Global microscope on the microfinance business environment 2012

9
Key fi ndings
For the fi fth straight year, Peru remains in the
number one position, resulting from a strongly
competitive microfi nance (MF) sector and
sophisticated regulatory environment. The
improvement in Peru’s business environment for
microfi nance was recorded in a number of areas.
Its regulatory framework for deposit-taking was
strengthened, while the government continued to
promote price transparency and fi nancial literacy.
Peru’s credit bureaus also provide both reliable
and comprehensive information on borrowers.
In second and third place, Bolivia and Pakistan
also showed some of the strongest gains in overall
scores and generally in the same dimensions as
Peru. Bolivia improved its regulatory frameworks
for deposit-taking. Donor-funded projects in
Bolivia are strengthening its microfi nance
accounting capacity and many MFIs are voluntarily
complying with IFRS (International Financial
Reporting Standards). Pakistan improved its
capacity to develop fi nancial transactions through
agents, particularly branchless banking. As a
result of branchless banking regulations issued by
the State Bank of Pakistan (the central bank),
Pakistan increased the number of transactions six
fold (from 3.5m to 20.6m) between March and
December 2011. Both countries improved the
effectiveness of their credit bureaus.
Cambodia is the only newcomer to the top ten.
Cambodia jumped fi ve places from 13th to eight in
2012 owing to the signifi cant progress of credit
bureaus in providing more complete information
© The Economist Intelligence Unit Limited 2012
<strong>Global</strong> <strong>microscope</strong> on the microfi nance business environment 2012
on borrowers in terms of their business and loan
record. Uganda, however, dropped out of the top
ten largely because of an unstable infl ationary
environment, which resulted in an increase of nonperforming
loans and drop in demand for
microfi nance products. Philippines, Kenya, El
Salvador and Colombia remained in the top ten
with 2012 rankings of fourth, fi fth, sixth and
seventh respectively.
At the other end of the list, Vietnam remains
55th out of 55 countries, despite experiencing a
slight improvement in the microfi nance
environment. Vietnam’s heavy government
involvement in the microfi nance sector precludes a
fair and competitive microfi nance environment,
thus limiting its overall score.
Georgia suffered the largest decline in score and
rank in this year’s Microscope study. Dropping 12
places from 26th to 38th, Georgia’s microfi nance
environment has deteriorated with minimal access
to dispute resolution mechanisms and poor price
transparency.
Despite some setbacks, the Microscope 2012
confi rms the continual improvement of the global
business environment for microfi nance. Notably,
28 out of 55 countries in the study improved their
overall score. Across indicators, the biggest
improvement was recorded in the credit bureau
indicator, as only 11 out of the 55 countries have
no functioning credit bureau. The second-largest
improvement was recorded within the use of
fi nancial agents where the private-sector-led