MICROBANKING BULLETIN - Microfinance Information Exchange

BULLETIN HIGHLIGHTS AND TABLESBULLETINHIGHLIGHTS AND TABLESBulletin HighlightsCraig F. ChurchillThe Bulletin database provides an excitingopportunity to answer some of the challengingquestions facing the microfinance industry. Inkeeping with the theme of this issue, this Highlightssection will explore the potential trade-off betweentarget market and self-sufficiency by looking closelyat the characteristics of financially self-sufficientmicrofinance institutions.As shown in Figure 1, the number of financially selfsufficient(FSS). 14 MFIs has increased over time,which reflects both the maturation of the industry aswell as our increasing success in encouragingorganizations to participate in the Bulletin.IssueFigure 1: Bulletin Participants over Time#1Oct1997#2July1998#3July1999#4Feb2000#5Sept2000# of All MFIs 28 72 86 104 114# of FSS MFIs 21 34 40 60 65% FSS 75 47 47 58 57Between the first and second issues, the Bulletinwaived the requirement that participating institutionshave a FSS ratio of at least 75 percent in an effortto broaden and deepen its coverage. That openedthe floodgates for a large increase in newparticipants, many of which were smaller, newer,and not sustainable. Some of these organizationshave improved over time, so that now three out ofevery five participants are financially self-sufficient.Of the financially self-sufficient MFIs, 24 institutionshave a FSS ratio of 110 percent or higher, whichroughly translates into an AROA above 4 percent.Characteristics of Financially self-Sufficient MFIsA closer look at the set of FSS MFIs revealsconsiderable variety. As shown in Figure 2, withthe exception of the very young programs inMENA/Central Asia, each peer group has at leastone FSS MFI, and 8 of the 14 groups have amajority that is financially self-sufficient. (For more14 The definitions for Bulletin ratios can be found in “The Index ofRatios and Tables” on page 39.details about the Bulletin peer groups, see “AnIntroduction to Peer Groups and Tables” followingthe Highlights section.)Figure 2: Self-sufficiency by Peer GroupPeer Group# of FSS # of non-MFIs FSS MFIs1. Latin America Large 10 12. Latin America Medium Broad 9 43. Latin America Medium Low-end 11 24. Latin America Small Low-end 1 45. Latin America Credit Unions 10 16. Asia Large 3 27. Asia-Pacific 5 08. South Asian 3 69. Africa Small 1 810. Africa Medium 2 411. Africa/MENA 4 212. MENA/Central Asia 0 613. Eastern Europe Broad 2 614. Eastern Europe High-end 4 3Total 65 49Figure 3 provides the characteristics of the top tenperforming Bulletin MFIs ranked by their financialself-sufficiency ratio.Figure 3: Characteristics of the Top Ten MFIsbased on Financial Self-sufficiency RatioRegion Target Market Methodology Size1. LA Broad Individual Medium2. LA High Individual Large3. Africa Broad Individual Medium4. LA Low Individual Medium5. Asia Low Solidarity Large6. LA Low Village Medium7. Asia Broad Solidarity Large8. LA Broad Solidarity Medium9. MENA Broad Individual Large10. LA Broad Individual LargeWith the exception of small programs andorganizations in Eastern Europe, all regions, targetmarkets, methodologies and sizes of institutions arerepresented on the Top Ten list. Although the topfour institutions all use an individual lendingMICROBANKING BULLETIN, SEPTEMBER 2000 29