Microfinance institutions weighing deposit mobilisiation: MIX

Microfinance Focus, Aug. 21, 2009: More MFIs than ever before are using deposits such as savings accounts and time deposits to fund their operations and expansion, according to a new study by the Microfinance Information Exchange, Inc. (MIX).
The report focused on the question whether microfinance institutions (MFIs) that mobilise deposits are serving the low income and poor client with savings products. The paper, titled “Microfinance and Small Deposit Mobilization: Fact or Fiction?” proposes a new indicator for better analysis and tracking of the relative size of deposit accounts worldwide.
“More MFIs than ever before are using deposits, such as savings accounts and time deposits, to fund their operations and growth, but until now we have not had a way to understand who the MFIs are reaching with these products,” stated Adrian Gonzalez, lead researcher for MIX and one of the co-authors of the research paper, in a press release. “The microfinance industry has long used average loan sizes per borrower to approximate the type of client an MFI is reaching with its loan products – low income clients, small to medium sized business or someone else. By using the new indicator of average deposits per depositor to average loan balances per borrower we can see if the depositor is the same type of client as the borrower.”
Deposits are an important part of microfinance, and can be an effective tool for helping low income and poor people plan for unexpected events, such as a sudden illness, or to pay for larger expected expenses, such as school fees.
“We were surprised to find that countries that have a pretty good track record at reaching the poorer populations with their loans, have larger sized average deposits per depositor in comparison with the average loan sizes, indicating that they are reaching higher income clients for deposit mobilization,” said Adrian Gonzalez. “However, most of the African countries continued to prove their strength in reaching poorer populations, mobilizing small sized deposits.”
The Microfinance Information Exchange, Inc. (MIX) is the leading provider of business information and data services for the microfinance industry.

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