Cross-Border Funding for Microfinance Middle East and North Africa Results of the CGAP Cross-border Funding Surveys 2010
About the surveysThe CGAP surveys focus on cross-border funding for microfinance.Over 150 institutions and funds have participated in CGAP’s 2010 surveyson microfinance funding, representing 85 to 95% of the total estimatedcross-border funding to microfinance.CGAP collects data from major funders (bilateral and multilateralagencies, development finance institutions, foundations) and frommicrofinance investment intermediaries (MIIs) such as MicrofinanceInvestment Vehicles (MIVs) and holdings.All data is as of December 2009. For any questions or data requests please contact Barbara Gähwiler at firstname.lastname@example.org.
At a Glance Commitments to Microfinance for MENA as of December 2009: $0.8 billion* 21 Public Donors and Private Donors and Investors Investors (Foundations, Institutional and (Multilaterals, Bilaterals, DFIs) Retail Investors) $0.7 billion $0.1 billion 16 Microfinance $0.67 bln $0.03 bln Investment $0.07 bln $0.03 bln Intermediaries (MIIs) Apexes Apexes $0.08 bln Microfinance (Support for microfinance at all levels of the financial system: retail, market infrastructure, and policy) * CGAP surveys capture 85 to 95% of the total cross border f unding to microfinance
Slow growth in commitments Committed Amount (million USD) +17% 21,313 (100%) Annual Growth Rates for 2008 to 2009 +22% +21% 6,188 (29%) +1% 4,724 (22%) +22% 4,064 (19%) +38% +19% +4% 2,544 (12%) 1,546 (7%) 787 (4%) 1,461 (7%) Total East Asia & Eastern Europe Latin America Middle East South Asia Sub-Saharan Multi-Region the Pacific & Central Asia & the Caribbean & North Africa (SA) Africa (SSA) (EAP) (ECA) (LAC) (MENA)Number of respondents: 61 and CGAP estimates based on 90 MIVs • $787 million committed to MENA as of 2009, representing 4% of total cross-border funding to microfinance. • Slow growth in commitments, with a rate of 4% compared to 17% globally. • 21 public funders (bilateral and multilateral agencies and development finance institutions - DFIs), 8 foundations/NGOs and 16 Microfinance Investment Intermediaries (MIIs) are active in MENA. • MENA is the region with the lowest number of private funders and intermediaries.
Public funding dominant, but private funding growing faster Commitments by Type of Funder 13% 16% 25% 31% 37% 32% 87% 40% 46% 84% 75% 69% 68% 63% 60% 54% Total EAP ECA LAC MENA SA SSA Multi-Region Public Funders Private Funders Number of respondents: 61 and CGAP estimates based on 90 MIVs • Public funders provide 87% of total commitments (compared to 69% globally). Private funders (foundations, institutional investors and individual investors) account for 13%. • However, private funding grew by 80% in 2009 (compared to 33% globally), while public funding decreased by -1% (compared to a 12% increase globally), mostly because of a strong decline in AfDB’s portfolio in MENA. • The Top 5 funders in MENA represent 46% of total funding to the region: AECID, AFD Proparco, IFAD, KfW, EC.
Strong increase in commitments for capacity building Commitments by Purpose 1% 12% 9% 16% 12% 33% 24% 17% 99% 88% 91% 88% 83% 84% 76% 67% Total EAP ECA LAC MENA SA SSA Multi-Region Onlending Capacity Building Number of respondents: 58 and CGAP estimates based on 90 MIVs• 84% of commitments to MENA are used to refinance retail financial service providers, directly or indirectly, compared to 88% globally. Morocco and Egypt receive 80% of these funds.• $128 million are committed to capacity building in MENA. 80% of these funds are used to strengthen retail service providers; 20% are used at the market infrastructure and policy levels. Morocco and Iraq receive more than 40% of capacity building funds to MENA.• Funding for on-lending remains stable in 2009 compared to 2008, while funding for capacity building increased by 36% - half of this increase is due to Iraq.
Debt is the main instrument, but guarantees are more widely used than in other regions Commitments by Type of Commitments by Type of Direct Funding by Direct Funding by Instrument Funding (TOTAL) Funding (MENA) Instrument (TOTAL) (MENA) 4% 4% 12% 21% Other 28% Guarantee 5% Guarantee 32% 55% 45% 68% 2% Grant Grant Equity 66% Equity 58% Debt Debt Direct Indirect Direct Indirect Number of respondents: 58 and CGAP estimates based on 90 MIVs• 68% is provided by funders directly or channeled through local governments, compared to 45% globally; the remaining 32% are channeled via intermediaries such as MIIs.• While debt remains the main financial instrument used by funders, guarantees represent 12% of direct commitments compared to less than 5% in other regions (58% of guarantees are focused on Morocco).• Equity investments are limited to a small number of organizations such as First Microfinance Institution Syria and JAIDA in Morocco, due to regulatory constraints in many countries in the region.
Morocco and Egypt receive more than 60% of funding to MENA Commitments by Country as of Dec. 2009, and 2008/2009 Trend Country allocation is available for 88% of MENA commitments 2009 2008/2009 Commitments Growth Algeria $2 to 50 mln → Djibouti $2 to 50 mln → Egypt $100 to 300 mln ↓↓ Iran <$2 mln → <$2 mln Iraq $2 to 50 mln ↑ $2 to 50 mln Jordan $2 to 50 mln → $101 to 300 mln Lebanon $2 to 50 mln → $301 to 500 mln Morocco $300 to 500 mln ↓ ↑↑ increases, more than 20 mln Syrian Arab Republic $2 to 50 mln ↑ ↑ increases, 5 to 20 mln Tunisia $2 to 50 mln → → same or change less than 5 mln West Bank and Gaza $2 to 50 mln → ↓ decreases, 5 to 20 mln ↓↓ decreases, more than 20 mln Yemen $2 to 50 mln → • Funders are active in 12 countries in MENA. • In 2008 and in 2009, Morocco and Egypt received most of the funding, although their share decreased; in 2009, they still represent at least 60% of total commitments to MENA. Commitments to Iraq and Syria increased in 2009 while commitments to Morocco and Egypt decreased.Country breakdown is available only for direct funding
Active Funders in MENATop 5 Funders in MENA Active Funders in MENA% of Commitments to MENA AECID 13% Multilateral & UN Agencies Foundations & NGOs Microfinance Investment Intermediaries AFD Proparco 11% (MIIs) IFAD 8% AfDB Citi Foundation Accion AIM KfW 7% EC Cordaid Consorzio Etimos EC 7% IFAD Gates Foundation DBMDF World Bank Grameen Foundation DMCF Grameen Jameel EMF Development Finance Mastercard Foundation Finethic Institutions (DFIs) Omydiar Network Hivos-Triodos AECID Oxfam Novib Incofin AFD Proparco JAIDA BIO Bilateral Agencies Oikocredit DCA USAID CIDA Planet MicroFund EIB GTZ respA GMF Finnfund Italy MoFA respA MF FMO JICA SIDI IFC MCC Wallberg GMF KfW Netherlands MoFA XXEB OPIC USAID
Method and Definitions• Method: Figures are based on data reported by 61 funders and 90 microfinance investment intermediaries. CGAP used data provided by microfinance investment intermediaries to estimate funding from individual investors and institutional investors. All data is as of December 2009. Growth rates are based on a subset of respondents for which data is available for all years covered by the surveys. Country breakdowns are based on funding for which country allocation is available. ***• Cross-border funding for microfinance: Like other development sectors, microfinance receives funding from public and private funders in developed countries. Depending on local capital markets and the regulatory environment, microfinance institutions in developing countries can also access local funding sources, such as client deposits or loans from local commercial banks. The CGAP surveys focus exclusively on foreign, or cross-border, funding for microfinance.• Commitments: A common way to measure funding for microfinance is to look at funders’ commitments. Total commitments represent the total amount of all currently active investments and projects, whether the funds have been disbursed or are yet to be disbursed during the remaining lifetime of a project. As such, total commitments describe the stock of funds set aside for microfinance at a given time (i.e. December 2009 for the data above). To understand the actual flow of money to the microfinance sector, it is also necessary to look at annual disbursements.• Microfinance Investment Intermediaries: Microfinance Investment Intermediaries (MIIs) are investment entities that have microfinance as one of their core investment objectives and mandates. MIIs can provide debt, equity or guarantees (directly or indirectly) to microfinance service providers. The main types of MIIs are Microfinance Investment Vehicles (MIVs), Holding Companies and others such as peer-to-peer lending platforms.
Survey Participants Public funders Multilateral and UN N=8 AfDB, AsDB, EC, IFAD, ILO, IsDB, UNCDF, World Bank agencies N=15 AusAID, CIDA, DANIDA, DFID, Finland MoFA, GTZ, Italy MoFA, Bilateral agencies JICA, Lux Dev, MCC, Netherlands MoFA, NORAD, SDC, Sida, USAID N=18 AECID, AFD Proparco, BIO, CAF, CDC, DCA USAID, EBRD, EIB, Development finance Finnfund, FMO, ICDF, IFC, IIC, KfW, MIF IADB, Norfund, OPIC, institutions (DFIs) SIFEM Private funders N=16 Foundations: Citi, Doen, Ford, Gates, Grameen, Grameen Jameel, Mastercard, MSDF, Rabobank, Stromme, Whole Foundations and NGOs Planet; NGOs: Cordaid, HIVOS, ICCO, Omidyar Network, Oxfam Novib Individual Investors n/a CGAP estimates* N=4 + CGAP ABP, ING, PGGM, TIAA Cref, and CGAP estimates* Institutional Investors estimates* *CGAP estimates are based on data from 90 MIIs. For more information on MIIs see http://www.cgap.org/p/site/c/template.rc/1.11.142715/
Advancing financial access for the world’s poor www.cgap.org www.microfinancegateway.org