Global microscope on the microfinance business environment 2012

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regulated entities. Many have become banks
because this allows them to offer many more
services and access capital at a lower cost.
l Asomicrofi nanzas, an association for MFIs,
launched in 2011. Currently, there are 26
institutional members that represent about 90% of
the market: banks, co-operatives, fi nance
companies and NGOs. Asomicrofi nanzas is building
platforms to collect, manage and disseminate
information about the market.
■ Costa Rica
Key characteristics of the microfi nance business
environment:
l The microfi nance environment in Costa Rica is
underdeveloped and faces strong competition from
state-owned banks, most notably the Banco
Nacional de Costa Rica, which participates
extensively in microcredit, but also acts as a
second-tier lender. However, requirements to
operate in the market (or to upscale) are low.
l There is no specialised vehicle for microfi nance,
and the majority of MFIs are constituted as nonregulated
NGOs. These tend to be small and
undercapitalised and have few incentives to
formalise or expand, given the limited market
opportunities that exist.
l Regulated fi nancial institutions in Costa Rica
generally uphold high accounting and governance
standards, and adherence to IFRS is mandatory.
Accounting quality and transparency in nonregulated
institutions is mixed, however, with the
highest standards arising from those who are part
of microfi nance networks.
l Transparency in pricing varies but is generally
adequate, as is the level of consumer protection
and credit bureau information.
Key changes and impacts since last year:
l Steps are being taken towards the establishment
of a national development bank following a 2008
law, but it is unlikely that such a bank will begin
operating within the next few years. Although it
could add yet another state-controlled competitor
© The Economist Intelligence Unit Limited 2012
<strong>Global</strong> <strong>microscope</strong> on the microfi nance business environment 2012
to the market, it could also serve to boost secondtier
lending.
l Although social indicators are high by regional
standards, there has been an uptick in poverty and
inequality since the 2009 recession, potentially
raising demand for microcredit.
l Coverage of both the private and public credit
bureaus increased signifi cantly, and the private
bureaus now cover up to more than three quarters
of the population (compared to just over half in the
previous year). However, the quality and breadth
of credit information continues to be uneven.
■ Dominican Republic
Key characteristics of the microfinance business
environment:
l The microfi nance sector is largely
underdeveloped and lacks a comprehensive
regulatory framework. Banks and co-operatives
service over 70% of the market and unregulated
NGOs and foundations attend to the remainder.
Banking supervision has improved in the last ten
years, but transparency and governance practices
are still well below international standards.
l There are no meaningful interest rate
restrictions nor is there standardisation in
transparency, pricing and client protection
standards. A government agency in charge of
protecting clients is beginning to examine lending
practices in the microfi nance sector, but its focus
has been on banks.
l As the market continues to grow, client
education, a fundamental aspect of client
protection, is growing in importance. Banco
ADOPEM, a leading MFI, has developed innovative
programmes—such as radio education segments
and a telenovela that addresses fi nancial
concepts—to teach people how to assess and select
the products that are most appropriate for them.
l Credit history information is very good.
However, non-regulated MFIs are not required to
report to the credit bureaus.