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

Microfinance in Africa 13
Figure 1.5 Depositor Growth Rates and Average Balances, 2005–10
Loan balance in US$
106
104
102
100
98
96
94
92
90
88
2005
2006
2007
2008
2009
2010
0.5
0.4
0.3
0.2
0.1
0.0
–0.1
–0.2
Deposit balance in US$
Year
Average deposit balance
Depositors (growth rate)
Source: 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.
in 2009 and 2010 (figure 1.5). Regional comparison shows that Africa’s
depositor growth rates were matched only by the Middle East for 2009,
leaving all other regions far behind, with some—such as East Asia and the
Pacific—even experiencing negative growth rates. Yet this trend reversed
in 2010, when East Asia and the Pacific and Europe and Central Asia
experienced positive growth rates while the number of African depositors
contracted.
Borrower growth rates have behaved very differently in Africa: falling
continually for the past five years, they dropped to 8 percent in 2009,
only to fall further in 2010 (figure 1.6). The further contraction in the
borrower growth rate in the latter year has been paralleled only by
Europe and Central Asia, while all other regions recovered and grew
again after contracting during the height of the financial crisis.
Average loan balances are frequently used to explain a further dimension
of outreach. If balances are decreasing, MFIs are going downmarket,
serving poorer clients and vice versa (Cull, Demirgüç-Kunt, and Morduch
2006). The same can be assumed for average deposit balances in general,
because poorer clients can save only smaller amounts in absolute terms.
Looking at Africa, the regional median of average deposit balances has
been decreasing but increased again in 2009 and 2010. Although this
indicates that outreach has been stepped up, it may also be a sign of MFI
clients being able to save less because of inflationary pressures in the
economy. Some support for this theory can be found in the increase in
average loan balances—potentially, these are funds used for consumption