MIX Microfinance World: Eastern Europe and Central Asia Microfinance Analysis and Benchmarking Report 2010

This report explores how MFIs, policy makers, and funders in Eastern Europe and Central Asia (ECA) have begun to adjust to the risks and challenges presented by the 2009 twin economic and financial crises. It analyzes client outreach, product realignment, changing policy and funding trends, and social performance indicators. The report states that decrease in economic activity, increase in unemployment, and decrease in remittance flows made it harder for MFI clients in ECA to repay their loans. The crises resulted in the contraction of the ECA microfinance sector, and deterioration of MFIs financial performance. Findings include:

• Poor performance of microloan portfolios led many banks to withdraw from microfinance and shift to small and medium enterprise lending;
• Knowing your customer gained importance and many MFIs began to put more effort into social performance management and tracking;
• Policy makers were prompted to examine issues of responsible and ethical finance and to tackle over-indebtedness;
• Cross-border public investors came forward to invest in microfinance;
• Deposits proved to be a reliable source of domestic funding;
• Savings portfolios increased.