Microfinance Market Outlook 2014

Microfinance Market Outlook 2014
No “sudden stop”: demand for microfinance soars
 

Zurich, 20 November 2013 – The emerging markets experienced a large-scale flight of capital in 2013. Despite the sharp falls suffered by some local stock markets and currencies, companies rooted in the real economy demonstrated their solidity. responsAbility Investments AG, the world's leading independent asset manager in the area of microfinance, today published its fourth Microfinance Market Outlook that combines an analysis of the current situation in the microfinance market with an assessment of how it is likely to develop in 2014.

There are more than 10,000 microfinance institutions (MFIs) globally. Only around 500 of them are self-sustaining in economic terms and have appropriate governance, business processes and accounting standards in place – making them suitable for investment. This group of MFIs constitutes the microfinance market that is the subject of the Microfinance Market Outlook 2014.

All of the MFIs in which responsAbility invests via actively managed funds operate in developing economies and emerging markets, where they perform a key role in the development of the financial sector. They provide financial services – such as savings deposit accounts – that are tailored to the needs of small and medium-sized enterprises (SMEs) and low-income households. In the countries where responsAbility invests alone, there are around 1.2 billion adults without a bank account – reflecting the vast potential of this market. 

In total, there are more than 70 countries worldwide with investable microfinance markets in which the legal framework allows private sector investors to fill this gap in financing provision. The volume of private cross-border investments in the microfinance sector totals approximately USD 7.5 billion, of which responsAbility accounts for around one fifth.

As the clear market leader in the area of private investments in MFIs, responsAbility has published its fourth Microfinance Market Outlook that combines an insight into the situation in the microfinance market at the end of 2013 with forecasts for 2014. responsAbility uses a portfolio of 100 MFIs to track the investable microfinance sector from a quantitative perspective for the purpose of this report. The data it gathers in this way is supplemented with information from interviews with 30 experts from all key markets worldwide in order to evaluate the market in qualitative terms. 

Microfinance Market Outlook 2014: key findings

  • The global microfinance market is likely to grow by around one fifth in 2013, as predicted in the previous Microfinance Market Outlook.

  • responsAbility expects the microfinance market to grow by 15% to 20% once again in 2014.

  • In terms of macroeconomic growth, all regions are expected to perform better in 2014 than in 2013. According to the International Monetary Fund (IMF), average real GDP growth in the 15 most important microfinance markets worldwide will increase from 5.3% in 2013 to 5.6% in 2014.

  • The experts interviewed for the report believe that gradual improvements in market infrastructure are helping to drive the sustained growth of the microfinance sector. These improvements include the emergence of credit bureaus that provide transparency about the creditworthiness of borrowers.

  • Due to their visible success and vast client base, local microfinance sectors in many areas are used by politicians for their own means. Strong diversification and risk monitoring of the investments therefore remain essential.

Contact

responsAbility Investments AG 
Ulli Janett, Media Relations
Telefon: +41 44 250 67 15
E-mail: ulli.janett [at] responsAbility.com

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This document was produced by responsAbility Investments AG. The information contained in this document (referred to hereinafter as ‘information’) is based on sources considered to be reliable but its accuracy and completeness are not guaranteed. The information is subject to change at any time and without obligation to notify the recipient. Unless otherwise indicated, all figures are unaudited and are not guaranteed. Any action derived from this information is always at the recipient’s own risk. This document is for information purposes only. The information provided is not intended as an offer or a recommendation to purchase or sell financial instruments or financial services and does not release the recipient from making his/her own assessment.