Microfinance Banana Skins 2008 - Citigroup

C S F I / New York CSFINorth AmericaBiggest risksFastest risers1 Corporate governance 1 Competition2 Management quality 2 Too much funding3 Inappropriate regulation 3 Unrealisable expectations4 Staffing 4 Reputation5 Transparency 5 Political interference6 Interest rates 6 Staffing7 Unrealisable expectations 7 Ownership8 Foreign exchange 8 Interest rates9 Back office operations 9 Strategy10 Managing technology 10 Mission driftRespondents from the US and Canada, who included a large proportion of investors, saw the greatestrisks lying in the areas of management of MFIs: corporate governance, management quality, staffingand transparency. They saw external risks in inappropriate regulation and market pressures such asinterest rates and foreign exchange. They also focused strongly on the risks to MFI reputations fromexcessive public expectations and the danger of mission drift, both of which raised the danger of greaterpolitical interference.Latin AmericaBiggest risksFastest risers1 Competition 1 Competition2 Interest rates 2 Political interference3 Political interference 3 Strategy4 Inappropriate regulation 4 Credit risk5 Cost control 5 Interest rates6 Credit risk 6 Natural catastrophes7 Capital availability 7 Foreign exchange8 Profitability 8 Staffing9 Product development 9 Ownership10 Managing technology 10 FraudLatin American respondents, who were mostly practitioners, focused closely on external factors bearingon their business: competition, regulatory and political pressures. Their high concern with interest ratesreflected the growing commercial pressures to which they feel exposed. Their internal concerns werewith improving the quality of the business through better management of costs and credit, by raisingprofitability, and by expanding the range of products they offer. This group also showed concern withthe rising risk of fraud.CSFI / New York CSFI E-mail: info@csfi.org.uk Web: www.csfi.org.uk 11