In Central And Eastern Europe - Microfinance Centre

CHAPTER 1
INTRODUCTION
Chapter 1 describes the study’s goals and the definition of microfinance on which it is based. It also contains a list of the many
countries in Central and Eastern Europe and the New Independent States, categorised by subregion. Finally, the chapter identifies
the audiences for whom we expect this report to be particularly useful, and suggests some ways in which to use it.
The Goals of the Study
This report is based on the first empirical study of the microfinance industry in Central and Eastern Europe and
the New Independent States (CEE and NIS). The main source of its findings is a survey of the region’s microfinance
institutions (MFIs) and funders conducted in 2001 by the Microfinance Centre for Central & Eastern
Europe and the New Independent States, headquartered in Warsaw, Poland.
The study achieved its four main goals:
• The creation of an empirically based, comprehensive picture of the current state of the microfinance industry
in the region
• A comparison of the performance of the region’s main organisational models for microfinance delivery—
credit unions, nongovernmental organisations (NGOs), “downscaling” commercial banks, and “greenfield”
microfinance banks
• An analysis of the main barriers to growth and development confronting microfinance in the region—
specifically, access to finance and legal and regulatory constraints
• A framework for action for the region’s various microfinance actors, the goal being to increase the scale,
outreach to the poor, financial viability, and impact of microfinance in the region
The first three goals in this list are, however, subject to some data limitations. These limitations reveal areas for
further study but do not, we believe, significantly call the accuracy of the study’s findings into question.
The first goal—an empirical picture of the region’s microfinance industry—depended heavily on the study’s
survey responses. These responses, supplemented with secondary-source data from annual reports and Web sites,
gave us the data we needed. Not surprisingly, we still ended up with less than 100% of the data sought. Of the
MFIs we were able to identify, 15% of the region’s credit unions, 43% of the NGOs, 38% of the commercialbank
downscaling programmes, and 67% of the microfinance banks responded to our survey, as did 71% of the
funders. When combined with secondary-source data, the study’s coverage increased to 95% of identified credit
unions, 74% of NGOs, 100% of microfinance banks, and 73% of downscaling programs, along with the same
71% of funders. Hence, while the study’s findings present a reliable picture of the size and performance of a significant
majority of the region’s microfinance industry, it does not necessarily represent the entire sector.
(Appendix 2 has further details of the study methodology and data limitations.)
Introduction