Jordan Microfinance Institutions' Financial Viability to ... - EuroJournals
Jordan Microfinance Institutions' Financial Viability to ... - EuroJournals Jordan Microfinance Institutions' Financial Viability to ... - EuroJournals
124 European Journal of Economics, Finance And Administrative Sciences - Issue 42 (2011) group lending and individual lending; the MFIs are not regulated as financial intermediaries by the financial authorities; they, recently, began to offer a variety of additional loan products including consumer loans; many of them offers micro- insurance, especially in Jordan and Egypt; and some experiencing mobile credit units (SANABEL & Mix, 2010, Op., Cit., PP 1-5). Active borrowers in the Arab world constitute only 2.7% of the worlds’ active borrowers, and 2.9% of its number of specialized MFIs, and also constitute 1.8% of the worlds’ loan portfolio, as has depicted from Table No. (1). Although, Arab MFIs are growing and tried to regulate microfinance sector, most Arab MFIs are unable to offer saving services, also another barrier is the lack of establishing a Credit Bureaus yet (SANABEL & Mix, 2010, Op., Cit., P6). The study conducted its analysis through two stages; at first through KPIs comparison of Jordan among Arab countries’ MFIs, and secondly at the stage of Jordanian eight specialized’ MFIs. 4.2. Microfinance at the Arab Level Measuring and analyzing the comparative performance of Microfinance in the Arab world report,identified the outreach indicators in 15 key performance indicators (KPIs), of which seven KPIs are considering deposit figures to MFIs, and due to the fact that Jordanian MFIs have no deposit services, the study only considers eight KPIs to represent the outreach performance. The report also determines eight macro-financial performance KPIs to be considered as a match of the breadth of microcredit outreach (Mix, SANABEL and, CGAP, 2010, P 16). In Arab countries, demand on microloans is still high; an outreach gap was estimated to 53 m. borrowers who are eligible to access microfinance in 2008. However, in Jordan it is estimated to be 205,444 borrowers and of 167.2 m. $ portfolio gap (Seep, Citi foundation, and SANABEL, P 9). Access to finance is hindered, in some Arab countries, by the denomination of public sector banks or funds that directs credit to certain, also many specialized MFIs are perceived to finance less risky clients and high return business. In addition to other obstacles such as: contract enforcement; property registration; poor investor rights protection; bureaucratic procedures; and high minimum capital requirement for business start-ups. Therefore, Microfinance sector in the Arab region remains shallow with low levels of access to finance (Seep, Citi foundation, and SANABEL, Op., cit., P 12). At the first phase, the comparative data of the KPIs are crystallized in the following Tables No. (2,3 & 4).Although Jordan comes to rate the third among 10 Arab countries in terms of the number of institutions; active borrowers; and loan portfolio size in 2009, it actually comes as the first Arab country when compared its loan portfolio per capita, and rating the second when comparing its active borrowers to inhabitants, as can be driven from Table No. (1). Jordan’s borrowers per capita are amounted to 2.7%; which is more than doubled of the Arab figure of only 1% vs. to 1.6% to world average.On the other hand, Jordan achieved high rank in the allocation of microfinance money to inhabitants; Jordan per capita loan portfolio was amounted to 22.8 $ in 2009. Whereas, loan portfolio per capita was amounted to 11.4 $ to the world, and only 4.6 $ to the Arabs, on the average. Table No. 1: Active Borrowers and Loan Portfolio in Arab Countries in 2009 Country No. of MFIs No. of Active Borrowers Loan Portfolio (LP) US $ Borrowers/ Pop % LP/Cap US $ Average Loan Balance US $ Egypt (76) 13 1,100,541 216,688,450 1.5 2.9 197 Morocco (31.7) 10 915,839 609,943,100 2.9 19.2 666 Jordan(5.9) 8 159,081 134,262,829 2.7 22.8 844 Tunisia (10.7) 1 123,041 41,355,997 1.1 3.9 336 Palestine (5.2) 8 34,057 89,202,509 0.8 17.2 2619 Lebanon (4.2) 3 31,671 29,274,281 0.8 7.0 924
125 European Journal of Economics, Finance And Administrative Sciences - Issue 42 (2011) Table No. 1: Active Borrowers and Loan Portfolio in Arab Countries in 2009 - continued Yemen (24) 6 28,714 3,593,486 0.1 15.0 125 Syria (21.9) 2 21,327 18,181,266 0.1 1.0 852 Sudan (42) 3 20,155 3,867,094 0.05 9.2 192 Iraq (31) 1 13,161 21,911,871 0.04 70.7 1665 Total Arab (252.6) 55 2,447,587 1,168,280,883 1.0 4.6 477 The World (5670) 1885 90,800,000 64,800,000,00 1.6 11.4 523 Arab % 2.9 2.7 1.8 Source: 1. SANABEL and Mix, Arab Microfinance Analysis & Benchmarking Report 2010. 2. www.themix.org/mfi/country/Jordan&www.mixmarket.org. 4.1.1. Outreach KPIs Jordan exercising well achievement for all outreach indicators; it always exercising above Arab industry norm’ index for the 8 th outreach KPIs, and rounds about the double against Arab norms for the gross loan portfolio and; average outstanding balance indicators of an index of 1.6, and more than half of that norm for average balance per borrower, and average outstanding balance to GNI per capita of an index of 1.3 plus. On the other hand, Jordan exercising quarter more than Arab norm for active borrowers, female percentage, average balance per borrower to GNI per capita indicators, of roughly an index of 1.3. Thereby, we can conclude from outreach indicators that Jordan was rounded between the second and third rank among Arab countries as driven from Table No. (2). Female Borrowers: Jordan became into the second among Arab MFIs for female lending, 79% of total number of loans are streamlined to females,comparing to an Arab average norm of 63.8% to females, and having an index of 1.24. Average Balance per Borrower: Jordan average loan portfolio to the active borrower is amounted to 844 $, and rated as the second among Arabs, Jordan’s indexed to 1.6 and Lebanon to 1.8 comparing to average balance of 527$ as Arab average. Also reference to the average balance per borrower to per capita GNI, Jordan and Morocco ranked at the second constituting an index of 1.3 versus 7.0 to Palestine. Average Outstanding Balance AOB: Jordan ranked the third among Arabs’ gross loan portfolio to loans outstanding, it amounted to 8387 $ with an index of 1.6 compared to 5266$ to the Arabs average. Palestine and morocco are higher than Jordan of an index of 4.6 and 2.1 respectively. On the other hand, Jordan rated the third for the AOB per capita indicator, having an index of 1.3 compared to 6.5 and 2.2 to Palestine and Egypt respectively. Table No. 2: Microfinance Outreach Key Performance Indicators KPIs in 2009 Outreach KPI Tunis Morocco Egypt Jordan Palestine Yemen Lebanon Industry Norm No. of Active Borrowers 123,041 915,839 1,100,5 41 159,081 34,057 28,714 31,671 129,507 % of Females 63 56.6 69.9 79 54.8 96 41.4 63.8 Female % Index ~ 0.99 0.89 1.10 1.24 0.86 1.51 0.65 1.00 No. of Loans Outstanding 10219 55693 38873 16009 3669 3564 13244 12958 Gross Loan Portfolio m.US $ 41.356 609.943 216.688 136.988 89.203 3.593 29.274 68.234 Average Balance per Borrower (ABB) $ * 336 666 197 844 2619 125 924 527 ABB Index ~ 0.6 1.3 0.4 1.6 5.0 0.2 1.8 1.0 ABB / GNI per capita % * 8.3 23.4 8.0 22.4 124.4 11.3 10.9 17.7 ABB / GNI per capita Index ~ 0.5 1.3 0.5 1.3 7.0 0.6 0.6 1.0 0
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125 European Journal of Economics, Finance And Administrative Sciences - Issue 42 (2011)<br />
Table No. 1: Active Borrowers and Loan Portfolio in Arab Countries in 2009 - continued<br />
Yemen (24) 6 28,714 3,593,486 0.1 15.0 125<br />
Syria (21.9) 2 21,327 18,181,266 0.1 1.0 852<br />
Sudan (42) 3 20,155 3,867,094 0.05 9.2 192<br />
Iraq (31) 1 13,161 21,911,871 0.04 70.7 1665<br />
Total Arab (252.6) 55 2,447,587 1,168,280,883 1.0 4.6 477<br />
The World (5670) 1885 90,800,000<br />
64,800,000,00<br />
1.6 11.4 523<br />
Arab % 2.9 2.7 1.8<br />
Source: 1. SANABEL and Mix, Arab <strong>Microfinance</strong> Analysis & Benchmarking Report 2010.<br />
2. www.themix.org/mfi/country/<strong>Jordan</strong>&www.mixmarket.org.<br />
4.1.1. Outreach KPIs<br />
<strong>Jordan</strong> exercising well achievement for all outreach indica<strong>to</strong>rs; it always exercising above Arab<br />
industry norm’ index for the 8 th outreach KPIs, and rounds about the double against Arab norms for the<br />
gross loan portfolio and; average outstanding balance indica<strong>to</strong>rs of an index of 1.6, and more than half<br />
of that norm for average balance per borrower, and average outstanding balance <strong>to</strong> GNI per capita of<br />
an index of 1.3 plus.<br />
On the other hand, <strong>Jordan</strong> exercising quarter more than Arab norm for active borrowers, female<br />
percentage, average balance per borrower <strong>to</strong> GNI per capita indica<strong>to</strong>rs, of roughly an index of 1.3.<br />
Thereby, we can conclude from outreach indica<strong>to</strong>rs that <strong>Jordan</strong> was rounded between the second and<br />
third rank among Arab countries as driven from Table No. (2).<br />
Female Borrowers: <strong>Jordan</strong> became in<strong>to</strong> the second among Arab MFIs for female lending, 79%<br />
of <strong>to</strong>tal number of loans are streamlined <strong>to</strong> females,comparing <strong>to</strong> an Arab average norm of 63.8% <strong>to</strong><br />
females, and having an index of 1.24.<br />
Average Balance per Borrower: <strong>Jordan</strong> average loan portfolio <strong>to</strong> the active borrower is<br />
amounted <strong>to</strong> 844 $, and rated as the second among Arabs, <strong>Jordan</strong>’s indexed <strong>to</strong> 1.6 and Lebanon <strong>to</strong> 1.8<br />
comparing <strong>to</strong> average balance of 527$ as Arab average. Also reference <strong>to</strong> the average balance per<br />
borrower <strong>to</strong> per capita GNI, <strong>Jordan</strong> and Morocco ranked at the second constituting an index of 1.3<br />
versus 7.0 <strong>to</strong> Palestine.<br />
Average Outstanding Balance AOB: <strong>Jordan</strong> ranked the third among Arabs’ gross loan<br />
portfolio <strong>to</strong> loans outstanding, it amounted <strong>to</strong> 8387 $ with an index of 1.6 compared <strong>to</strong> 5266$ <strong>to</strong> the<br />
Arabs average. Palestine and morocco are higher than <strong>Jordan</strong> of an index of 4.6 and 2.1 respectively.<br />
On the other hand, <strong>Jordan</strong> rated the third for the AOB per capita indica<strong>to</strong>r, having an index of 1.3<br />
compared <strong>to</strong> 6.5 and 2.2 <strong>to</strong> Palestine and Egypt respectively.<br />
Table No. 2: <strong>Microfinance</strong> Outreach Key Performance Indica<strong>to</strong>rs KPIs in 2009<br />
Outreach KPI Tunis Morocco Egypt <strong>Jordan</strong> Palestine Yemen Lebanon<br />
Industry<br />
Norm<br />
No. of Active Borrowers 123,041 915,839<br />
1,100,5<br />
41<br />
159,081 34,057 28,714 31,671 129,507<br />
% of Females 63 56.6 69.9 79 54.8 96 41.4 63.8<br />
Female % Index ~ 0.99 0.89 1.10 1.24 0.86 1.51 0.65 1.00<br />
No. of Loans Outstanding 10219 55693 38873 16009 3669 3564 13244 12958<br />
Gross Loan Portfolio<br />
m.US $<br />
41.356 609.943 216.688 136.988 89.203 3.593 29.274 68.234<br />
Average Balance per<br />
Borrower (ABB) $ *<br />
336 666 197 844 2619 125 924 527<br />
ABB Index ~ 0.6 1.3 0.4 1.6 5.0 0.2 1.8 1.0<br />
ABB / GNI per capita %<br />
*<br />
8.3 23.4 8.0 22.4 124.4 11.3 10.9 17.7<br />
ABB / GNI per capita<br />
Index ~<br />
0.5 1.3 0.5 1.3 7.0 0.6 0.6 1.0<br />
0
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