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BULLETIN HIGHLIGHTS
BULLETIN HIGHLIGHTS
Sustainability in Sight: An Analysis of MFIs that Become Sustainable
Blaine Stephens
Enabling Historical Analysis
This tenth edition of the MicroBanking Bulletin
represents a sea change in benchmarking analysis
for the microfinance industry. Over the past eight
years and nine data sets, the Bulletin has used performance
information on a pool of MFIs to answer
questions about retail microfinance. Its peer grouping
process and the increasing number and diversity
of MFIs participating in the Bulletin lent the data
project a more meaningful framework with which to
interpret MFI performance for a given year. What
factors drive productivity? How do savings mobilizers
perform? And how do large Latin American
MFIs differ in either of these areas from medium
size African institutions? The Bulletin could apply
its data set to seek answers to these and other
questions of MFI performance.
The focus of analysis shifts. For this edition, the
Bulletin now trains its lens on retail performance
trends over time. As the field of vision widens, the
nature of the questions that can be answered also
changes. Analysis moves from comparing levels of
self-sufficiency between Eastern European and
Middle Eastern retail institutions, to questioning how
long it takes for an institution in either locale to become
self-sufficient. Rather than simply peeling
back the layers of financial performance to see
what cost structures and revenue streams yield
strong returns, this data set sheds light on how
these factors have combined and changed over
time, returning a more dynamic view of institutional
performance. For the first time, the scope of the
Bulletin database brings this time series approach
to bear on global industry benchmarks.
Building the Trend Lines Data Set
This new focus on trends did not come about fortuitously.
This historical data set builds on recent industry
efforts to harmonize business reporting standards,
establish norms for adjustments, and produce
commonly understood performance indicators.
The result, the product of a year of collaboration
between Bulletin staff and 60 MFIs around the
globe, is this first publication of Trend Lines, a special
edition of the MicroBanking Bulletin dedicated
to the analysis of trends in retail microfinance performance.
These 60 MFIs constitute the Trend
Lines data set: the Trend Lines MFIs
The Bulletin built this new data set on solid foundations.
MFIs were invited to participate based on
criteria of length, quality and depth of past data.
Participation required a minimum of four consecutive
years of data submitted to the Bulletin. While
many institutions already had six or more years on
record, this first retrospective data set builds on four
core years: 1999 – 2002. Ensuring quality and
depth of data allowed for quicker incorporation of
past data into the new standards. Audits, annual
reports, ratings and other documents provided most
of the missing pieces needed to make the transition.
Future editions of this Bulletin Trend Lines publication
will build on this high quality data set. As more
MFIs meet the above base criteria, the data set will
grow. With growth will come broader representation,
new experiences, and new answers to the
questions that we ask ourselves about the dynamics
of MFI performance over time.
Characteristics of the Trend Lines Data Set
The MFIs participating in this first Trend Lines edition
of the Bulletin represent the diversity of characteristics
present in retail institutions around the
globe. As Figure 1 demonstrates, they are diverse
in age, institutional type, credit methodology, and
even in level of self-sufficiency. They span the
globe and offer financial services from operations of
all sizes.
Institutional development, though, is not static, and
this data set presents a microcosm of some of the
changes underway over the same period in the industry
at large. Over the four year period, many
non-profit Trend Lines MFIs have transformed into
licensed, regulated financial institutions. Indeed,
just over 30% of the NGOs shed their non-profit
status for some regulated institutional model. While
the majority of these took up special MFI licenses,
classified here as NBFI, a few also became formal
sector banks.
A number of associated trends also occurred over
the period. As these institutions transformed, many
MFIs started taking deposits from their customers.
More than 10% of these institutions moved from
offering no deposit services to amassing customer
savings of more than 20% of their total asset base.
MICROBANKING BULLETIN, MARCH 2005 23