MICROBANKING BULLETIN - Microfinance Information Exchange

BULLETIN HIGHLIGHTS AND TABLESFigure 5 highlights the diversity among FSS MFIs.It shows, for example, that while FSS MFIs fromLatin America vastly outnumber sustainableprograms in Asia (41 to 12), there is a much smallergap in the percentage of FSS MFIs to total MFIs inthose regions (77 percent to 55 percent).Two findings stand out from a simplistic analysis ofFigure 5. First, older MFIs have a distinctadvantage over their younger counterparts.Second, small MFIs have a real disadvantage intheir efforts to achieve financial self-sufficiency. It isalso interesting to note that nearly half of theprograms using group methodologies (solidarity andvillage) or serving low-end market are sustainable.Performance VolatilityMany institutions experience wide swings in theirfinancial self-sufficiency levels. If we had publishedthe Top Ten list in the last issue of the Bulletin, only5 of those listed in the prior issue would also appearon this year’s list. The Bulletin database currentlyconsists of 52 participants (not just FSS MFIs) forwhich we have both 1998 and 1999 data. Of the52, 22 experienced an increase in the FSS ratio ofmore than 10 percentage points, 14 decreased bymore than 10 points, and 16 basically stayed thesame (+/- 10 points).As shown by Figure 6, newer institutions tend toexperience more volatility than older MFIs, but theyhave not cornered the market on fluctuations. Moremature institutions operating in unstablemacroeconomic conditions or competitive marketsalso experience big swings in their FSS ratio.How Low Can They Go?Now to the crux of the matter: is there a trade-offbetween financial self-sufficiency and depth ofoutreach? Figure 7 lists financially self-sufficientMFIs ranked by their depth of outreach (averageoutstanding loan / GNP per capita) and averageoutstanding loan balance.The data in Figure 7 suggest that it is possible toprovide very small loans and be financially selfsufficient—atleast in Latin America and parts ofAsia. With one exception, MFIs in Africa andEastern Europe have achieved financial selfsufficiencyby serving a broad or high-end targetmarket.Figure 6: Percent Change in Financial Self-sufficiency from 1998 to 1999New and Young MFIsMature MFIs-100% -50% 0% 50% 100% 150% 200% 250%MICROBANKING BULLETIN, SEPTEMBER 2000 31