2010 Transversal Analysis of MFI Performance in Africa: Third Edition
This study, commissioned by the African Microfinance Transparency Forum (AMT), tracks the progress of African MFIs rated by MicroRate, MicroFinanza Rating and Planet Rating. It is an update to the 2008 transversal analysis results, and uses data from recent rating reports of AMT members and non-members.
The study reviews portfolio quality, profitability, funding structure, sources of funds and funding costs of the MFIs. It examines MFIs’ efficiency and productivity levels, and analyzes effectiveness of their resource utilization. Conclusions include:
- Portfolio quality and operating expense ratios have improved;
- Loan loss reserves have improved, but are still below best practice levels;
- Increase in funding costs and competition puts pressure on cost structure and interest rates;
- Funding structures vary according to institutional type and local regulations;
- Smaller cooperatives seek debts which, when subsidized, crowd out deposit mobilization;
- Cash collateral is common in Africa;
- MFIs exhibit positive trends in terms of efficiency and productivity.
The study states that new regulations being implemented in East Africa will have long-term effects on funding structure of MFIs. It predicts that the financial crisis will have repercussions on the MFIs.