AnnuAl RepoRt FY 2008 - Microfinance Information Exchange

Annual ReportFY 2008MicrofinanceInformationExchange, Inc.July 2007 – June 2008

Letter from the Chairman of the BoardA Good Year for Transparency2008 proved to be another good year for MIX. The organization furthered its reputationas the transparency backbone of the microfinance industry by increasing itsreach of coverage, and by providing analysis and reports on microfinance marketsthroughout the developing world.MIX has built a unique and powerful global reporting platform for microfinanceand our coverage improved significantly. At the end of the 2008 fiscal year –June 30, 2008 – 1225 MFIs from 93 countries serving more than 66 million borrowersand 71 million savers were reporting to MIX, and that number continues toincrease. The web portal, MIX Market (www.mixmarket.org), is providing fresh,high quality data on MFIs, as well as information on funding organizations, networksand other service providers. The benchmarking reports, published in theMicroBanking Bulletin, are the single most important reference for performancemetrics in microfinance.The microfinance industry recognizes MIX’s contributions and expertise. Academicresearchers, investment banks, private sector investors and funders, multi-lateraland bi-lateral development organizations, and governments all rely on MIX for ourdata services and statistics on the performance of microfinance institutions and theindustry overall. The mainstream media also recognizes MIX’s role in the microfinanceindustry; in recent months, The Financial Times, The Economist, Forbesmagazine and Time magazine all cited MIX data.Obviously, there is still much more work to do at MIX. We need to continue expandingour coverage by focusing on regions that do not have strong representation inMIX data. We also need to focus on our data quality to ensure that the informationwe are making publicly available is as fresh and clean as possible. We need to offernew information services on MFI products, funding structure information and socialperformance data to respond to the evolving demands of our clients. And finally,we need to invest in our IT platform to better deliver our information services andto meet user expectations, as well as to ensure stability and security of our database.These will be the priorities for MIX for the next 12 months, and beyond.2

2009 is likely to be a transformational year for microfinance. Liquidity shortages,currency dislocations and global recession are likely to affect microfinance institutionsand their clients. The global crisis will test the assumption that microfinance isresilient to economic shocks and can continue to access funding and maintain highquality loan portfolio in time of turmoil. More than ever, MIX is needed to monitorthe risks of microfinance and provide market participants with reliable informationservices on the performance of MFIs. MIX’s global reporting standards, informationplatform and benchmarks reports are precious resources for the industry.In closing, I would like to thank MIX’s clients: MFIs, investors, governments,researchers and analysts for their trust and participation in our services. We lookforward to your feedback to help us continually improve our work. I’m grateful toMIX’s partners in the field, helping MIX to collect data and identify trends; withoutthese partners, MIX would not be able to achieve the reach that we do. I wouldalso like to recognize MIX’s generous donors for their long term commitment andsupport of the public mission of MIX.And last but not least, on behalf of all the Board members, I would like to thank thestaff at MIX for their dedication to strengthening microfinance and for the exceptionalwork they do.Xavier ReilleChairman of the BoardMicrofinance Information Exchange, Inc.3

Our SponsorsMIX is a private, not for profit company,founded by CGAP in partnership withthe Citigroup Foundation, the DeutscheBank Americas Foundation, the OpenSociety Institute, the RockdaleFoundation and others.MIX relies on financial and non-financialsupport from a group of Core Funders.They represent a diverse group of organizationsinterested in fostering transparencyand data analysis within the microfinanceindustry, and MIX is grateful tothem for their support and assistance.4

MIX's Core Funders are:Bill & Melinda Gates FoundationGuided by the belief that every life has equal value,the Bill & Melinda Gates Foundation works to helpall people lead healthy, productive lives. In developingcountries, the Foundation focuses on improvingpeople’s health and giving them the chance to liftthemselves out of hunger and extreme poverty. In theUnited States, the Foundation seeks to ensure that allpeople — especially those with the fewest resources— have access to the opportunities they need to succeedin school and life.CGAPConsultative Group to Assist the Poor (CGAP) is aconsortium of 33 public and private developmentagencies working together to expand access tofinancial services for the poor in developing countries.It is a resource center for the entire microfinanceindustry, where it incubates and supports innovativeproducts, cutting-edge technology, novel deliverymechanisms and concrete solutions to the challengeof expanding microfinance.Citi FoundationThe Citi Foundation is committed to enhancingeconomic opportunities for individuals and families,particularly those in need, so that they can improvetheir standard of living. Globally, the Citi Foundationfocuses its strategic giving on microfinance, smalland growing businesses and sustainable enterprises,education, financial education and asset building, theenvironment, and community development.5

MIX's Core Funders are:Deutsche Bank Americas FoundationThe Foundation’s work focuses on communitydevelopment projects, education programs, arts,and initiatives for fostering intercultural understanding.The Foundation is also the center of competence forDeutsche Bank’s global microfinance programs. Theactivities of the Americas Foundation are financedsolely from Bank donations.IFADIFAD was created 30 years ago to tackle rural poverty,a key consequence of the droughts and famines of theearly 1970s. Since 1978, IFAD has invested more thanUS$10 billion in low-interest loans and grants that havehelped over 400 million very poor rural women and menincrease their incomes and provide for their families.IFAD is an international financial institution and a specializedUnited Nations agency. It is a global partnershipof OECD, OPEC and other developing countries.Today, IFAD supports more than 200 programs andprojects in 85 developing countries and one territory.6

Omidyar NetworkPierre Omidyar, the founder of eBay, and his wife,Pam, established Omidyar Network based on thebelief that every person has the potential to make adifference. Since 2004, Omidyar Network has workedwith partners to create opportunities for people totap that potential, enabling them to improve theirlives and make powerful contributions to theircommunities. These efforts are organized aroundtwo investment initiatives — Access to Capital, andMedia, Markets and Transparency.Open Society InstituteThe Open Society Institute (OSI), a private operatingand grantmaking foundation, aims to shape publicpolicy to promote democratic governance, humanrights, and economic, legal, and social reform. On alocal level, OSI implements a range of initiatives tosupport the rule of law, education, public health, andindependent media. At the same time, OSI works tobuild alliances across borders and continents on issuessuch as combating corruption and rights abuses.7

The MIX TeamThe staff at MIX is comprised of highlyskilled professionals dedicated to thesuccess of the microfinance industry,with extensive experience in the microfinance,development and financialsectors. The team continually seeks outnew opportunities amid the changingmicrofinance landscape, stayingabreast of regional trends, regulationsand other activities and issues that mayimpact the sector.MIX’s organizational structure emphasizesour core business of data collectionand analysis. Of the 12 people MIXhad on staff in FY 2008, nine — a full75 percent — were part of the analystteam. By keeping the focus on ourarea of expertise, MIX has been able toevolve along with the sector, keepingpace with changes while remainingoperationally efficient.Organizational ChartEXECUTIVE DIRECTORCOO/Directorof AnalysisDirector of MarketingCommunicationsBusiness ManagerLead ResearcherAnalyst, Anglophone AfricaAnalyst, Francophone AfricaAnalyst, Eastern Europe/CentralAsia and East Asia/PacificAnalyst, Middle East/NorthAfrica and South AsiaManager, Latin America/CaribbeanLead Analyst, Latin America/CaribbeanJunior Analyst, Latin America/Caribbean8

Board of DirectorsMIX is overseen by a Board of Directorswith expertise in the microfinancesector. The Board is actively involvedin strategy and long-term growth ofthe organization.Xavier ReilleChairman of the BoardCGAPRobert AnnibaleDirectorCitigroup, Inc.Neal DeLaurentisDirector and TreasurerOpen Society InstituteMartin HoltmannDirectorInternational Finance CorporationAsad MahmoodDirectorDeutsche Bank GroupCrystal HutterObserverOmidyar NetworkCynthia StoneObserverStandard and Poor's9

The mission at MIX is simple: Support the growth of the microfinance industry byproviding a world-class public information platform.MIX: Strengthening the Microfinance IndustryMicrofinance, despite its non-profitorigins, is similar to any other growingindustry — it has to build strongretail institutions for a healthy sectorto develop. The tools used to buildstrong institutions are the same asthose in other industries — data collection,analysis, benchmarking, trendsetting, and in particular, the processof financial transparency. Transparencyis a prerequisite for any efficientmarket. It is only after these practicesare implemented that microfinance asa sector will be fully integrated intomainstream markets, finally allowingthe industry to grow to scale and reachits full potential.As the leader in business informationand performance data for the microfinanceindustry, MIX provides theplatform and the tools necessary formicrofinance institutions to becometransparent. Through MIX Market —MIX’s global online platform — microfinanceinstitutions can publish financialand operational information, a criticalstep on the path to transparency, andnecessary for long-term sustainability.The MicroBanking Bulletin (MBB)publishes annual benchmarks andtrend data, giving stakeholders a viewof the industry from an aggregateperspective, while other MIX publicationsprovide regional and countryanalysis and trends.The microfinance sector continues toevolve as it responds to customers’needs. MIX’s efforts to bring abouttransparency are an important elementof the development of the sector as itexpands to provide financial servicesto the world’s unbanked.MIX’s Three Primary Objectives are to:• Improve MFI performance and transparency.• Boost public and private investment in microfinance through the increasedexchange of information.• Lead benchmarking activities.10

Building on Knowledge: A Strategic ApproachFrom a village credit co-operative with 75customers to a regulated bank servingmore than 6 million microborrowers,microfinance institutions take a varietyof forms and run the gamut of sizes.Due in part to these massive variationsand because of the very nature ofmicrofinance, which is to serve theunbanked population, no definitivefigure exists for the number of microfinanceinstitutions (MFIs) in operationsthroughout the developing world.Because of this diversity and in manycases, the informality of the institutions,we recognize that we cannotcollect data on every MFI operating.Therefore to ensure our MFI coverageis as representative and inclusive aspossible, we have developed a strategythat allows us to cover the marketplaceas it expands and evolves.In 2007, MIX sought the advice of agroup of industry experts to help usidentify the leading MFIs throughoutthe developing world, based on anumber of factors, including size,product innovation and length of timein operation. These MFIs have beentermed “Tier 1, because of the levelof influence they exert in the industry.Once these were identified, we set outto ensure their inclusion in our database.We then moved on to Tier 2 MFIs,focusing on identifying and includingthem in our coverage. Through this topdown strategy, MIX covers the vastmajority of the microcredit market.This targeted approach also allows forearly identification of greenfields andup-and-coming MFIs, as we seek toinclude those organizations showingpotential to change the market withinnovative business models or interestingproduct lines. Tracking and includingthese MFIs in our database providesthe broadest representation of organizationspossible.12

MIX Market: Bridging the Information GapMIX Market (www.mixmarket.org) isan online platform for microfinance institutions(MFIs) to publicly share businessinformation and performance datawith stakeholders and others who areinterested in the microfinance industry.The website also includes informationon other segments in the microfinancesector: funders and investors publishinformation on their businesses andthe types of MFIs they are interestedin working with, and networks andother service organizations publishbusiness data and affiliate information,making MIX Market a true informationexchange platform.Over the past several years, we havefocused on comprehensive and inclusivecoverage for MIX Market, workingto ensure all regions of the developingworld were appropriately represented.This is a continual effort, as marketsopen up in regions that previouslylacked representation and as moreMFIs become transparent.As we have expanded coverage on MIXMarket, we have sought to improve thetime to market for publishing outreachand performance results reported byMFIs. From an average lag of 12 to 18months in 2005, we now commonlypost MFI results in less than six monthsafter fiscal year end. For most MFIs, thismeans that our staff has analyzed andposted results within one month followingthe availability of the MFI’s auditedfinancial statements. In FY 2008,unaudited results for leading MFIs wereposted on MIX Market within threemonths of their year end close.“Our presence on your site is critical for dissemination of information to our investorsand others who are interested in us . . . MIX Market is doing a great service toall microfinance players — small and big, start-ups and stalwarts. Please keep upthe good work.”Manab Chakraborty, Mimo Finance, Dehradun, India14

*Regional Abbreviations:Africa — sub-Saharan AfricaEAP — East Asia/PacificECA — Eastern Europe/Central AsiaLAC — Latin America/CaribbeanMENA — Middle East/North AfricaS. Asia — South AsiaMIX Market MFIRegional Breakdown*236 S. Asia40 MENA318 LAC226 ECA131 EAPRegistered Userson Registered MIX Market Users12,00010,0008,0006,0004,0002,000273 Africa0200320042005200620072008Number of PublishedNumber MFIs on of MIX Published Market MFISAverage Number of MonthlyNumber Visits to of MIX Visits Market150035,000120030,00025,00090020,00060030015,00010,0005,00002003200420052006200720080200320042005200620072008FY 2008 Achievements• MIX Market had data on 1225 MFIs, including all Tier 1 and most of the Tier 2institutions throughout the developing world by end of FY 2008.• MIX Market had 10,038 registered members by end of FY 2008.• MIX Market had information on 100 funding organizations.• MIX Market had information on 167 networks and service organizations.• MIX Market averaged more than 30,000 visits each month in FY 2008.• Time between financial year close and data availability was 1 to 6 months.15

Benchmarks and Trend Lines: Providing theTools for MFIs to SucceedBenchmarking is a process for monitoringand improving the performance ofthe microfinance industry as a wholeand microfinance institutions individually,allowing for the highest level ofcomparability between organizationsand peer groups. It provides MFIs withan important tool to assess areas ofstrength and weakness, and can helpan organization continuously challengeits practices and improve performance.MIX leads the industry in benchmarkingfor MFIs, producing annual industrybenchmarks and trend lines, and customizedperformance reports (CPRs)for each MFI that participates in ourbenchmarking efforts.To create comparable benchmarks thatare meaningful for MFIs and other stakeholders,we place MFI data into peergroups, based on a number of criteria.The peer groups are designed to bespecific enough to provide useful toolsfor managers and board members tocompare their organization’s performanceto similar institutions. Criteriainclude age, charter type, financialintermediation, lending methodology,outreach (in terms of borrowers),profit/not-for-profit status, region,scale and sustainability.MIX produces annual trend lines aswell, based upon the benchmark series,to show a year-on-year view of MFIFY 2008 Achievements• MicroBanking Bulletin Issue Number 15, published in the autumn of 2007,featured benchmarks based on data from 704 MFIs, the largest data set to datefor the benchmarks.• MicroBanking Bulletin Issue Number 16, published in spring, 2008, includedtrend lines based on performance data from a record 340 MFIs in 68 countriesreporting data for 3 years, from 2004 to 2006, for the most robust set ofperformance trends to date.• 704 CPRs were produced for MFIs participating in the data collection processfor the benchmarks.16

“Having an independent report like this (MIX CPR) is a valuable resource.”Director, Urwego, Rwandaperformance. The trend lines use datafrom MFIs that have participated inthe benchmarks for the past threeconsecutive years. Through the trendlines, we can see how the industry haschanged and evolved, and even makeassumptions about its growth in futureyears. As the data set continues toincrease, the trend lines become morerobust, showing an ever more inclusiveand long-term view of the industry andMFI performance.The benchmarks and trend lines arepublished in MIX’s semi-annual journal,The MicroBanking Bulletin, and on ourwebsite at www.themix.org.CustomizedPerformance ReportsMFIs that participate in the benchmarkingprocess receive a customizedperformance report (CPR) from MIX,which allows them to compare theirown performance against that of theirpeers. This report provides MFI managersand directors a tool with which tounderstand their institution’s performance,standardized in accordance withinternationally accepted terms, adjustmentsand indicators, and comparedwith, or benchmarked to, the performanceof other, similar institutionsbased on a series of characteristics.MFIs use their CPRs to help with businessprocess improvements, goalsettingand to create action plans. Theyalso use the reports as a tool to helpattract more public and commerciallyorientedinvestors to their MFI.FY 2008 AchievementsThe 2006 benchmarks, published in autumn, 2007, showed the broadest regionalparticipation by MFIs to date:· Africa: 119 MFIs, representing 17% of the data set.· Asia: 194 MFIs, representing 28% of the data set.· Eastern Europe and Central Asia: 126 MFIs, representing 18% of the data set.· Latin America and the Caribbean: 227 MFIs, representing 32% of the data set.· Middle East and North Africa: 37 MFIs, representing 5% of the data set.17

Thought Leadership: Research in 2008MIX provides research based on ourunique set of capabilities and comprehensivedatabase, with the goalof addressing questions percolatingin the microfinance community. Ourresearch reports, analysis and data setsare widely used and frequently citedby other organizations and researchteams, including World Bank, DeutscheBank, Fitch Ratings, Morgan Stanley,Citigroup and CGAP, as well as by themedia, including Forbes magazine, Timemagazine, Financial Times, and others.18

Research Publishedin FY 2008:Resilience of MFIs to MacroeconomicFactors. This paper quantifies theimpact that macroeconomic variablessuch as inflation and domestic growthhave on the portfolio quality of MFIs.In addition, the paper identifies the maininternal drivers of portfolio quality ofMFIs based on a sample of more than640 MFIs in 88 countries, covering mainlythe period 2000 – 2006.How Many MFIs and Borrowers Exist?In discussing the market penetration ofmicrofinance institutions throughoutthe developing world, hard data can bedifficult to come by. MIX combines datafrom our own database (MIX Marketand the MicroBanking Bulletin), theMicrocredit Summit Campaign, andthe Inter-American Development Bank(IADB) for comprehensive figures onmarket coverage. This downloadable filecovers 100 countries, 2,207 microfinanceinstitutions, and 77 million borrowers,and is updated semi-annually.Efficiency Drivers of MFIs: The Case ofOperating Costs. Operating expensesrepresent over three-quarters of allexpenses of MFIs, and understandingits drivers is very useful in understandingthe main differences in costs betweenMFIs with different levels of outreachand depth of outreach. Among the maindrivers of efficiency, this research indentifiesloans sizes and ages of the MFIs.Alternative Methods for Comparisonsof Loan Balances. In order to makeinternational comparisons, standardmicrofinance practice normalizesloan balances by converting them toa common currency (US dollars) andcomparing them to some measure oflocal income, typically GNI per capita.This piece investigates the impact ofincome inequality and exchange rateson measuring and ranking microfinanceoutreach using two other methods.19

Standards: Helping to Develop Best PracticesMicrofinance has grown and evolvedsignificantly in the last several years,yet as an industry, it is still quite young,especially when compared to the formalfinance sectors such as banking and thesecurities market. As such, microfinanceis still struggling to establish a series ofwidely agreed upon and adopted performanceand reporting standards.With expertise in financial analysisand benchmarking for microfinanceinstitutions, MIX is a leader in creatingand tracking standards. The tools thatMIX has helped develop and implementfor use by MFIs are based upon universallyaccepted accounting standards.As MIX works to increase MFI adoptionof these standards, we also havebroadened our contribution to includetechnology and social performance.TechnologyMIX has developed a software systemfor data processing using XBRL, abusiness reporting “language” createdspecifically to streamline theprocessing and reporting of financialdata. With implementation by largescale organizations such as the FederalDeposit Insurance Corporation (FDIC)and the Securities and Exchange Commission(SEC) in the United States, theTokyo Stock Exchange and ShenzhenStock Exchange in Asia and the Bank ofSpain and National Bank of Belgium inEurope, XBRL is swiftly becoming thebusiness standard for the banking andsecurities industries worldwide.By implementing XBRL, MIX is introducinga standard reporting frameworkfor microfinance institutions, helpingthe industry become integrated intomainstream markets.FY 2008 AchievementsMIX produced its first data set (based on 2006 data) using XBRL to processthe data, allowing for better use of human resources and streamlining ofinternal processes.20

Social PerformanceSocial performance reporting is an areaunique to microfinance; there is nobanking or securities industry equivalent.This is because microfinance byits very nature is intended to affect asocial bottom line — whether it is reducingpoverty, creating employmentor empowering marginalized groups,microfinance institutions were createdwith a social mission in mind.However, monitoring the social impactof MFIs has not been done in anyconsensual, standardized manner, andquestions abound regarding the process,including what indicators shouldbe used to monitor social performance,how should they be tracked, and whowill track them.The Social Performance Task Force, aworking group of MFI managers andpractitioners, networks, funders andother stakeholders, including MIX,was created to help answer someof the questions. The Task Force hasbeen charged with clearly definingsocial performance and addressingissues about measuring and managingsocial performance.As an integral member of the workinggroup, MIX, together with other participants,created a pilot survey on socialperformance indicators and reached outto MFIs to participate in the questionnaire.We helped compile the responses,and in the annual Social PerformanceTask Force meeting this past June, MIXpresented the results of the pilot survey.In this meeting, based on the surveyresults MIX presented, the first set ofsocial performance indicators wereadopted by the Task Force.FY 2008 Achievements• As a member of the Social Performance Task Force, MIX played an integralrole in creating and delivering to MFIs a pilot survey to help establish socialperformance indicators.• Compiled and presented the results of the social performance pilot surveyin the annual Social Performance Task Force meeting.21

“MIX is the information backbone of the microfinance industry.”Director of Risk, Citigroup Microfinance GroupCovering the Developing WorldMIX’s staff is active in every region ofthe developing world, participating inconferences, workshops and seminarsto further MIX’s message of financialtransparency and to ensure we areat the leading edge of changes in theindustry. MIX works closely with partners— such as networks and otherservice providers — in each region fora better understanding of the marketplaceand to promote MIX’s efforts.MIX produces a number of reports andanalyses for each region based on ourextensive database. All reports are availableto the public at www.themix.org.22

FY 2008, MIX Presented Datafrom the Following Countries:· Angola· Benin· Burkina Faso· Burundi· Cameroon· Central AfricanRepublic· Chad· Congo· Congo,DemocracticRepublic of the· Ethiopia· Gambia· Ghana· Guinea· Kenya· Madagascar· Malawi· Mali· Mozambique· Niger· Nigeria· Rwanda· Senegal· Sierra Leone· South Africa· Sudan· Swaziland· Tanzania· Togo· Uganda· ZambiaAfricaMicrofinance in Africa representspotential and possibilities, but theindustry is still highly fragmented,making data collection challenging.MIX established an office in Dakar,Senegal in 2006 to better allow us todevelop partnerships in the region,participate in area workshops andmeetings and to connect with MFIs.FY 2008, Reports and Analyses:• Africa Microfinance Analysis and Benchmarking Report, focused on thecountries of sub-Saharan Africa.• UEMOA Microfinance Analysis and Benchmarking Report, focused on theeight countries of the West African Monetary Union.23

In FY 2008, MIX Presented Datafrom the Following Countries:· Afghanistan· Bangladesh· Cambodia· China· East Timor· India· Indonesia· Laos· Nepal· Pakistan· Papua NewGuinea· Philippines· Samoa· Sri Lanka· Thailand· VietnamAsia and the PacificMicrofinance in Asia dominates the globalmarket, with rapid growth and massivescale. Because of this region’s magnitudein terms of both geography and population,MIX works with several partners inAsia, as well as leading MFIs, networksand other organizations, ensuringcomprehensive regional coverage.FY 2008, Reports and Analyses:• Asia Microfinance Analysis and Benchmarking Report, covering 194 MFIs.• India Microfinance Review.• Individual country analyses and benchmarking for Nepal and Cambodia.• MIX Asia 100, an analysis of microfinance institutions in Asia, with a rankingof the most successful institutions, produced in collaboration with the AsianDevelopment Bank (ADB).24

In FY 2008, MIX Presented Datafrom the Following Countries:· Albania· Armenia· Azerbaijan· Bosnia andHerzegovina· Bulgaria· Croatia· Georgia· Kazakhstan· Kosovo· Kyrgyzstan· Macedonia· Moldova· Mongolia· Montenegro· Poland· Romania· Russia· Serbia· Tajikistan· Turkey· Ukraine· UzbekistanEastern Europeand Central AsiaThe microfinance industry in this regionhas played a significant role in thedevelopment of the mainstreamfinancial sector. Thanks in part to thisintegration, and to our relationshipswith networks and MFIs in this region,MIX databases represent more than 90%of the microcredit marketplace in theEastern Europe and Central Asia region.FY 2008, Reports and Analyses:• Eastern Europe and Central Asia Microfinance Analysis and Benchmarking Report,covering 126 MFIs in the region.• Central Asia Microfinance Analysis and Benchmark Report, covering MFIs inKazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan.• Individual country analysis on Azerbaijan, Bosnia and Herzegovina, and Russia.25

In FY 2008, MIX Presented Datafrom the Following Countries:· Argentina· Bolivia· Brazil· Chile· Colombia· Costa Rica· DominicanRepublic· Ecuador· El Salvador· Guatemala· Haiti· Honduras· Mexico· Nicaragua· Panama· Paraguay· Peru· VenezuelaLatin Americaand the CaribbeanMIX has a regional office in Lima, Peru,opened in 2005, that communicates,educates and builds relationships withthe microfinance institutions throughoutthe region. The local presence hasallowed MIX to forge strong relationshipswith the national and regionalmicrofinance networks. In coordinationwith our network partners in theregion, MIX produces a number of reportsand analyses on the Latin Americaand Caribbean microfinance market.FY 2008, Reports and Analyses:• Latin America Microfinance Analysis and Benchmarking Report, covering 228microfinance providers for benchmarks and 135 MFIs for trends from 2004 – 2006.• Central America Microfinance Analysis and Benchmarking Trends Report, 2006,covering the sub-region.• Nine individual microfinance analysis and benchmarking or trend reports for Bolivia,El Salvador, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Paraguay, Peru.• Championship League — MIX 100, an analysis of microfinance in the region, witha ranking of some of the most successful institutions.26

In FY 2008, MIX Presented Datafrom the Following Countries:· Egypt· Iraq· Jordan· Lebanon· Morocco· Palestine· Syria· Tunisia· YemenMiddle Eastand North AfricaThe Middle East and North Africa regionis one of the youngest microfinancemarkets in the developing world, anddue to low market penetration, it hasa favorable environment for growth.Overall, a minority of sustainable MFIsserves a majority of the client basethroughout the region. MIX works witha network partner in the Middle Eastand North Africa region to help us withaccess to MFIs and data collection.FY 2008, Reports and Analyses:Arab Microfinance and Benchmarking Report, covering 23 leading MFIsin the Arab world.27

Strategic Partnerships: Working Together for ChangeMIX’s business model is one of partnershipand resource sharing. Werecognize that to cover the globalmarkets, we need to establish relationshipswith organizations who share ourmission of strengthening the microfinanceindustry. We seek out partnerswith regional expertise who will workwith local MFIs on understanding theimportance of transparency.MIX has developed strong partnershipswith more than 20 organizationsthroughout the world, allowing us toincrease market coverage, helpingsource MFI data and assisting in datacollection. Without the support of thesepartner organizations, MIX could notperform the work we do. We are gratefulto our partners for their dedicationand commitment to microfinance.28

MIX’s Partners are:Africa:AMEFIGHAMFINAsia:MABSMISFA LtdCMF MICRA MCPIIntellecap PMN M-CRILEastern Europe & Central Asia:AMFARMC30

Latin America & the Caribbean:AsofinProDesarolloCopemeRedCamif RedCamifCopemeRFRAsofinProDesarrolloRFRMiddle East & North Africa:SanabelInternational:AKAMACCION, InternationalFINCAOpportunity InternationalMicrocredit SummitCampaign31

A Look ForwardCollecting, presenting and analyzingdata on the microfinance industry arethe primary goals of MIX. Now, withthe global credit crisis and recessionof 2008, monitoring and analyzing theperformance of the institutions thatserve the world’s working poor is evenmore urgent. How the financial crisisis impacting MFIs and their customersremains to be seen. It is an importanttime for microfinance, and access toobjective, reliable data on the industryand its institutions is as critical now asever before.MIX’s work gathering and analyzingperformance data on the institutionsand on the industry as a whole willcontinue and expand. Our plans for thenext three years are based on extensivemarket research and feedback from ourstakeholders. Our activities will focus onour core areas of expertise.32

MFI ProductLines ReportingThe microfinance industry continuesto alter and adjust to customers’demands, with traditional MFIs nowoffering products beyond micro-enterpriseloans, regulated banks reachingdownstream to offer loans and savingsvehicles to a new market, and the availabilityof products such as insuranceand remittances. MIX is responding tothese changes by adding product linebreak-out to our data services. We willbegin by focusing on Tier 1 MFIs andexpect to have about 200 MFIs reportingproduct line break-out for the dataset released in autumn, 2009.MFI Sources of FundsAs microfinance receives attentionfrom the mainstream media, moreinstitutions are able to access funds forgrowth from commercial banks, developmentbanks, and other institutions.Yet very little information is availableabout the extent to which MFIs areleveraged. MIX is collecting data onsources of MFI debt, including the typeof lender, amount of loan, interest rate,currency and maturity of loans. Thisinformation will help the industry to betterunderstand regional market trends,and will assist MFIs in seeking competitivelypriced funding.33

Social PerformanceStandardsThe goal of microfinance is to providefinancial services to the world’s poorest,thus helping them improve their livesand plan for a better future. To date,the information available on microfinanceinstitutions has been related tofinancial performance, and no largescale data are available to assess amicrofinance institution’s effectivenessat improving the lives of its clients.Thanks to the generosity of theMichael & Susan Dell Foundation,MIX has already hired a Manager forSocial Performance Standards. Thismanager will work closely with theSocial Performance Task Force, leadingmany of the sub-committees, andworking on MFI adoption of the newlyestablished indicators, with consistentoutreach to the MFIs and networks.MIX expects to have aproximately 30MFIs reporting on social performanceby end of FY 2009 (June 30, 2009).MIX MarketRedevelopmentMIX Market (www.mixmarket.org) isMIX’s public face for access to data onMFIs and other microfinance actors,yet the technology used to build thewebsite and the underlying databaseis outdated, never having been redevelopedsince its inception in 1999. TheMasterCard Foundation has generouslydonated the funds for MIX to redevelopthe entire database and redesign theMIX Market website to greatly improveperformance, user experience and dataaccessibility. The redevelopment willinclude multi-language capabilities,allowing our international user base totake full advantage of the new website.MIX expects to launch the new MIXMarket in the summer of 2009.34

Statement of Financial PositionJune 30, 2008 June 30, 2007ASSETSCurrent assets:Cash and cash equivalents $1,078,576 $361,655Accounts receivable $7,800 $6,500Grants and contributions receivable $1,163,025 $88,400Employee travel advances $4,768 $3,853Prepaid expenses $12,951 $6,044Total current assets $2,267,120 $466,452Equipment, net $686,162 $496,649Other assets:Deposits $6,390 $6,390Other - $227Total other assets $6,390 $6,617TOTAL ASSETS $2,959,672 $969,718LIABILITIES AND NET ASSETSCurrent liabilities:Notes payable, current $13,318 $22,066Accounts payable $166,433 $22,612Accrued vacation $27,006 $38,587Deferred revenue $236,307 $66,667Total current liabilities $443,064 $149,932Notes payable, non-current $7,223 $20,541Total liabilities $450,287 $170,473Net assets:Unrestricted $1,102,237 $740,633Temporarily restricted $1,407,148 $58,612Total net assets $2,509,385 $799,245TOTAL LIABILITIES AND NET ASSETS $2,959,672 $969,71836

Statements of Cash FlowsCash Flows from Operating Activities:For the year endedJune 30, 2008For the year endedJune 30, 2007Change in net assets $1,710,140 ($368,396)Adjustments to reconcile change in net assets tonet cash (used in) provided by operating activities:Depreciation $198,930 $197,352Changes in assets and liabilities:Accounts receivable ($1,300) ($6,500)Grants and contributions receivable ($1,074,625) ($38,859)Employee travel advances ($915) ($1,655)Prepaid expenses ($6,907) $806Other $227 -Accounts payable $143,821 ($13,278)Accrued vacation ($11,581) $12,178Deferred revenue $169,640 ($55,292)NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITES $1,127,430 ($273,644)Cash Flows from Investing Activities:Purchase of equipment ($388,443) ($166,760)Cash flows from Financing Activities:Curtailments on long-term debt ($22,066) ($22,817)Net increase (decrease) in cash and equivalents $716,921 ($463,221)Cash and equivalents, beginning of year $361,655 $824,876Cash and Equivalents, End of Year $1,078,576 $361,655Supplemental Information:Noncash investing and financing activities:Equipment financed through- ($37,991)notes payableCash paid during the year for:Interest $2,999 $4,91037

Statements of ActivitiesFor the year ended June 30, 2008 For the year ended June 30, 2007UnrestrictedTemporarilyRestrictedTotals Unrestricted TemporarilyRestrictedTotalsRevenue:Contributions $75,000 - $75,000 $180,100 - $180,100Grants and contracts $821,042 $2,461,000 $3,282,042 $429,075 $612,225 $1,041,300Consulting income $21,524 - $21,524 $27,800 - $27,800Sales and other income $33,382 - $33,382 $14,557 - $14,557Investment income $2,212 - $2,212 - - -Net assets released$1,112,464 ($1,112,464) - $553,613 ($553,613) -from restrictionsTotal Revenue $2,065,624 $1,348,536 $3,414,160 $1,205,145 $58,612 $1,263,757Expenses:Program services $1,471,471 - $1,471,471 $1,408,037 - $1,408,037Supporting services:Management and general $202,645 - $202,645 $169,671 - $169,671Fundraising $29,904 - $29,904 $54,445 - $54,445Total supporting services $232,549 - $232,549 $224,116 - $224,116Total expenses $1,704,020 - $1,704,020 $1,632,153 - $1,632,153Change in net assets $361,604 $1,348,536 $1,710,140 ($427,008) $58,612 ($368,396)Net assets, beginning of year $740,633 $58,612 $799,245 $1,167,641 - $167,641Net assets, end of year $1,102,237 $1,407,148 $2,509,385 $740,633 $58,612 $799,24538

Statements of Functional ExpensesProgramServicesFor the year ended June 30, 2008 For the year ended June 30, 2007ManagementandGeneralTotalProgramServicesFundraisingManagementandGeneralFundraisingSalaries and benefits $671,435 $102,690 $15,798 $789,923 $724,111 $91,050 $29,125 $844,286Employee training - - - - $5,185 - - $5,185Travel and subsistence $82,479 $182 - $82,661 $72,632 $14 $10,828 $83,474Professional fees $352,118 $54,107 $7,217 $413,442 $182,339 $58,064 $5,036 $245,439Printing andreproductionTotal$32,656 $630 - $33,286 $33,233 $3,910 $1,955 $39,098Postage and delivery $6,100 $933 $144 $7,177 $14,786 $1,740 $870 $17,396Telecommunications $19,617 $3,000 $462 $23,079 $16,472 $1,938 $969 $19,379Depreciation expense $169,090 $25,861 $3,979 $198,930 $196,127 $928 $297 $197,352Equipment rentaland service$9,475 $1,449 $223 $11,147 $10,145 $1,194 $597 $11,936Insurance $4,468 $683 $105 $5,256 $2,929 $345 $172 $3,446Memberships, dues $4,039 $618 $95 $4,752 $53,120 $315 $350 $53,785and subscriptionsOffice supplies $5,248 $803 $123 $6,174 $8,509 $1,001 $501 $10,011Rent $70,928 $10,848 $1,669 $83,445 $67,914 $8,540 $2,732 $79,186Miscellaneous $43,818 $841 $89 $44,748 $20,535 $632 $1,013 $22,180Totals $1,471,471 $202,645 $29,904 $1,704,020 $1,408,037 $169,671 $54,445 $1,632,15339

Microfinance Information Exchange, Inc.1901 Pennsylvania Avenue, NW, Suite 307Washington, DC 20006, U.S.AWeb: www.themix.orgE-mail: info@themix.orgTel: +1 202 659 9094Fax: +1 202 659 9095