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Improving Knowledge of and Serving Better the Clients of Microfinance

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SOLIDARITY AND RESPONSIBILITY: MICROFINANCE INVESTING AND WORKING TOWARDS THE MILLENNIUM DEVELOPMENT GOALS BAROMETERrd 2012 3 Edition Editorial Jean-Michel Severino In partnership with: Chairman of Convergences 2015 ince its beginning 30 years ago, microfinance has had very productive years exemplified by a strong growth, by the positiveS impression it has had on development professionals and on public opinion in general, and finally by the attribution in 2006 of the Nobel Peace Prize to Muhammad Yunus, the founder of microcredit. For many years, microfinance was considered a panacea for poverty. Since 2010 however, the sector has been damaged by various localized crises (India, Morocco, Nicaragua…). Therefore actors have been starting to question, renew and innovate their practices in order to revert to the original social assignment of microfinance, while building more sustainable economic models. Convergences 2015 wishes to fit in with this dynamic of thinking and of change. In May 2011, it launched the Paris Appeal for responsible microfinance. It received the support © Hélène Grégoire//ACTED of thousands of people who shared the same ideas of defending the social assignment of microfinance institutions and rejecting the Improving knowledge of and serving better excessive commercialization of the sector. With the publication of the Microfinance Barometer for the third the clients of microfinance consecutive year, Convergences 2015’s goal is to present the main ubjected to considerable experienced various changes as well presented a special report « For a Diversifying products – various trends of microfinance in the world media coverage, the as an important growth for which it return to more social microfinance », types of microloans, microsavings as well as to develop some key issues crises of the microfinance must adapt its methods, structures the 2012 edition continues the and microinsurance – and improving in the sector. Analytical articles, sector have disclosed the and regulation. Professionals agree discussion for the improvement of access to financial services are lobbying articles and feedback mission drift of certain on the fact that these localized microfinance practices and calls for opening new perspectives. from experiences will highlight the actors,S such as aggressive business crises do not bring into question the a better understanding and better challenges of microfinance and practices, prohibitive interest rates... role of microfinance as a tool for servicing of microfinance clients. underline emerging solutions. Most importantly, these crises – development but call for changes Firstly, it is important to understand In 2012, we have chosen to put along with the over indebtedness in the practices of microfinance them in order to analyze the real SPECIAL clients back at the centre of the which often accompanies them – institutions (MFIs) and of the and varying needs of the poorest. debate. Who are they? What are have shown the inherent weaknesses other actors involved (investors, Secondly, we need to serve them their needs? How can we better of this relatively recent sector. regulators…). Along the lines of the better, by adapting MFIs’ supply REPORT address their expectations? These For several years, the sector has 2011 Microfinance Barometer, which to meet clients’ expectations. > > > page 3 questions are at the heart of the repositioning of microfinance in the world, as well as in France – to which we have devoted the central Interview Central Leaflet - France Leaflet. In addition to MIX Market international statistics, the 2012 Microfinance Barometer Sam Daley-Harris > Microfinance in also presents data from two exclusive surveys: one on French Founder of the Microcredit France microfinance actors operating on the international scene and the Summit Campaign other on microfinance actors in France. These surveys show the > Exclusive Ipsos dynamism of the sector, which continues to grow in value and in opinion poll the number of beneficiaries. I see a future For the third consecutive year, the Microfinance Barometer also shows for microfinance that puts clients the results from an exclusive survey “ Antoine Pompa, on the perception of microfinance among the French population. at the center. Manager of ‘Espace Foot’ In addition to the Microfinance „ Barometer, Convergences 2015 continues its reflection by organizing > > > page 12 > > > page 5 the world Forum for the Millennium Development Goals to be held in September 2012, by participating in regular events throughout the year Table of contents The main trends of microfinance in developing countries p. 2 SPECIAL REPORT - Understanding the unbanked and through its website where news and underserved p. 3 Placing clients back at the heart of microfinance p. 4 Clients’ portraits p. 4 CENTRAL from solidarity actors can be found LEAFLET - FRANCE - The main issues around microfinance in France p. 5 Clients’ portraits p. 5 OPINION (www.convergences2015.org). Take action with us now! POLL - What do the French think of microfinance? p. 8 The impact of professional microcredit in France and in developed countries p. 8 SPECIAL REPORT - Improving the relevance of financial services p. 9 SURVEY - French microfinance actors on the international scene p. 10 Savings and credit cooperatives p. 11 Interview with Sam Daley-Harris p. 12 The Paris Appeal for responsible microfinance p. 12 2. MICROFINANCE BAROMETER 2012 The main trends of microfinance in developing countries Geographical breakdown of microfinance portfolio and active borrowers as of 2010* Overview of active microfinance borrowers in 2010* Bn: billion Mn: million East Asia & the Pacific Number 105 million South Asia of active borrowers borrowers EUR 6.8 Bn 20 Mn borrowers 12% 19% % of women borrowers 80% Latin America & East Asia & Eastern Europe South Asia Latin America % of borrowers living in rural areas 70% the Pacific the Caribbeans & Central Asia 58.8 Mn borrowers & the Caribbeans EUR 18.5 Bn EUR 17.7 Bn 16.5 Mn borrowers / 16% EUR 6.7 Bn 56% Average loan size per borrower 426 34% 33% 12% (EUR) Eastern Europe Africa Africa & Central Asia % of borrowers served by 83% EUR 3.6 Bn 5.1 Mn 2.8 Mn borrowers / 3% group lending 7% borrowers Middle East 5% & North Africa % of borrowers served by Middle East & North Africa individual lending 17% EUR 0.9 Bn / 2% 2.2 Mn borrowers / 2% 2010 gross loan portfolio* 2010 number of active borrowers* Total of EUR 54 Bn Total of 105 Mn active borrowers *Sample of 1193 MFIs reporting to MIX Market in 2010 Transformational change balances in LAC (Latin America and sector will be led by full service banks ahead for the microfinance the Caribeans) can be attributed to offering low-income clients specific Change in gross loan portfolio (EUR)** sector the strength of the local economies products and services. Reflecting the and are led in particular by the growth scaling of operations in microfinance, 35% Responding to the large number of Peru. A decline is expected for currently the 100 largest institutions 45 Bn Annual growth rate (%) of financially excluded clients South Asia when the end figures of represent roughly 82% of the global 40 Bn 30% with a wide range of complex the 2011 fiscal year figures become loan portfolio and 80% of borrowers. Annual growth rate (%) and diverse needs, microfinance available due to the Andhra Pradesh 35 Bn continues to grow and today offers a crisis in India and the resulting Microfinance has been a leading 25% spectrum of products and services, write-offs of nearly one quarter of driver in achieving the milestone of 30 Bn including growing microsavings and the Indian market. Africa forms at banking half of the world’s global 20% microinsurance products. The latest present only 7% of the 2010 global population. However, with further 25 Bn data from the 1,193 financial services microfinance gross loan portfolio, but technological innovations such as providers listed on MIX Market is expected to be an area of strong mobile banking, prepaid cards, 20 Bn 15% shows that, as of December 2010, growth with currently only 24% and exploration of new distribution Gross loan portfolio 15 Bn they reached 105 million borrowers of adults in Africa having a bank channels to extend to hard-to-reach 10% with outstanding loans of EUR 54 account. Finally, in 2010, around clients, the microfinance sector is 10 Bn billion. More than 56% of these 56% of reporting institutions were undergoing major transformations. To 5% clients live in South Asia and around deposit-taking, which provided the help build institutions that can close 5 Bn 80% are women. However, with opportunity to develop microsavings the financial access gap, actors such half of the global adult population products directly for their clients. as Citi and MIX are working across 0 0% still unbanked, the financial access the microfinance sector in order to 2008 2009 2010 challenge remains. As demand across the globe has enable MFIs to increase scale and continued to expand, the sector has product choice to expand access to The 2010 fiscal year was seen more banks and other financial financial services. a particularly strong year for institutions open their services to the microfinance with both portfolio previously excluded. In 2010, more BOB ANNIBALE Change in number of active borrowers** and number of borrowers growing than 61% of clients were served GLOBAL HEAD CITI MICROFINANCE by 24% and 12%, respectively. The through a regulated bank or non-bank AND CITI COMMUNITY DEVELOPMENT East Asia and Pacific
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