International Funding for Microfinance Reaches at Least US$25 billion in 2011: Report

Microfinance Focus, December 5, 2012: According to the CGAP’s Cross-Border Funder Survey, international funding for microfinance reached at least US$25 billion in 2011. The total amount committed continues to increase, though at a slower rate in the past two years: average annualized growth decreased from 17 percent per year between 2007 and 2009 to six percent per year between 2009 and 2011, said the report. Further, the report said, “the slower growth can be explained by the fact that funders committed the same amount of funding in new projects in 2011 compared to 2009, and at the same time more projects closed in the past two years”.

The CGAP funder survey collects data from the major cross-border funders of microfinance. In 2012, CGAP surveyed 59 microfinance funders. According to the report, As of December 2011, the 59 cross-border funders reporting to CGAP represented 70 percent of the total market estimate of cross-border funding.

• Public funding continues to be higher (approx. 2/3 of total commitments) than the share of private funding (approx. 1/3 of total commitments).

• Private funders are outpacing public funders in growth. Between 2009 and 2011, the average annualized growth rate for private funding is estimated at 12% compared to 3% for public funding. 

• Seventy-seven percent of total commitments ($13.5 billion) were used for refinancing retail providers. Finally, three regions – South Asia, Europe and Central Asia, and Latin America and the Caribbean – received more than 60 percent of total commitments. Commitments in the ECA region decreased by 5% per year on average between 2009 and 2011. 

• The bulk of cross-border funding continues to be used for refinancing retail providers (77% of commitments).

• Funding for capacity building at all levels of the financial system represents 15% of commitments. 60% of capacity building commitments focus at the level of retail institutions. 

• Debt funding remains the main instrument (55% of commitments) but has remained stable between 2009 and 2011. Between 2009 and 2011, equity investments increased by 12% per year on average. This was mostly driven by DFIs. Between 2009 and 2011, the amount committed through guarantees increased by 32% per year on average. This was mostly driven by four large guarantee programs.

• In the next 5 years, to expand financial services for the poor, cross-border funders will include in their top priorities rural finance, agricultural finance, responsible finance, and branchless banking.  

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