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The State of Microfinance in Central and Eastern Europe and the New Independent States, 2004 -2005

The State of Microfinance in Central and Eastern Europe and the New Independent States, 2004 -2005. According to MicroCredit Summit Campaign, at the end of 2004 microfinance institutions served over 90 million borrowers worldwide. Source: Microcredit Summit Campaign.

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The State of Microfinance in Central and Eastern Europe and the New Independent States, 2004 -2005

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  1. The State of Microfinance in Central and Eastern Europe and the New Independent States, 2004-2005

  2. According to MicroCredit Summit Campaign, at the end of 2004 microfinance institutions served over 90 million borrowers worldwide... Source: Microcredit Summit Campaign

  3. ... additionally 140 million of clients were served by credit unions worldwide Source: World Council of Credit Unions

  4. In Eastern Europe and Central Asia: over 4 million borrowers

  5. Outreach by Sub-regions

  6. Outreach by Sub-regions

  7. In Azerbaijan:80,000 borrowers

  8. Market Penetration of NGOs/NBFIs

  9. MFI scale of outreach

  10. Largest NGOs/NBFIs by outreach * 2004 data from MIX Market

  11. Gross Loan Portfolio in ECA

  12. Portfolio Growth Rate

  13. Median portfolio size

  14. Depth of Outreach

  15. Women Borrowers

  16. Some highlights of 2004 performance • NGOs/NBFIs in ECA are more profitable than microfinance banks ...

  17. ... even though their expenses are higher ...

  18. ... but portfolio yields are also higher

  19. Operating costs of NGOs/NBFIs are higher because of smaller scale ... Operating efficiency – operating cost/gross loan portfolio NGOs/NBFIs Microfinance banks Gross loan portfolio

  20. ... and because of higher cost of serving lower-end borrowers Operating efficiency – operating cost/gross loan portfolio Depth of outreach

  21. Key Constraints to Growth

  22. RegulatoryChallenges Regulatory Environment 56% • Aspects of regulations that continue to pose challenges include: • Tax codes • Collateral, especially cash collateral, laws • Interest rate regulation • Transformation options • Non-profit status definition Sources of Funds 56%

  23. Constraints in accessing funds • Restrictions on deposit mobilization by non-bank institutions • Restrictions on the use of borrowed funds for on-lending • Not-for-profit status deterring equity investors • Lack of knowledge how to access funds • Lack of visibility towards potential investors • Lack of capacity for liability management and foreign currency risk management

  24. Competition faced by NBFIs • Strongest competition in the Caucasus among NBFIs • High level of competitive pressure for NBFIs from banks in Russia/Ukraine • Balkans - 88% of NBFIs perceive competition from other NBFIs as quite strong

  25. Trends • Increasing leverage through better access to borrowed funds, including commercial sources • Lowering interest rates as there is more competition and MFIs become more efficient • Product diversification

  26. Leverage of NGOs/NBFIs

  27. Interest rates • 55 percent of MFIs decreased interest rates, in particular in the Balkans

  28. Product innovation • New lending products for current clients • New lending products for new clients • New non-lending products

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