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Cross-Border Funding for Microfinance Sub-Saharan Africa Results of the CGAP Cross-border Funding Surveys 2010

2010 Funder Survey Highlights SSA Nov 5

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Page 1: 2010 Funder Survey Highlights SSA Nov 5

Cross-Border Funding for Microfinance

Sub-Saharan Africa

Results of the CGAP Cross-border Funding Surveys 2010

Page 2: 2010 Funder Survey Highlights SSA Nov 5

About the survey

The CGAP surveys focus on cross-border funding for microfinance.

Over 150 institutions and funds have participated in CGAP’s 2010 surveys on microfinance funding, representing 85 to 95% of the total estimated cross-border funding to microfinance.

CGAP collects data from major funders (bilateral and multilateral agencies, development finance institutions, foundations) as well as from microfinance investment intermediaries (MIIs) such as Microfinance Investment Vehicles (MIVs) and holdings.

All data is as of December 2009.

For any questions or data requests please contact Barbara Gähwiler at [email protected].

Page 3: 2010 Funder Survey Highlights SSA Nov 5

At a Glance

35 Public Donors and Investors

(Multilaterals, Bilaterals, DFIs)

$1.9 billion

Private Donors and Investors

(Foundations, Institutional and Retail Investors)

$0.6 billion

Microfinance(Support for microfinance at all levels of the financial system: retail, market infrastructure, and policy)

40 Microfinance Investment

Intermediaries (MIIs)

Commitments to Microfinance for SSA as of December 2009: $2.5 billion*

* CGAP surveys capture 85 to 95% of the total cross border funding to microfinance

$1.85 bln

Ap

exes

$0.3 bln $0.3 bln

$0.4bln

Ap

exes

$0.05 bln

Page 4: 2010 Funder Survey Highlights SSA Nov 5

Commitments growing faster than in other regions

• $2.5 billion committed to SSA as of 2009, i.e. 12% of total cross-border funding to microfinance.

• Largest growth in commitments, together with ECA, with a growth rate of 22%.

• SSA is the region with the largest number of active cross-border funders: 35 public funders (bilateral and multilateral agencies and development finance institutions - DFIs), at least 14 foundations and NGOs, and 40 Microfinance Investment Intermediaries (MIIs).

21,313 (100%)

1,546 (7%)

6,188 (29%)4,724 (22%)

787 (4%)

4,064 (19%)

2,544 (12%)1,461 (7%)

Total East Asia & the Pacific

(EAP)

Eastern Europe & Central Asia

(ECA)

Latin America & the Caribbean

(LAC)

Middle East& North Africa

(MENA)

South Asia (SA)

Sub-Saharan Africa (SSA)

Multi-Region

Committed Amount (million USD)+17%

+4%

+21%+22%

+19% +38%+22%

+1%

Number of respondents: 61 and CGAP estimates based on 90 MIVs

AnnualGrowth Rates for 2008 to 2009

Page 5: 2010 Funder Survey Highlights SSA Nov 5

Public funding dominant, but private funding growing faster

• Public funders provide 75% of total commitments to SSA (compared to 69% globally). Private funders (foundations, institutional investors and individual investors) account for 25%.

• However, private funders’ commitments grew by 63% in 2009 (compared to 33% globally), while public funders increased their commitments by only 13% (compared to 12% globally).

• Among public funders, bilateral and multilateral development agencies decreased their commitments compared to 2008 by -4% and -1% respectively, with multilaterals’ trend strongly influenced by AfDB’s strong decline. DFIs increased their commitments by 51%, with specifically strong growth of AECID and AFD Proparco.

69%63%

68%

54%

87% 84%75%

60%

31% 37% 32%46%

13% 16%25%

40%

Total EAP ECA LAC MENA SA SSA Multi-Region

Commitments by Type of Funder

Public Funders Private FundersNumber of respondents: 61 and CGAP estimates based on 90 MIVs

Page 6: 2010 Funder Survey Highlights SSA Nov 5

SSA receives a third of all capacity building funds

• 67% of commitments to SSA are used to refinance retail financial service providers, directly or indirectly, compared to 88% globally.

• $774 million are committed to capacity building in SSA, which represents a third of the $2.3 billion committed to capacity building globally. 28% of these funds are used for capacity building at the market infrastructure and policy levels in SSA. 7 countries, namely Uganda, Mozambique, Mali, Nigeria, Ethiopia, Kenya, Benin, represent more than 40% of this capacity building funds.

• In 2009, funding for on-lending increased by 28%, whereas funding for capacity building increased by 13%.

88%83%

99%91%

84%88%

67%76%

12% 17%

1%9% 16% 12% 33% 24%

Total EAP ECA LAC MENA SA SSA Multi-Region

Commitments by Purpose

Onlending Capacity Building

Number of respondents: 58 and CGAP estimates based on 90 MIVs

Page 7: 2010 Funder Survey Highlights SSA Nov 5

Equity funding on the rise, but debt remains high

• 56% is provided by funders directly or channeled through local governments; 44% of commitments are channeled via intermediaries such as MIIs, compared to 55% globally.

• SSA is the only region were grants are as widely used as debt. For direct investments especially, grant is the main instrument. Grants in SSA amount to close to $1 billion, which represents 36% of total grant funding.

• Equity is on the rise and already represents 6% of funders’ direct investments and more than 20% of MIIs investments. More than half of funder’s direct equity investments is focused on affiliates of international networks (e.g. Procredit, Advans, Access, MicroCred, Accion); direct equity investments are concentrated in 4 countries: South Africa, Kenya, Congo DRC, Mozambique.

Page 8: 2010 Funder Survey Highlights SSA Nov 5

8 countries receive 40% of funding to SSA

• In 2009, funders are active in more than 41 countries in SSA.

• In 2008 and in 2009, the same 8 countries (Ethiopia, Kenya, Uganda, Mozambique, Mali, Tanzania, Nigeria, Ghana) received at least 40% of total funds committed to SSA.

Commitments as of December

2009

2008/2009 Growth in

Commitments

Commitments as of December

2009

2008/2009 Growth in

CommitmentsAngola 2 to 50 mln → Malawi 2 to 50 mln ↓Benin 2 to 50 mln ↓ Mali 50 to 100 ↑Burkina Faso 2 to 50 mln ↑↑ Mauritania 2 to 50 mln →Burundi 2 to 50 mln ↑ Mozambique 100 to 300 →Cameroon 2 to 50 mln → Namibia 2 to 50 mln →Cape Verde 2 to 50 mln → Niger 2 to 50 mln →Central African Republic 0 to 2 mln → Nigeria 50 to 100 →Chad 2 to 50 mln ↓ Rwanda 2 to 50 mln ↓Comoros 2 to 50 mln ↑ São Tomé and Principe 0 to 2 mln →Congo, DRC 2 to 50 mln → Senegal 50 to 100 ↑Congo, Rep. 2 to 50 mln → Sierra Leone 2 to 50 mln →Côte d'Ivoire 2 to 50 mln → Somalia 0 to 2 mln →Ethiopia 100 to 300 ↑↑ South Africa 2 to 50 mln ↑Gabon 0 to 2 mln → Sudan 2 to 50 mln ↑Gambia 2 to 50 mln ↑ Swaziland 2 to 50 mln ↑Ghana 50 to 100 ↓ Tanzania 50 to 100 ↑Guinea 2 to 50 mln → Togo 2 to 50 mln →Kenya 100 to 300 ↑↑ Uganda 100 to 300 →Lesotho 2 to 50 mln → Zambia 2 to 50 mln →Liberia 2 to 50 mln → Zimbabwe 2 to 50 mln →Madagascar 50 to 100 ↓

↑↑ increases, more than 20 mln

↑ increases, 5 to 20 mln

→ same or change less than 5 mln

↓ decreases, 5 to 20 mln

↓↓ decreases, more than 20 mln

Commitments by Country as of Dec. 2009, and 2008/2009 TrendCountry allocation is available for 63% of SSA commitments

$2 to 50 mln

$51 to 100 mln

$101 to 300 mln

<$2 to 50 mln

Country breakdown is available only for direct funding

Page 9: 2010 Funder Survey Highlights SSA Nov 5

Active Funders in SSA

IFAD 11%AfDB 7%

AFD Proparco 6%Gates Foundation 5%

EC 5%

Top 5 Funders in SSA% of Commitments to SSA

Page 10: 2010 Funder Survey Highlights SSA Nov 5

Survey Participants

Public funders

Multilateral and UN agencies

N=8 AfDB, AsDB, EC, IFAD, ILO, IsDB, UNCDF, World Bank

Bilateral agencies

N=15 AusAID, CIDA, DANIDA, DFID, Finland MoFA, GTZ, Italy MoFA, JICA, Lux Dev, MCC, Netherlands MoFA, NORAD, SDC, Sida, USAID

Development finance institutions (DFIs)

N=18 AECID, AFD Proparco, BIO, CAF, CDC, DCA USAID, EBRD, EIB, Finnfund, FMO, ICDF, IFC, IIC, KfW, MIF IADB, Norfund, OPIC, SIFEM

Private funders

Foundations and NGOs

N=16 Foundations: Citi, Doen, Ford, Gates, Grameen, Grameen Jameel, Mastercard, MSDF, Rabobank, Stromme, Whole Planet; NGOs: Cordaid, HIVOS, ICCO, Omidyar Network, Oxfam Novib

Individual Investors n/a CGAP estimates*

Institutional InvestorsN=4 + CGAP estimates*

ABP, ING, PGGM, TIAA Cref, and CGAP 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/

Page 11: 2010 Funder Survey Highlights SSA Nov 5

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.

Page 12: 2010 Funder Survey Highlights SSA Nov 5

Advancing financial access for the world’s poor

www.cgap.org

www.microfinancegateway.org