Microfinance Banana Skins 2008 - Citigroup

C S F I / New York CSFIEuropeBiggest risksFastest risers1 Management quality 1 Competition2 Corporate governance 2 Too much funding3 Inappropriate regulation 3 Credit risk4 Staffing 4 Unrealisable expectations5 Cost control 5 Staffing6 Fraud 6 Interest rates7 Managing technology 7 Political interference8 Too much funding 8 Mission drift9 Transparency 9 Reputation10 Strategy 10 Corporate governanceEuropean respondents, who consisted mostly of investors in West Europe and practitioners in EastEurope, saw the greatest risks in internal management issues including corporate governance, staffing,cost control and strategy, though these were not necessarily seen to be the fastest rising risks. Concernsabout inappropriate regulation were particularly strong in East Europe. The areas of rising risk are thegrowth of competition, both in business and funding. They also see rising risks in the areas ofreputation and mission drift. This group showed a strong concern with fraud.AfricaBiggest risksFastest risers1 Too little funding 1 Competition2 Management quality 2 Corporate governance3 Credit risk 3 Management quality4 Managing technology 4 Managing technology5 Inappropriate regulation 5 Staffing6 Corporate governance 6 Distribution channels7 Staffing 7 Product development8 Cost control 8 Profitability9 Profitability 9 Strategy10 Strategy 10 Back office operationsAfrican respondents consisted mainly of practitioners and members of aid organisations and NGOs.They were the most concerned of any group about the scarcity of funding for microfinance – in contrastto other regions which saw the risk lying in an overabundance. Management issues ranked high ontheir list, particularly staffing. Credit risk was also seen as a high level problem. African MFIs putprofitability and cost control among their strongest concerns, and saw growing challenges in the areasof distribution channels and product development.12 CSFI / New York CSFI E-mail: info@csfi.org.uk Web: www.csfi.org.uk