Kosovo Microfinance outreach up by 27%, portfolio growth slower: MIX report

By Nagesh Narayana

Microfinance Focus, Jan. 19, 2010: In its first report on Kosovo microfinance benchmarking, the Microfinance Information Exchange (MIX) has listed the latest trends in Kosovo MFIs.
It showed that the MFIs had increased their borrower base by 20 percent in 2008 and by 27 percent as of 31 October 2009 but the growth in portfolio was slower at 15% in the 3rd quarter of 2009, compared to the increase of 41 per cent in 2008.
Moreover, this is far below the penetration levels reached by other microfinance sectors in the Balkans: 84 per cent in Bosnia and Herzegovina (BiH), 35 per cent in Serbia and Montenegro, and 23 per cent in Albania.
The report has attributed it to the decrease  in remittances in Kosovo, in turn reducing the purchasing power of clients. As a result MFIs became more conservative in their lending by disbursing smaller loans, the report said giving figures like – the median indicator for average loan balance per borrower has decreased from 2,023 euros (USD 2,810) in 2008 to 1,904 euros (USD 2,644) in 2009. On the contrary, in previous years it had been continuously rising, the report said.
On the brighter side, the report said in terms of profitability, Kosovo MFIs are on par with peers from the Balkans with adjusted ROA at 1.3 percent, which was higher than the median for the ECA region at 0.3 percent.

The 2009 Kosovo Microfinance Analysis & Benchmarking Report was produced by MIX and the Association of Microfinance Institutions in Kosovo (AMIK). This report analyzes developments in the legal and regulatory environment and financial performance of microfinance in Kosovo and includes benchmarks comparing 7 MFIs in Kosovo to regional peers.
The microfinance sector in Kosovo has been operating since 1999, and most microfinance institutions (MFIs) in Kosovo started as economic development programs of international humanitarian organizations.

Currently there are 14 microfinance institutions operating mainly in rural areas, representing 18 per cent of the financial sector in terms of number of loans and 7 per cent in total loan amount, the report said and added that these figures indicate an overall large number of loans provided in small amounts by MFIs in Kosovo.

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