumped by 54 percent in 2009, and significant loan-loss provisions were recorded in 2009. MIVs’ total assets grew 18 percent faster than MIV microfinance portfolios. As a result, cash positions have reached record level: 17 percent as of December 2009.
By Witt Gatchell, Research Associate
About CGAP: Housed at the World Bank Group, CGAP (Consultative Group to Assist the Poor) is an independent policy and research center dedicated to facilitating the provision of financial access to poor people worldwide. 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.
About The SMART Campaign and Client Protection Principles: The SMART Campaign is housed at the Center for Financial Inclusion in New York City and was launched with seed money from US-based NGO ACCION International. It seeks to promote six core consumer protection principles including: avoidance of over-indebtedness, transparent and responsible pricing, appropriate collection principles, ethical staff behavior, mechanisms for redress of grievances and privacy of client data. As of August 23, 2010, 528 microfinance institutions (MFI) have endorsed the Campaign.
Additional Resources:
MicroCapital Universe:CGAP:
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=CGA…
MicroCapital Universe: The SMART Campaign and Client Protection Principles:
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SMA…
MICROCAPITAL PAPER WRAP-UP: Microfinance Investment Vehicle (MIV) Performance and Prospects: Highlights from the CGAP 2009 MIV Benchmark Survey by CGAP
https://www.microcapital.org/microcapital-paper-wrap-up-microfinance-inve…
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