MICROBANKING BULLETIN - Microfinance Information Exchange

FINCA Uganda is one of the most matureprograms supported by FINCA international. Ina fascinating narrative, Mike McCord highlightsthe decisions that affected the evolution ofFINCA Uganda’s financial performance over thepast five years and its search to meet its dualobjectives.(1999 ALB: US$60; Depth: 19.4 percent) Pro Mujer in Bolivia started as an NGO thatbrought women into economic activity for thefirst time through a training program. Over timeit added a credit component. Nancy Natilsondescribes the challenges of operating in ancompetitive environment, yet maintaining anunwavering commitment to serving the poor.(1999 ALB: US$116; Depth: 11.5 percent) BURO Tangail, in Bangladesh, has made astrong attempt to incorporate deposit servicesfor poor clients. Geetha Nagarajan highlightsBURO’s fight to improve sustainability whileserving its relatively poor clients (92 percent liveon less than US$1 per day). BURO facesparticular challenges related to the additionalexpense of offering deposit services.(1999 ALB: US$57; Depth: 16.0 percent) Although it serves a heterogeneous clientele,BASIX extends its services into rural India.Nagarajan points to the unique challengesfaced by a private organization that seeks tocompete with subsidized credit to the poor.BASIX has had to face a reduced yield on itsportfolio brought on by increased delinquencyand higher costs associated with its ruralexpansion.(1999 ALB: US$208; Depth: 56.0 percent)In the Bulletin Highlights, Craig Churchill analyzesthe characteristics of financially sustainable MFIs.He finds that there is NOT a strong relationshipbetween loan balances and self-sufficiency, andthat some of the most profitable MFIs serve thepoorest clients. He then focuses on how low-endMFIs achieve financial self-sufficiency and identifiesimportant regional differences in their strategies.The Highlights section also includes an initial tasteof longitudinal analysis—how the performance ofMFIs changes over time.Programs targeting relatively poorer clients reachsustainability through a variety of means. We try toillustrate these distinct paths by creating a relativelylarge number of peer groups. In this issue, weadded one new peer group, dividing EasternEurope into High-end and Broad. Otherwise, thepeer groups remained relatively stable.As usual, the back of the Bulletin contains statisticaltables showing results both for peer groups that wehave created, and for several other indicators: ageof program, scale of operations, lendingmethodology, degree of financial intermediation,and target market.This Bulletin includes data from 114 MFIs in 46countries, an increase of ten institutions from IssueNo. 4. In each issue, new programs are added,while others drop out. Over half of the participatingprograms have updated their information within thepast year. We only include programs that havecontributed data in the past two years. Thisrepresents tighter criteria from previous issues ofthe Bulletin that included information from threeyears. So, while we have gained 17 new programsfor this issue, we lost 7 MFIs that did not updatetheir data recently.These regular changes in the composition of eachpeer group complicate the interpretation of datafrom one Bulletin to the next. Readers should becautioned NOT to draw inferences about theevolution of indicators across issues of the Bulletin.To address this issue, the next MicroBankingBulletin will include some information that showsthe evolution of key indicators for institutions fromwhich we have a series of data over a number ofyears. Obviously, these represent a smaller subsetof the entire group of programs that are currentlysending us data, but this longitudinal analysis willstill provide important insights into how MFIsdevelop over time.Finally, I would like to recognize the tremendousefforts of Jennifer McDonald who has recently leftthe Bulletin staff to work for a microfinanceinstitution in Africa. Jennifer is known to many ofyou as the heart and soul of the Bulletin during itsfirst three years. Her contributions are far toonumerous to list. Suffice it to say that herdedication, attention to detail, and commitment toquality set a standard that her successors mustwork hard to maintain. Thank you Jennifer.We hope that you will enjoy this issue and welcomeany suggestions for ways in which we can make theBulletin more relevant to your work.Robert Christen2 MICROBANKING BULLETIN, SEPTEMBER 2000