Financial Sector Development in Africa: Opportunities ... - World Bank

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8 Jarotschkin The chapter starts with an examination of some key outreach indicators, comparing across world regions and African subregions. Indicators that provide information on outreach are (1) MFI’s financial penetration; 1 (2) the percentage of borrowers who are female; (3) average loan balances; and (4) the percentage of rural clients, rural automated teller machines (ATMs), and points of sale (POS). The next section will focus on the impediments to implementing this outreach and, where possible, some best-practice suggestions from across Africa. While impediments in this context are numerous, this chapter chooses to focus on four prominent ones: (1) cost constraints, (2) deficiencies in understanding clients’ needs, (3) lack of or inefficient prudential and nonprudential regulation, and (4) the absence of financial infrastructure. In an effort to keep the depiction of impediments and some best-practice solutions close to each other, each obstacle description will begin with a summary recommendation, and, where possible, provide examples of pioneering MFIs and progressive regulation or financial infrastructure in Africa. A more detailed illustration of the same will follow. Microfinance Outreach Africa’s microfinance industry has been growing. The continent’s total asset increase over the last five years has been in line with a worldwide trend of a growing industry. On the whole, MFIs apparently weathered the financial crisis better than most industries until 2010, looking at asset growth rates. Yet, in 2010 asset growth rates not only slumped but also contracted and have yet to return to their precrisis growth levels ( figure 1.1; MIX and CGAP 2009). Banks, such as Equity Bank in Kenya and Capitec in South Africa, have garnered special attention over the last years, holding roughly US$1.7 billion and US$2.1 billion, respectively, in 2010. Both banks grew notably even throughout the crisis, even though Equity Bank could not sustain the gigantic precrisis growth rates of 190 percent per annum that it recorded in 2007 (up from roughly 82 percent growth per annum in 2006) after listing on the Nairobi Stock Exchange. Outreach to Clients below National Poverty Lines While the total assets of microfinance institutions have been growing, the overall reach of the industry has remained minor. In the overall picture of finance, MFIs in Africa make up only a small part of total assets compared with the MFIs in other world regions (table 1.1). In 2010 MFIs in Africa reported reaching nearly 7 million borrowers and a significantly larger
Microfinance in Africa 9 Figure 1.1 Total Asset Growth across Regions, 2005–10 35,000 30,000 25,000 US dollars 20,000 15,000 10,000 5,000 0 2005 2006 2007 2008 2009 2010 Year Africa East Asia and the Pacific Europe and Central Asia Latin America and the Caribbean Middle East South Asia Source: MIX Market database 2012, http://www.themix.org/publications/mix-microfinance-world. Note: All figures provided by MIX Market represent trends only because not all MFIs in a country report to the database. Table 1.1 Total Borrowers, Depositors, and Penetration Rates, 2010 Measure Africa North Africa East Africa Southern Africa Central Africa West Africa Population below national poverty line (millions) 437.9 31 91.3 73.6 65.8 176 Total borrowers (millions) 7.1 1.8 2.5 0.6 0.3 1.8 Penetration rate for borrowers (%) 1.6 5.7 2.8 0.8 0.5 1.0 Total depositors (millions) 17.5 0.03 10.5 0.6 1.1 5.3 Penetration rate for depositors (%) 4.0 0.1 11.5 0.8 1.6 3.0 Sources: Author’s calculations based on the World Bank’s World Development Indicators (database), http:// data.worldbank.org/indicator; the CIA World Factbook, https://www.cia.gov/library/publications/the-worldfactbook/; MIX Market database 2012, http://www.themix.org/publications/mix-microfinance-world. Note: All figures provided by MIX Market represent trends because not all MFIs in a country report to the database. 17 million depositors. With considerably more borrowers than Eastern Europe, Central Asia, and the Middle East, these figures still bring Africa’s borrower penetration rate to just 1.6 percent 2 — significantly lower than all other regions globally, aside from Eastern Europe and Central Asia. The savings penetration rate is somewhat higher at 4.0 percent.
Page 1: lic Disclosure Authorized Public Di
Page 5 and 6: Financial Sector Development in Afr
Page 7 and 8: Contents Foreword Acknowledgments E
Page 9 and 10: Contents vii PART III Safeguarding
Page 11: Contents ix 4.4 Size of Mortgage Lo
Page 14 and 15: xii Foreword In their own way, each
Page 16 and 17: xiv Acknowledgments led by Stefan N
Page 18 and 19: xvi Editors and Contributors of Acc
Page 20 and 21: xviii Editors and Contributors deve
Page 22 and 23: xx Abbreviations FSB FSD FSDT FSI G
Page 24 and 25: 2 Beck and Maimbo to the bottom of
Page 26 and 27: 4 Beck and Maimbo advocate a “bui
Page 29: CHAPTER 1 Microfinance in Africa Al
Page 33 and 34: Microfinance in Africa 11 A Special
Page 35 and 36: Microfinance in Africa 13 Figure 1.
Page 37 and 38: Microfinance in Africa 15 Impedimen
Page 39 and 40: Microfinance in Africa 17 Figure 1.
Page 41 and 42: Microfinance in Africa 19 to physic
Page 43 and 44: Microfinance in Africa 21 Understan
Page 45 and 46: Microfinance in Africa 23 Some exam
Page 47 and 48: Table 1.2 Fanikisha Project Type of
Page 49 and 50: Microfinance in Africa 27 world reg
Page 51 and 52: Microfinance in Africa 29 implicitl
Page 53 and 54: Microfinance in Africa 31 Financial
Page 55 and 56: Microfinance in Africa 33 situation
Page 57 and 58: Microfinance in Africa 35 have yet
Page 59 and 60: Microfinance in Africa 37 9. This i
Page 61 and 62: Microfinance in Africa 39 Ehrbeck,
Page 63 and 64: CHAPTER 2 Mobile Financial Services
Page 65 and 66: Mobile Financial Services in Africa
Page 69 and 70: Table 2.2 African First- and Second
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Mobile Financial Services in Africa
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Table 2A.1 ID and SIM Registration
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79 Guinea Yes http://fr.allafrica.c
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Togo Yes http://www.mediaf.org/fr/t
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84 Coates and Hofmeister chains. It
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86 Coates and Hofmeister unions in
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88 Coates and Hofmeister trap for t
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90 Coates and Hofmeister Sources of
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92 Coates and Hofmeister Box 3.1 Ca
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94 Coates and Hofmeister farm input
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96 Coates and Hofmeister Technical
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98 Coates and Hofmeister agree to b
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100 Coates and Hofmeister Box 3.3 C
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102 Coates and Hofmeister Attitudes
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104 Coates and Hofmeister developin
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106 Coates and Hofmeister specifica
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108 Coates and Hofmeister ———
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CHAPTER 4 Housing Finance Simon Wal
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Housing Finance 113 Figure 4.1 Mort
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Housing Finance 115 countries, down
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Housing Finance 117 • The housing
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Housing Finance 119 limited to a fe
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Housing Finance 121 housing and inf
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Housing Finance 123 borrowed by ext
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Housing Finance 125 Box 4.1 Afforda
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Housing Finance 127 Box 4.2 South A
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Housing Finance 129 the degree to w
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Housing Finance 131 markets is the
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Housing Finance 133 are unable to o
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Housing Finance 135 greenfield vent
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Housing Finance 137 Figure 4.5 Obst
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Housing Finance 139 changes in the
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Housing Finance 141 • Introduce a
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Housing Finance 143 Box 4.6 Progres
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Housing Finance 145 of the impact o
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Housing Finance 147 funds. Within s
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Housing Finance 149 Hassler, O., an
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CHAPTER 5 The Reform Agenda for Fin
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The Reform Agenda for Financial Reg
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PART IV Financial Sector Reform: Ac
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180 Dafe lack access to external in
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182 Dafe having a positive theory o
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184 Dafe In sum, high transaction c
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186 Dafe through the selective allo
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188 Dafe institutions of the indust
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190 Dafe the boundaries of informat
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192 Dafe range of examples of both
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194 Table 6.1 Period Since the end
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196 Dafe state-owned financial inst
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198 Dafe The degree of success, in
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200 Dafe Although the current conse
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202 Dafe The interdependence of the
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204 Dafe in the 1980s and 1990s wer
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206 Dafe Alternative Approaches to
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208 Table 6.2 Approach to explain/
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210 Dafe state-centered, and interd
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212 Dafe particularly important fac
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214 Dafe Table 6.3 (continued) Mana
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216 Dafe activism in the developing
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218 Dafe structures can undermine m
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220 Dafe Conclusion There is strong
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222 Dafe policy is not straightforw
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224 Dafe banks that open agents in
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226 Dafe Bankable Frontier Associat
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228 Dafe Goldsheid, R. 1958. “A S
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230 Dafe ———. 2001. Types of
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