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Cross-Border Funding for Microfinance South Asia Results of the CGAP Cross-border Funding Surveys 2010
About the CGAP 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 email@example.com.
At a Glance Commitments to Microfinance for SA as of December 2009: $4 billion* 29 Public Donors and Private Donors and Investors Investors (Foundations, Institutional and (Multilaterals, Bilaterals, DFIs) Retail Investors) $3.4 billion $0.6 billion 37 Microfinance $3.36 bln $0.04 bln Investment $0.4 bln $0.2 bln Intermediaries (MIIs) Apexes Apexes $0.5 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
Low growth in commitments in 2009 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• Cross-border funders had $4,064 million committed to South Asia (SA) as of 2009, representing 19% of total cross-border funding to microfinance.• Lowest growth in commitments, with a rate of 1% compared to 17% globally.• 29 public funders (18 bilateral and multilateral agencies and 11 development finance institutions - DFIs), 14 foundations/NGOs and 37 Microfinance Investment Intermediaries (MIIs) are active in SA.• The AsDB and the World Bank represent more than 50% of commitments to SA.
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 84% of total commitments to SA, compared to 69% globally. Private funders (foundations, institutional investors and individual investors) account for 16%.• While public funding decreased by -7%, private funding increased by 129% in 2009 (compared to 33% globally). Of the 37 MIIs active in SA in 2009, only 24 were active there in 2008.• Bilateral agencies decreased their commitments by -17%; multilateral agencies by -10%. DFIs increased their commitments by 18% on average.
Focus on refinancing retail financial service providers 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• 88% of commitments to SA are used to refinance retail financial service providers, directly or indirectly.• At least $400 million are committed to capacity building in SA. 83% of these funds are used to strengthen retail service providers; 17% are used at the market infrastructure and policy levels. India represents close to 80% of these capacity building funds, due to one large project funded by AsDB, World Bank and KfW.• Funding for on-lending increased by 33% in 2009, while funding for capacity building decreased by -18%.
Debt is by far the main instrument used by funders Commitments by Type ofCommitments by Type of Direct Funding by Direct Funding by Instrument Funding (TOTAL) Funding (SA) Instrument (TOTAL) (SA) 4% 1% 1% 4% 10% 21% 2% Other Other 5% Guarantee 40% Guarantee 55% 45% 60% Grant Grant 86% Equity 66% Equity Debt Debt Direct Indirect Direct Indirect Number of respondents: 58 and CGAP estimates based on 90 MIVs• 60% of commitments to SA is provided by funders directly or channeled through local governments, 40% are channeled via intermediaries such as MIIs.• Debt remains the main financial instrument used by funders.• Funders committed $550 mln in grants. Grant represent 10% of direct investments, compared to 21% globally. Afghanistan and Bangladesh received 60% of total grants to SA.• Debt and equity increased in 2009 while grants and guarantees decreased during the same year.
India receives 65% of total funding to SA • Funders are active in 8 countries in SA. • In 2008 and 2009, India represents at least 65% of total commitments to SA. Direct Commitments by Country as of Dec. 2009 2008/2009 Commitments as of Growth in December 2009 Commitments India > $1billion ↑↑ Bangladesh $300 to 500 mln ↓ Pakistan $100 to 300 mln ↓↓ Afghanistan $100 to 300 mln ↓↓ Sri Lanka $50 to 100 mln ↓↓ $2 to 50 mln Bhutan $2 to 50 mln → $51 to 100 mln Maldives $2 to 50 mln → Nepal $2 to 50 mln ↓↓ $101 to 300 mln $301 to 500 mln ↑↑ increases, more than 20 mln $501 to 1,000 mln ↑ increases, 5 to 20 mln → same or change less than 5 mln >$1 bln ↓ decreases, 5 to 20 mln ↓↓ decreases, more than 20 mlnCountry breakdown is available only for direct funding
Active Funders in SA Top 5 Funders in SA Active Funders in SA % of Commitments to SA AsDB 27% Multilateral & UN Agencies Bilateral Agencies Microfinance Investment Intermediaries (MIIs) World Bank 25% AsDB AusAID KfW 9% EC CIDA Aavishkaar Goodwell respA GMF IFAD DFID ASN-Novib respA MF DFID 6% ILO Finland MoFA Bellwether Rural Impulse IFAD 5% IsDB GTZ BOPEF ShoreCap UNCDF Italy MoFA Consorzio Etimos SIDI World Bank JICA DBMDF SNS Netherlands MoFA Dignity SNS MF II Norad DMCF Symbiotics DRF SDC Elevar Equity II Triodos FSF Foundations & NGOs USAID EMF Triodos MF Citi Foundation Finethic Triodos-Doen Cordaid Development Finance GCMC Unitus EF Doen Foundation Institutions (DFIs) Hivos-Triodos Wallberg GMF Ford Foundation AFD Proparco I&P Gates foundation BIO Impulse Grameen Foundation CDC Incofin Hivos DCA USAID India FIF ICCO EIB MicroVentures MSDF Finnfund MicroVentures India Omydiar Network FMO MicroVentures SICAR Oxfam Novib IFC MicroVest I Rabobank Foundation KfW MicroVest II Stromme Foundation Norfund Oikocredit Whole Planet Foundation OPIC OTI
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