MICROFINANCE PUBLICATION ROUND-UP: 11th Symbiotics MIV Survey, Very Small Businesses in Ethiopia, Climate-shock Recovery Lending in Africa

“2017 Symbiotics MIV Survey,” published by the Symbiotics Group, September 2017, 55 pages, available at:
http://symbioticsgroup.com/wp-content/uploads/2017/09/Symbiotics-2017-MIV-Survey.pdf

This 11th annual survey of microfinance investment vehicles (MIV) offers data from 93 microfinance funds managed by “44 specialized asset management companies located in 17 countries.” The responding firms’ funds comprise 94 percent of the estimated market size of USD 13.5 billion. The MIV’s assets allocated to microfinance total USD 9.6 billion, of which 73 percent is in fixed-income funds, 16 percent in mixed funds and 11 percent in equity funds. Of the respondents’ MIVs, 56 percent are fixed-income, and 24 percent are equity funds, with the remainder mixed between the two types. “[T]he largest share of MIVs’ direct microfinance portfolio in 2016” – 34 percent – is deployed in Latin America and the Caribbean. This figure is 4 points above the mark reported in 2015.

“(Very) Small and Growing Businesses in Ethiopia: Preliminary Findings,” by Benjamin Mackay, published by ADA (Appui au Développement Autonome), 2017, 3 pages, available at:
http://www.ada-microfinance.org/download/3737/sgbs-ethiopia-bm-en.pdf

This study is based on interviews of the owners of 45 micro-, small and medium-sized enterprises (MSMEs) in Ethiopia. All are in urban areas and are served by three microfinance institutions. The sample includes a balance of the service and industry sectors. The goal was to understand the MSMEs’ performance, prospective growth and barriers to success.

Of all the businesses surveyed, 91 percent were founded using family funds. The companies began with an average of three employees and “have multiplied their workforce by a factor of six.” Out of the 769 jobs created by the companies surveyed, 93 percent are held by “non-family workers.”

Regarding interactions with financial institutions, the first loans to the businesses averaged EUR 4,700 (USD 5,475) for a duration of 20 months. All owners reported wanting to grow their business, and 69 percent said access to finances were the greatest obstacle.

In terms of education, 50 percent of owners have a college degree and averaged “7 years of prior business experience.” The author also found that 86 percent of the businesses that grew from the micro category into small or medium-sized enterprises are owned by men.

“Recovery Lending in Africa;” published by the UK Department for International Development (DFID), World Vision UK and VisionFund International; June 2017; 15 pages; available at: http://www.visionfund.org/library/client/documents/Recovery%20Lending%20in%20Africa_FINALREPORT.pdf

In anticipation of the 2015 and 2016 El Niño climate pattern, DFID provided GBP 2 million (USD 2.6 million) to VisionFund to on-lend in three countries with the goal of reducing the negative impacts of the expected droughts (mostly in Malawi and Zambia) and flooding (mostly in Kenya). In particular, the loans, which averaged about GBP 100 (USD 132), were intended to help rural families avoid making choices likely to damage their long-term economic prospects. For example, the loans might help families avoid “taking children out of school, reducing food consumption and sending family members away for labour in order to sustain their livelihoods.” The program provided “14,500 clients with loans…impacting 87,000 beneficiaries.” Of the borrowers, 72 percent are women.

By the end of the study period, the report states “most clients increased productive and household assets,” signifying the end of the setbacks caused by El Niño. However, the researchers also found that “99 [percent] of clients reached have experienced an average of six follow-on shocks such as pests and diseases on crops.”

By Aleks Marceau, Research Associate

Sources and additional resources:

2017 Symbiotics MIV Survey:
http://symbioticsgroup.com/wp-content/uploads/2017/09/Symbiotics-2017-MIV-Survey.pdf

About Symbiotics Group:
https://symbioticsgroup.com

(Very) Small and Growing Businesses in Ethiopia-Preliminary Findings:
http://www.ada-microfinance.org/download/3737/sgbs-ethiopia-bm-en.pdf

About ADA:
http://www.ada-microfinance.org

Recovery Lending In Africa:
http://www.visionfund.org/library/client/documents/Recovery%20Lending%20in%20Africa_FINALREPORT.pdf

About VisionFund International:
http://www.visionfund.org

Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/.