2003 Arab Microfinance Analysis and Benchmarking Report - English
Growth in the microfinance industry in the Arab world is in full swing. This young sector, where non governmental organizations and solidarity loans still predominate, is slowly transforming: diversifying its institutional structures and client services. This slow diversification comes with rapid growth in coverage. Traditional MFIs analyzed in the 2002 edition of the Benchmarking Arab Microfinance report have doubled their outreach, climbing to more than 400,000 active borrowers by the end of 2003. The Moroccan sector still holds the lead with the two largest institutions in terms of outreach in the region, but other actors, including commercial banks in Egypt, have discovered microfinance and are already offering services to a growing number of clients.
How has the sector performed in the region? What are its strengths? What are the drivers of those strengths? How has it evolved in comparison with other regions of the world? How does performance vary within the region? This report tackles all of these questions, by highlighting the Arab world in the midst of an evolving global industry and closely analyzing Arab microfinance performance within the region.
Arab microfinance continues to extend its outreach and scale, taking advantage of experiences and lessons learned from other regions of the world. Though young, the sector is reaching client levels achieved by regions in which microfinance took hold long before. Within the region, the chasm is widening between large institutions and the rest. Large MFIs almost doubled their outreach since 2002, while others reported much slower growth. These same flagship institutions continue to enjoy profitability levels above those achieved in other regions. For these Arab MFIs, the positive returns stem from low cost levels, thanks to nearly perfect portfolio quality, and some of the lowest cost of funds in the industry.
Indeed, even as some leading institutions open up to local and global capital markets, Arab microfinance still relies primarily on grants and donations for the capital to fund its lending activity.
