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

14 Jarotschkin
Figure 1.6 Loan Growth Rates and Averages Balances, 2005–10
(regional median)
Loan balance in US$
400
350
300
250
200
150
100
50
0
2005
2006
2007
2008
2009
2010
0.4
0.3
0.2
0.1
0.0
–0.1
–0.2
–0.3
–0.4
Deposit balance in US$
Year
Average loan balance
Active borrowers (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.
smoothing (MIX and CGAP 2009). Simultaneously, higher average loan
balances illustrate MFIs rendering services to marginally richer clients
over the past years. Although the regional average of loan balances has
been notably larger than the regional median, the latter has been growing
faster over the years. This illustrates an upmarket movement not only
for the upper spectrum of MFIs but also for the median MFI.
On a disaggregate level, the business decision has been evident for
Equity Bank (in Kenya) and Capitec (in South Africa), which have continually
increased their average loan balances over the last years until
2010, up by 100 percent (2007) and 82 percent (2009), respectively.
Increasing average loan balances and average deposit balances are certainly
not required—some MFIs have illustrated otherwise. For example,
Compartamos, the Mexican MFI, after issuing an initial public offering
(IPO) in 2007, expanded its client base in the same market segment—as
strong borrower growth post-IPO and constant average loan balances
indicate. Yet, for existing Compartamos customers, the equity influx did
not come with the advantage of lower interest rates; Equity Bank, however,
did decrease interest rates. Indeed, Equity halved its median yield on
portfolio, from roughly 40 percent (2006) to 20 percent (2007) after
publicly listing on the Nairobi Stock Exchange on August 7, 2006, and
was at 17 percent in 2010. Although Capitec did not publicly list, the
bank also decreased its median yield to portfolio from 188 percent
(2005) to 47 percent (2010).