The document summarizes the history and challenges facing the microfinance industry in South Africa. It discusses four phases of development: before 1992 which was dominated by NGOs; 1992-1999 which saw key growth but also the collapse of some NGOs; 1999-2005 of continued growth within a more regulated environment; and 2006 onwards. Some of the main challenges discussed are the need for expanded financial products like savings and insurance, improving understanding of clients, addressing regulatory burdens, and enhancing access to information.

1. Challenges facing the microfinance “industry” in South Africa Gerhard Coetzee 2006 MFSA Conference

7. Market ‘growth’ in Rand volume

17. Short term price comparisons 360% 1 month R1,000 Micro-lender 6 336% 1 month R1,000 Micro-lender 2 222% 1 month R1,000 Bank 6 60-360% 30 days R750 13 lenders 360% 1 month R500 Micro-lender 5 2003 MFRC TCOC 259.2% 1 month R500 Micro-lender 1 360% 1 month R100 Micro-lender 4 360% 1 month R100 Micro-lender 3 540-1040% 25-30 days R500 Cash lender 6 360% 1 month R100 Micro-lender 9 640-780% 25-30 days R500 Cash lender 5 336% 1 month R100 Micro-lender 2 360-450% 25-30 days R500 Cash lender 4 264% 1 month R100 Micro-lender 1 360% 30 days R500 Cash lender 3 228% 1 month R100 Bank 6 540-1040% 7-25 days R100-R500 Cash lender 2 APR Term Loan amount Institutions APR Term Loan amount Institutions 2003 2000 Table 9: Comparative Table: Interest Charges by Institutions in 2000 and 2003 (Random Institutions) – Cash Lenders

18. Longer term price comparisons 198/209 6 R2000 7 lenders 80/105 12 R3000 27 lenders 56/83 24 R8000 21 lenders 70/95 12 R5000 23 lenders 2003 MFRC TCOC 112 12 R5,000 Bank 2 78 6-12 R2,000-R6,000 Term lender 1 209 9 R2,000 Micro-lender 7 287 3-6 R1,500-R3,000 Cash lender 7 147 12 R2,000 Bank 4 153 3 <R6,000 Cash lender 9 98 12 R1,000 Bank 1 57 24 <R9,000 Term lender 2 155 12 R2,000 Micro-lender 8 242 18-24 <R10,000 Cash lender 8 83 12 R5,000 Bank 5 45-88 12 >R2,000 Term lender 3 APR (%) Term (months) Loan amount Institutions APR (%) Term (months) Loan amount Institutions 2003 2000 Table 10: Comparative Table: Interest Charges by Institutions in 2000 and 2003 (Random Institutions) – Term Lenders