Jordan Microfinance Institutions' Financial Viability to ... - EuroJournals

127 European Journal of Economics, Finance And Administrative Sciences - Issue 42 (2011)
PAR is amounted to 1% - 1.3%. Yemen and Egypt MFIs are in less risk, and the most risky MFIs are
Morocco and Palestine, as can be driven from Table No. 4.
Write-off Ratio: Yemenand Egypt MFIs are experienced the lowest value of loans written–off
to average loan portfolio among Arabs, and Jordan and Tunis came at the third rank among Arab MFIs.
Also, for the Loan Loss Rate; which is the write-offs excluding loans recovered to loan portfolio,
Yemen, Palestineand Egypt MFIs are experienced the lowest value, then Jordan came to be the fourth
among Arabs.
Risk Coverage:Jordan is experiencing the first country for the impairment loss allowance to
PAR more than 30 days, it was amounted to 195.9%, then Egypt followed by 153.5%, and Yemen for
105%.
Finally, Non-Earning Liquid Assets to Total Assets:the cash at banks to total assets is shown
to be the highest to Egypt’s MFIs of 31.2%, and Yemen of 20.7%. Unfortunately, Jordan came at the
lowest rank among Arabs of 7.9%.
Table No. 4: Microfinance Financial Risks' Key Performance Indicators KPIs in 2009
Risk & Liquidity KPIs
Portfolio @
Risk >30 Days
Portfolio @
Risk >90 Days
Write-Off
Ratio
Loan Loss
Rate
Risk
Coverage
Non-Earning
Liquid
Assets/ Total
Assets
Tunis 4.7% 2.9% 0.6% 0.3% 79.6% 13.5%
Morocco 6.4% 4.5% 7.3% 6.6% 59.9% 16.5%
Egypt 1.2% 0.8% 0.0% 0.0% 153.5% 31.2%
Jordan 1.3% 1.0% 0.6% 0.6% 195.9% 7.9%
Palestine 7.5% 4.4% 0.7% 0.0% 56.2% 12.1%
Yemen 0.9% 0.3% 0.0% 0.0% 105.1% 20.7%
Lebanon 2.3% 0.9% 0.7% 0.7% 61.1% 13.4%
Arab Industry Norm ^ 2.56 1.43 1.41 1.17 91.02 15.16
Source: 1) SANABEL & Mix, 2010 Arab Microfinance Analysis & Benchmarking Report, 2) Mixmarket.org.
^ Industry Norm is mainly calculated as the Geometric Average due to a wide dispersion of KPIs, but for the cases of zero
or minus figures, an Average (Mean) is utilized.
4.3. Microfinance at Jordan Level
In general, the financial viability of Jordan’s MFIs enables them to widening their outreach activities.
As can be driven from Table No. 5, the eight Jordanian MFIs have 85 offices throughout the country
with 854 personnel; this means 71 employees, on the average, are serving each governorate in Jordan,
noting that Jordan has 12 governorates; this KPI indicates to MFIs outreach. As mentioned earlier,
Jordan MFIs are not tolerated to collect savings either from their clients (borrowers), or from others.
Thereby, deposits are zero to all MFIs.
Development & Employment Fund DEF is shown to have around half of the microfinance
market in Jordan; it has 42.5% of the MFIs total assets, 59.6% of total equities, and 43.6% of gross
loans portfolio. On the other hand, its liabilities are minimal; total borrowing is amounted to 11.4% of
the market, debt/equity is 0.12 and, total write off is zero; this is due to the government support and
donations, and also its Law No. 33 of the year 1992 that protects its funds from write offs; due to the
Law of State Funds applied. Thereby, DEF has the capability to extend its operations all over the
remote areas and poverty enclaves; it can and should maximize its outreach to combat poverty and
unemployment. Especially, it’s cleared that its impairment loss allowances come in the middle of
Jordan MFIs, and also its borrowings is the least among them, in comparison to AlWatani bank and
FINCA’s borrowings of 51.4% and 88.1% of their total assets respectively.