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How is the global crisis affecting MFIs and their clients?

How is the global crisis affecting MFIs and their clients? Preliminary results CGAP Global Opinion Survey. April 2009. A year-long crisis? Food, Financial & Economic shocks. August 2008, CGAP Food crisis survey: Operational costs and PAR increasing Clients’ food consumption down

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How is the global crisis affecting MFIs and their clients?

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  1. How is the global crisis affecting MFIs and their clients? Preliminary results CGAP Global Opinion Survey April 2009

  2. A year-long crisis? Food, Financial & Economic shocks August 2008, CGAP Food crisis survey: • Operational costs and PAR increasing • Clients’ food consumption down November 2008, CGAP virtual conference on Financial Crisis impact: • Global liquidity contraction • Foreign exchange risk Q1 2009: • Crisis acceleration + rapid propagation to emerging/developing econ. • 2009 GDP growth forecast for developing countries 2.1% in 2009 (5.8% in 2008) - 31 March World Bank data. Question: How is the global crisis impacting MFIs and MFI clients?

  3. Measuring MFIs’ managers opinion: How much are your clients affected by the global crisis?

  4. MFI clients subject to triple shock Food & Fuel – Financial crisis – Economic slowdown INCOME • Remittances • Loans • Profit margins from micro business • Savings EXPENDITURE • % income in food • % income in repayment • % income on work inputs Are MFI clients more or less resilient to this crisis than poor at large? (we don’t know - yet)

  5. Clients impacted differently… 59% respondents: repayment is down ECA: 75% MENA: 41% Repayment is down in all regions MFI clients spending a higher share of income on food, specially in SA and SSA (55% of respondents). Food higher priority for NGO clients Greater % of income on food 57 % respondents: their clients are saving less, especially in SSA, SA and EAP MFI clients appear to be saving less

  6. Overview of impact on MFIs, by tier Portfolio down or same, % of respondents Av. loan size down or same, % of respondents Portfolio-at-Risk up, % of respondents Loan portfolio is stable or decreasing for 64% of MFIs Portfolio-at-Risk is increasing for 69 % of MFI managers

  7. EAP ECA LAC MENA SA SSA Down Same Up Graphs by region Credit risk is up: regional differences Portfolio at Risk (PAR), % of respondents Credit Risk is up worldwide ECA more affected: 88% of MFIs report rise in PAR MENA and EAP less affected: 62%/ 58% of MFIs report rise in PAR

  8. Increasing liquidity concerns, especially for smaller Tier 3 MFIs Liquidity constraints now Liquidity constraints later 52% of MFIs report liquidity constraints now 66% face constraints for next 6 months Tier 3/smaller MFIs more exposed

  9. Savings-based institutions: mixed message  Most savings-based MFIs not facing liquidity constraints 56% vs. 43% for non-savings  Higher levels of PAR increases 76% savings-based vs. 66% for non-savings

  10. Outlook according to MFI managers • Liquidity problems increasing- 66% of MFI managers expect increased liquidity pressures (75% for Tier 3 MFIs) • PAR improvements - 36% of managers say that their PAR will improve (more pessimistic views in ECA and LAC) • Stable outlook - 77% of managers think their financial performance will remain stable or improve

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