By Ralitsa Sapundzhieva and Agharazi Babayev, published by Microfinance Information Exchange, January 2013, 27 pages, available at: http://www.themix.org/publications/mix-microfinance-world/2013/01/2012-eastern-europe-and-central-asia-regional-snapshot
This Microfinance Information Exchange (MIX) report reviews the performance of microfinance institutions (MFIs) in Eastern Europe and Central Asia (ECA).
The authors begin with a comparison of ECA with the five other regions of the globe according to data from the MIX Market website. ECA accounts for 3 percent of the number of global loans outstanding, but 10 percent of the global gross loan portfolio. ECA MFIs report a median outstanding individual loan balance of USD 1,930, which is the highest in the world. The median amount of deposits is also the highest in the world at USD 2,037. Loan portfolio growth continues, though the number of loans outstanding remains mostly unchanged. Portfolio quality has improved and MFI profitability has increased by 0.3 percent since 2010. ECA social performance reporting increased by 54 percent with 180 MFIs reporting to MIX in 2012. ECA now accounts for 21 percent of global social performance reporting to MIX.
With regard to gender outreach, the authors find that the performance of ECA countries to be mostly positive. Although female client outreach is the lowest globally and the number of female borrowers only increased by 2 percent in 2010, ECA has the second highest percentage of female board members (33 percent), managers (45 percent) and staff (49 percent). The proportion of group loans has grown from 19 percent in 2008 to 24 percent in 2011 led by high demand in Central Asia. The share of rural borrowers in the region has also increased from 54 percent to 66 percent in 2011, though loan balances have slightly decreased in rural areas.
Cross-border funding, which includes commitments for debt refinancing, equity and grants, decreased in two-thirds of ECA countries as more projects were terminated than started in 2011. Although commitments decreased by an average 5 percent per year between 2009 and 2011 to USD 3.1 billion, ECA continues to rank among the regions that receive the highest amounts of cross-border funding. Equity levels for non-bank financial institutions (NBFIs) and NGOs have increased since 2009. Although total borrowing has decreased for these for NBFIs and NGOs, this is mostly due to a steep downturn in Bosnia and Herzegovina.
The authors conclude by suggesting what they find to be the most important trends in ECA. The increase in portfolio quality, profitability and number of borrowers signal a regional recovery from the global financial crisis. Social performance reporting, rural outreach, female participation and group lending have increased. Cross-border funding has decreased since 2009 as investment is being reallocated to other regions. Equity levels, however, continue to increase for NBFIs and NGOs on average due to positive trends in Georgia, Kazakhstan, Kyrgyzstan and Russia. The lack of investor confidence in the Bosnian market accounts for the decrease in funding for NBFIs and NGOs in ECA, though the industry in that country has recently shown signs of recovery.
By Brendan Millan, Research Associate
About Microfinance Information Exchange (MIX)
The Microfinance Information Exchange (MIX) is a US-based nonprofit provider of performance data and analysis on microfinance institutions (MFIs), funders, networks and service providers dedicated to serving the financial needs of low-income clients. The mission of MIX is to strengthen the microfinance sector and financial inclusion in general by promoting transparency. The organization’s MIX Market website offers access to financial and social performance information covering approximately 2,000 MFIs. MIX publications include the MicroBanking Bulletin and MIX Microfinance World, which feature periodic research and data analysis. Incorporated in 2002, MIX is headquartered in Washington, DC, with regional offices in Azerbaijan, India, Morocco and Peru. Its supporters include the Bill & Melinda Gates Foundation, CGAP (Consultative Group to Assist the Poor), Omidyar Network, The MasterCard Foundation, the UN’s International Fund for Agricultural Development, the Michael & Susan Dell Foundation, Citi Foundation, Ford Foundation and Deutsche Bank.
Sources and Resources:
MicroCapital.org story, February 27, 2012, “Competition, Loan Rates, and Information in Microcredit Markets; Eastern Europe and Central Asia Regional Snapshot; and Economic Strengthening of the Bottom Billion”, https://www.microcapital.org/microfinance-publication-round-up-competition-loan-rates-and-information-in-microcredit-markets-eastern-europe-and-central-asia-regional-snapshot-and-economic-strengthening-of-the-bottom-billion/
MicroCapital.org story, June 30, 2010, “Microfinance Information Exchange (MIX) and Global Impact Investing Network (GIIN) to Share Data With $187,000 Grant From Rockefeller Foundation”, https://www.microcapital.org/microcapital-brief-microfinance-information-exchange-mix-and-global-impact-investing-network-giin-to-share-data-with-187000-grant-from-rockefeller-foundation/
MicroCapital Universe Profile: Microfinance Information Exchange, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Microfinance+Information+Exchange+%28MIX%29
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