By Amaka Agwuegbo
The global financial meltdown marked a challenging period for microfinance institutions (MFIs) in various countries. The economic and financial crises that reached MFIs and their clients turned calm waters into choppy seas for many institutions in the sector.
In the just released MIX ranking of global MFIs, only one Nigerian MFI, Self-Reliance Economic Advancement Programme (SEAP), made it to the top 100, ranking 37 among 100 rated institutions. Other African countries on the top 100 are Egypt, Morocco, Ghana, Tunisia and Malawi.
Ranking 37, SEAP, a Kwara State based MFI, is aimed at promoting sustainable livelihood and bridging development gap between the rural and urban communities towards solid financial and economic empowerment.
Though it started operations in 1998 without any grant/donation but loans and personal contributions, but in 2000, it received a UNDP/MSP grant to aid it disburse funds to clients and train staff. Presently, SEAP has 800 staff manning 81 offices in 14 states.
According to SEAP’s the Managing Director, Dcn. Olatunde Oladokun (JP), being the only Nigerian microfinance institute on the top 100 global MFIs is as a result of close monitoring of operations and exposure to international ratings.
“All we did was being transparent in our operations and also expose ourselves to international rating agencies because not all MFIs can afford to expose themselves to such rating agencies due to the cost.
“The Microfinance Information Exchange (MIX) sent some forms to us which we filled and I’m sure they generated all the information that was used in judging us from the forms.”
SEAP’s loan portfolio is N2.8bn with a total of 190,234 active savers, of which 136,748 are active clients (those who are consistent with loans and repayment). Of the 190,234 active savers, 91 per cent are female and the MFI records 99 per cent recovery rate of loans given out.
“We insist and maintain zero default rate, but we allow a little delinquency. This means that if someone is to pay his loan on Monday but is not able to, he can do so on Wednesday,” Oladokun said.
The Microfinance Information Exchange (MIX) is the leading provider of business information and data services for the microfinance industry. Dedicated to strengthening the MFI sector by promoting transparency, MIX provides detailed performance and financial information on microfinance institutions, investors, networks, and service providers associated with the industry
The 2009 MIX Global 100 Composite Ranking captures the effects of the changing environment, where global growth rates slowed for the first time in years, and many MFIs faced stagnant or rising costs, and in some instances, a slow rise in credit risk. The significant movement in these rankings over the last year reminds one of the difficult balances that MFI operators must strike as they attempt to keep their institutions on the path of growth, profitability, and efficiency in their operations.
The MIX Global 100 aims to provide a composite picture of MFI performance using a series of attributes: outreach, efficiency, and transparency. It views MFI performance, something that is inherently local and influenced by the conditions of the market in which the MFI must operate, through the lens of universal goals – a financially sound institution and expanding outreach to clients at the lowest possible cost – and all done in the public arena so that others may learn from the experience.
The 2009 MIX Global 100 surveyed 955 MFIs from nearly 100 countries and ranking results draw on the breadth and diversity of the industry. They cover the spectrum of providers, stages of growth, and scales of operations present in microfinance today. As a group, surveyed institutions represented nearly 85 per cent of the known pool of microfinance borrowers, serving 72 million borrowers with $37bn in loans and holding $22bn in deposits from 67 million microfinance clients.
As economic growth slowed in several markets and MFIs became more cautious in their lending, the resulting slower growth in borrowers proved the single biggest factor in moving last year’s top 100 MFIs down the rankings.
After years of steady global growth rates of 25 percent, MFIs from every region saw their borrower base expand more slowly in 2008 in all but a handful of markets. For these institutions, annual growth in borrowers fell from 43 percent in the 2008 rankings to 15 percent this year, based on FY2008 results. By comparison, top 100 MFIs as a group maintained growth rates at just below 40 percent, on par with the growth rates from the prior year.
Overall, the 2009 MIX Global 100 rankings reflect the dynamic changes in MFI performance that occurred over the last year.