Global microscope on the microfinance business environment 2012

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been proposed, capping interest rates to 4% above
the central bank rate (CBR) and minimum interest
rates on deposits to 70% of the CBR. The
amendment has since held up passage of the
Finance Bill.
■ Madagascar
Key characteristics of the microfi nance business
environment:
l The legislative framework in Madagascar
establishes three tiers and fi ve categories of MFIs.
l The microfi nance sector is split between the
long-established informal co-operative and mutual
sector and the more recently established
professional MFIs.
l There is a national strategy for microfi nance and
a highly structured legal framework and national
promotion unit, which makes it conducive to
establish and upscale MFIs.
Key changes and impacts since last year:
l The continuing political crisis means that very
little has changed with respect to the regulatory
environment, but it has led to an extended
economic downturn, increasing the demand for
loans while also undermining the creditworthiness
of borrowers. MFIs have had to become
increasingly vigilant in monitoring the overall
riskiness of their portfolios.
l The capacity of the supervisory body, the
Commission de Supervision Bancaire et Financière
(CSBF), has been strengthened thanks to specifi c
training programmes. However, there remain
concerns regarding the CSBF’s independence in the
light of the dismissal of the CSBF director-general,
Frédéric Rasamoely, who was replaced by the
appointment of Guy Richard Ratovondrahona, a
close relative of the president’s wife.
l Population of the two new Credit Bureau
databases began in 2011: one for commercial
banks, the other for MFIs.
l In the last year, implementation of the
regulatory framework (which requires the
formalisation of all MFIs via licensing) has come
© The Economist Intelligence Unit Limited 2012
<strong>Global</strong> <strong>microscope</strong> on the microfi nance business environment 2012
into force, so that in practice any and all
unregulated institutions are now barred from
offering microloans.
■ Mozambique
Key characteristics of the microfi nance business
environment:
l Microfi nance in Mozambique is primarily focused
in the southernmost province of Maputo, which is
also the most heavily populated region. Because so
much of the population, particularly in the rural
areas, is unbanked, there has been a multi-year
push to expand access to MFIs in the more rural
provinces.
l In order to incentivise this rural push, there are
many government subsidies accessible for rurally
operating MFIs. The high cost of doing business in
provinces other than Maputo has typically been a
barrier for most MFIs because of the low population
density and lack of infrastructure. However, these
subsidies have distorted the microfi nance market.
l In addition, many of the MFIs are foreignowned.
Combined with the donor money that is
pouring into microfi nance in Mozambique, most of
the push forward (for branch openings,
transparency, and the like) seems to be coming
from outside Mozambique.
Key changes and impacts since last year:
l As in many other Sub-Saharan African countries,
transparency in loan fees is not strong in
Mozambique. However, there have been some
efforts to change this, mainly led by
MFTransparency and the African Microfi nance
Network (AMFIN). MFTransparency started
publishing micro loan pricing data for Mozambique
in February 2012, as part of its transparency
pricing initiative.
l Although there is currently no legal limit on the
interest rates that MFIs are allowed to charge their
clients, there has reportedly been some discussion
within Banco de Moçambique (BDM, the central
bank) circles regarding the possible introduction of
a usury rate.