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Introduction
Taux dintrt en microfinance : abus ou ncessit ? 3
Documents cls
Pour des taux dintrts justes et transparents en microfinance,
Zoom microfinance n 35, SOS Faim, mars 2012 4
Annexes
Intervenants 33
Partenaires Luxembourg 34
Partenaires Bruxelles 36
Introduction
une plus grande attention aux moyens de rduire les cots dexploitation
pour garantir le plus haut degr defficacit et de comptitivit des taux
dintrt.
mars 2012 n 35
Zoom microfinance
Pour des taux dintrts justes et transparents
en micro finance
Accder au service
est le plus important
SOS Faim-M.Lefebvre
La question des taux dintrts sur les crdits reste centrale dans lindus-
trie de la micro finance. Elle continue susciter dbats et polmiques,
alors que le taux dintrt constitue la majeure partie du prix pay par un
client pour accder un service financier se voulant accessible et adapt
une population aux faibles ressources.
La ncessit dun taux dintrt acceptable (adapt la rentabilit de lactivit
qui sera ralise) et transparent a t renforce par larrive au premier plan du
thme de la protection des clients en micro finance. Cette thmatique a merg
suite aux diffrentes crises1 vcues par le secteur dans des pays aussi diffrents
que la Bolivie, le Nicaragua, lInde, le Maroc ou encore le Bnin. Ces crises ont
souvent t lies une saturation dune partie du march et des mcanismes
de surendettement et de cavalerie financire .
Mais au fait, quest ce qui justifie le tarif du taux dintrt demand par une
institution de micro finance ?
1 : Voir larticle Au-del de la crise , Dfis Sud 102, pages 7-9.
p
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SOS Faim-A.Kennes
Laccs au crdit pour les femmes rurales pruviennes est une condition de leur indpendance.
Nous avons demand leur point de vue une vingtaine de tante : il ne faut en effet pas rduire la micro finance au
praticiens de la micro finance sur le sujet. Les rponses micro crdit. Mais galement celui de disposer de res-
reues recoupent les pistes proposes par Proparco : sources stables, mme dans les cas les plus frquents o
lpargne est dpose vue.
La limitation des frais oprationnels
La limitation des frais oprationnels qui psent le plus Harbu (thiopie) cre comme IMF oriente vers le
lourd dans la dfinition du taux compte parmi les so- crdit, a pris conscience de limportance de lpargne :
lutions avances en premier lieu, avec diffrentes non seulement, elle constitue une source relativement
modalits concrtes proposes : peu coteuse de ressources pour les octrois de crdit
mais elle reprsente galement une assurance pour
la professionnalisation du staff et des dirigeants ; lIMF. Les bons pargnants sont gnralement des cli-
la mthodologie du crdit : un processus doctroi ents plus srieux ! Cette volution ne sest pas ralise
qui soit le plus transparent possible pour tous les ac- sans mal car elle a demand un changement de men-
teurs, avec une bonne communication avec le client et talit de la part des agents de crdit.
en vitant au maximum les paperasseries inutiles ; Si on recourt au refinancement, un interview argumente
un contrle budgtaire strict et permanent ; lavantage de disposer de garanties pour permettre de
ngocier un taux plus attractif, puisque cela rduit la
un systme dinformation et de gestion efficace per- prise de risque du prteur.
mettant de corriger rapidement une situation.
Le cot de la ressource La limitation des pertes sur crdits
Les rpondants mutualistes ou coopratifs avancent Plusieurs intervenants mettent laccent sur la rapidit
lavantage de recourir aux dpts de leurs membres. de raction que permet un bon systme dinformation
Lpargne (sa collecte et sa rmunration) est en effet et de gestion (SIG). Selon un dirigeant de Kafo Jiginew :
considre comme meilleur march que les autres res- des pertes leves gnrent souvent des frais gn-
sources. Une institution performante peut arriver un raux en hausse ; elles sont rvlatrices de dfaillances
cot de lordre de 4 %. Kafo Jiginew, la principale IMF de gestion et de gouvernance. Chez nous, un suivi quo-
malienne, collecte lpargne de ses membres un cot tidien est ralis chaque matin et permet de tirer la
total qui oscille entre 4,75 et 5 %. Selon les personnes sonnette dalarme si ncessaire, par exemple en met-
interviewes, lpargne prsente dautres avantages. tant laccent sur les recouvrements en ralentissant les
Tout dabord, celui de rpondre une demande impor- octrois .
p
5
SOS Faim-M.Lefebvre
dopration diffrents, quil est fondamentalement dis-
tinct de servir un client au centre dune ville et dans une
zone rurale, quun client salari na pas le mme profil
de risque quun petit producteur rural, que la technolo-
Les caisses rurales sont encore rarement informatises (ici dans une
caisse des U-BTEC au Burkina Faso).
7 : Nimal A. Fernando Asian Development Bank Understanding and
dealing with high interest rates on microcredit - May 2006. gie de crdit utilise, notamment la garantie demande,
modifie galement le niveau de risque .
Pour le Renaca (Bnin), un plafonnement du taux
dintrt sans accompagnement spcifique (accs
Charges dintrts des ressources moindre cots, subsides pour le
fonctionnement,) pour aider les IMF grer le gap
Un autre aspect intressant de cette question apparat dfavorable ventuel que cela engendrerait, crerait
lorsquon replace les charges dintrts des micro entrepre-
certainement des dsquilibres dont les consquences
neurs dans le contexte global de leurs recettes et de leurs
dpenses. Castello, Stearns et Christen prsentent une peuvent entraver la viabilit, en particulier pour les
analyse de ce genre partir dun chantillon demprun- IMF de petite taille ou celle nayant pas encore atteint
teurs chiliens, colombiens et dominicains. Ces emprunteurs lautosuffisance.
payaient des taux effectifs mensuels relativement levs
(6,3 % par mois en moyenne). Mais leurs charges dintrts
La limitation des taux doit tre dcide (par les au-
ne reprsentaient quune proportion minuscule de leurs torits montaires) dans le but principal dviter plutt
cots (entre 0,4 et 3,4 %). lusure que dans celui dallger les cots aux clients. Une
telle initiative doit en amont se proccuper de la qualit
Extrait de ltude spciale CGAP les taux dintrts appli-
cables aux micro crdits janvier 1997 des ressources (cots dobtention, dure, modalits
de paiement,) utilises par les IMF afin dvaluer les
cots y affrents pour fixer un seuil qui nhypothque Finrural (Bolivie) estime que malgr les efforts des
pas la rentabilit des oprations des IMF . organes de rgulation et des IMF elles-mmes, il reste
Le rseau dIMF Alafia (Bnin) revient galement sur la normment faire, vu que le client nest pas en capacit
question des usuriers : puisque le taux dintrt nest de discriminer par exemple entre taux variables et taux
pas un problme pour les clients, il nest donc pas jus- fixes et par consquent, quil ne prend pas cet lment
tifi de limiter les taux dintrt. Il faut cesser de faire en compte au moment de choisir une entit financire. Il
la comparaison des IMF avec les banques commerciales, faut ds lors gnrer des mcanismes dducation finan-
elles ne sont pas sur le mme march, le march des IMF cire permanente orients vers les clients par des entits
est celui des usuriers ; il faut donc com- indpendantes .
parer les IMF aux usuriers, vous verrez Limportance de lducation financire
que la diffrence est nette au niveau des revient dans plusieurs ractions et
taux dintrt. En supprimant les IMF, devient galement une priorit pour de
leur clientle ne se dirigera pas vers les plus en plus dacteurs impliqus dans
banques, mais plutt vers les usuriers. lappui au secteur. Le programme de
Cette comparaison des IMF aux usuriers Lpargne micro finance UE-ACP 2011-2014 en a
se justifie donc. Protger le consom- est considre comme ainsi fait un de ses axes prioritaires.
mateur , nest pas synonyme de limiter meilleur march
que les autres
Le rseau ALAFIA (Bnin) apporte
les taux dintrt. La Smart Campaign galement un clairage sur la forma-
a dit les principes de protection des ressources tion des agents des IMF : Peu dIMF
clients. Lun de ces principes est la sassurent que les clients ont accs
transparence des prix et conditions et des informations exhaustives, dans un
la tarification responsable, obligeant langage clair, qui ne prte pas confu-
les institutions offrir des services de sion et que les clients soient capables
qualit, comptitifs sur le march et de comprendre. La communication sur
bnfiques aux clients. Un march de les prix et conditions nest pas encore
micro finance transparent avec des clients duqus fi- claire et le personnel nest pas suffisamment form pour
nancirement constitue un moyen sr de baisser les taux communiquer efficacement avec tous les clients, afin
dintrt. de garantir que ces derniers comprennent le produit, les
termes du contrat, leurs droits et leurs obligations. Les
techniques de communication utilises ne pallient pas
les limitations lies au niveau dalphabtisation des cli-
Des taux transparents ! ents. Dans la trs grande majorit dIMF, les clients ne
sont pas informs des prix et des conditions de tous les
produits financiers avant que la vente ne soit conclue, y
Cette dernire position nous amne naturellement compris les taux dintrts, les primes dassurance, les
limportance de la question de la transparence des taux. soldes crditeurs minimaux, lensemble des frais, des
Il y a quasiment unanimit dans le panel des institutions pnalits, des produits associs, des frais de tierce par-
contactes pour dire que la transparence reste insuff- tie, et des modifications qui peuvent subvenir au cours
isante et quil faut lamliorer. Les commissions, les taux du temps .
flat , les frais administratifs chargs aux emprunt- La transparence effective des taux est de plus en plus
eurs sont dnoncs par les IMF elles-mmes. Sagit-il vue comme une condition, du moins dans les marchs
dune remise en cause de leurs propres pratiques ou es- comptitifs. Combine avec des mesures de protection
timent-elles plutt que ce sont leurs collgues qui ont et dducation financire des clients, elle est cense
des pratiques discutables ? Il ne nous est pas possible aboutir une relle mise en concurrence qui induirait une
de rpondre cette question. diminution des taux proposs aux emprunteurs. Le mar-
Plusieurs lments dexplication sont avancs : ainsi, Ci- ch de la micro finance devenant ainsi un march comme
derural (Prou) constate que 90 % des clients issus des un autre avec une vision librale du dveloppement.
secteurs dfavoriss nont aucune connaissance finan-
cire de base, ce qui permet de nombreuses IMF de ne
pas tre totalement transparentes vis--vis de leurs cli-
ents, que ce soit volontairement ou involontairement .
p
7
diteur responsable : Freddy Destrait, 4 rue aux Laines, B-1000 Bruxelles (Belgique) n 30
Coordination : Marine Lefebvre Du micro crdit classique une
Graphisme : www.marmelade.be approche solidaire et rgionale :
Zoom Microfinance est imprim sur du papier recycl le cas du programme de dveloppement
intgr de Fatick au Sngal (PDIF)
SOS Faim Agir avec le Sud
4 rue aux Laines, B-1000 Bruxelles (Belgique)
n 29
Tl. 32-(0)2-511.22.38 Fax 32-(0)2-514.47.77
La cooprative Los Andes :
E-mail info.be@sosfaim.org
la finance solidaire pour
SOS Faim Action pour le dveloppement le dveloppement rural
The problem is that administrative costs are Nevertheless, accepting the importance of
inevitably higher for tiny microlending than financial sustainability does not end the discussion
for normal bank lending. For instance, lending of interest rates. An interest charge represents
$100,000 in 1,000 loans of $100 each will money taken out of clients pockets, and it is
obviously require a lot more in staff salaries than unreasonable if it not only covers the costs of
making a single loan of $100,000. Consequently, lending but also deposits excessive profits
interest rates in sustainable microfinance into the pockets of an MFIs private owners.
institutions (MFIs) have to be higher than the Even an interest rate that only covers costs and
rates charged on normal bank loans. includes no profit can still be unreasonable if the
costs are excessively high because of avoidable
As a result, MFIs that claim to be helping poor inefficiencies.
people nevertheless charge them interest rates
that are substantially higher than the rates richer High microloan interest rates have been criticized
borrowers pay at banks. No wonder this seems since the beginning of the modern microfinance
wrong to observers who do not understand, movement in the late 1970s. But the criticism
or do not agree with, the argument that has intensified in the past few years, and
MFIs can usually serve their poor customers legislated interest rate caps are being discussed
best by operating sustainably, rather than by in a growing number of countries. Part of the
generating losses that require constant infusions reason for the increased concern about rates is
of subsidies. simply that microfinance is drawing ever more
public attention, including political attention.
In todays microfinance industry, there is still Another factor is that quite a few MFIs are now
some debate about whether and when long- being transformed into private commercial
term subsidies might be justified in order to corporations.
reach particularly challenging groups of clients.
But there is now widespread agreement, within In the early years most MFIs were ownerless
the industry at least, that in most situations MFIs not-for-profit associations, often referred to as
ought to pursue financial sustainability by being nongovernmental organizations (NGOs). If an
as efficient as they can and by charging interest NGO generates a profit, the money normally
rates and fees high enough to cover the costs of stays in the institution and is used to fund
their lending and other services. additional services and benefits for clients. But
February 2009
Document cls CGAP Brief Are Microcredit Interest rates excessive? February 2009
Midi de la microfinance 13
many NGO MFIs have eventually wanted to circumstances of individual MFIs around the
add deposit-taking to their activities, because world, but also because there is no agreed
they see savings services as valuable for their standard for what is abusive. There is an intense
clients, and because capturing deposits allows dispute about how high interest rates and profits
them to fund expansion of their microlending. would have to be to qualify as excessive, and
When NGOs approach a government banking indeed about whether terms like this have any
authority for a license to take deposits, they are useful meaning, at least in the arena of for-
usually required to reorganize their businesses profit microfinance. In a recent CGAP study,
into for-profit shareholder-owned corporations. we did not propose any theoretical framework
Once this happens, profits can wind up in the or benchmark against which to measure what
pockets of private shareholders, inevitably is excessive or not. We presented available
raising the specter of such owners making data, and then formed our own admittedly
extreme returns on their investment by charging intuitive judgment about the reasonableness of
abusive interest rates to poor borrowers who the general picture appearing in that data. Of
have little bargaining power because their other course, readers will apply their own criteria or
credit options are limited. intuition to the data in judging whether rates or
profits strike them as abusive, exploitative,
A firestorm of controversy erupted in April 2007 excessive, unreasonable, etc.
when shareholders of Compartamos, a Mexican
MFI with a banking license, sold a part of their CGAP analyzed the level and trend of microcredit
shares in a public offering at an astonishingly rates, and compared these rates with other
high price, which made some of the individual rates that low-income borrowers pay. Then we
sellers instant millionaires. One important decomposed MFI interest income, looking at
reason for the high price was that Compartamos the levels of its four main components: cost of
was charging its clients very high interest rates funds, loan loss expense, administrative cost,
and making very high profits. The annualized and profit. Finally, we briefly considered whether
interest rate on loans was above 85 percent emerging competition can be expected to lower
(not including a 15 percent tax paid by clients), rates in the future.
producing an annual return of 55 percent on
shareholders equity. Interest rate levels
In fact, most MFIs charge interest rates well below Based on the best data available, the median
those that provoked controversy in the case of interest rate for sustainable (i.e., profitable)
Compartamos. But the story tapped into a deep MFIs was about 26 percent in 2006. The 85
well of concern about high microcredit interest percent interest rates that drew so much
rates and the trend toward commercialization attention to the Mexican MFI Compartamos are
of microfinance. truly exceptional, rather than representative of
the industry. Less than 1 percent of borrowers
Are microcredit rates abusively high? Obviously pay rates that high.
there can be no one-size-fits-all answer to this MFI interest rates declined by 2.3 percentage
question, not only because there are huge points a year between 2003 and 2006, much
variations in the interest rates and related faster than bank rates.
Document cls CGAP Brief Are Microcredit Interest rates excessive? February 2009
14 Midi de la microfinance
Document cls CGAP Brief Are Microcredit Interest rates excessive? February 2009
Midi de la microfinance 15
February 2009
At the same time, the most profitable universal the lower-interest-rates-through-
10 percent of the worldwide microcredit competition scenario will be.
portfolio produced returns on equity
All CGAP publications
above 34 percent in 2006, a level that is no How all this information is put together is up are available on the
doubt high enough to raise concerns about to each reader. We approach the issue from CGAP Web site at
www.cgap.org.
appropriateness for some observers. Much a development perspective, where the main
of this profit is captured by NGOs and never concern is not financial results but rather client CGAP
reaches private pockets. But some of it does benefitincluding, of course, those future 1818 H Street, NW
MSN P3-300
go to private investors. A judgment about clients who will get access to financial services Washington, DC
whether such profits are abusive would as new investment expands the outreach of 20433 USA
depend, not only on the observers standard MFIs. A few MFIs have charged their borrowers
Tel: 202-473-9594
for what is a reasonable profit, but also on interest rates that seem considerably higher than Fax: 202-522-3744
investigation of individual MFI circumstances, what would make sense from this perspective.
Email:
including the risk levels faced by investors Indeed, it would be astonishing if this were not
cgap@worldbank.org
when they committed their funds. the case, given the diversity of the industry and
Profits of sustainable MFIs, measured as the scarcity of competitive markets yet. CGAP, 2009
AUTHORS
Richard Rosenberg, Adrian Gonzalez, and Sushma Narain
Document cls CGAP Brief Are Microcredit Interest rates excessive? February 2009
16 Midi de la microfinance
Access to Finance
FoRuM
Reports by CGAP and Its Partners
No. 7, June 2013
Document cls Microcredit Interest Rates and Their Determinants, 20042011, Access to Finance Forum Reports by CGAP and Its Partners, no. 7, June 2013
Midi de la microfinance 17
introduction
F
rom the beginning of modern microcredit,1 its defer most discussion of methodology until the An-
most controversial dimension has been the in- nex, one point is worth making here at the begin-
terest rates charged by microlendersoften re- ning. The earlier CGAP paper used data from a con-
ferred to as microfinance institutions (MFIs).2 These sistent panel: that is, trend analysis was based on 175
rates are higher, often much higher, than normal profitable microlenders that had reported their data
bank rates, mainly because it inevitably costs more to each year from 2003 through 2006. This approach
lend and collect a given amount through thousands gave a picture of what happened to a typical set of
of tiny loans than to lend and collect the same amount microlenders over time.
in a few large loans. Higher administrative costs have This paper, by contrast, mainly uses data from
to be covered by higher interest rates. But how much MFIs that reported at any time from 2004 through
higher? Many people worry that poor borrowers are 2011.3 Thus, for example, a microlender that entered
being exploited by excessive interest rates, given that the market in 2005, or one that closed down in 2009,
those borrowers have little bargaining power, and would be included in the data for the years when
that an ever-larger proportion of microcredit is mov- they provided reports. We feel this approach gives a
ing into for-profit organizations where higher inter- better picture of the evolution of the whole market,
est rates could, as the story goes, mean higher returns and thereby better approximates the situation of a
for the shareholders. typical set of clients over time. The drawback is that
Several years ago CGAP reviewed 20032006 fi- trend lines in this paper cannot be mapped against
nancial data from hundreds of MFIs collected by the trend lines in the previous paper, because the sam-
Microfinance Information Exchange (MIX), look- ple of MFIs was selected on a different basis. (We
ing at interest rates and the costs and profits that did calculate panel data for a consistent set of 456
drive those interest rates. The main purpose of that MFIs that reported from 2007 through 2011; we
paper (Rosenberg, Gonzalez, and Narain 2009) was used this data mainly to check trends that we report
to assemble empirical data that would help frame from the full 20042011 data set.)
the question of the reasonableness of microcredit
interest rates, allowing a discussion based more on 3. For readers interested in the composition of this group, we can
summarize the distribution of the more than 6000 annual ob-
facts and less on ideology.
servations from 2004 through 2011. Note that this is the distri-
In this paper, we review a better and fuller set of bution of MFIs, not of customers served. Category definitions
MIX data that runs from 2004 to 2011. Though we can be found in the Annex:
Region: SSA 14%, EAP 13%, ECA 18%, LAC 34%, MENA 5%, S.
1. In this paper, microcredit refers to very small, shorter-term, Asia 16% (for abbreviations see Figure 1).
usually uncollateralized loans made to low-income microen- Profit status: for-profit 39%, nonprofit 59%, n/a 2%. (Note
trepreneurs and their households, using unconventional tech- that for-profit MFIs serve the majority of borrowers, because
niques such as group liability, frequent repayment periods, they tend to be larger than nonprofit MFIs.)
escalating loan sizes, forced savings schemes, etc.
2. MFIs are financial providers that focus, sometimes exclusive- Prudentially regulated by financial authorities? yes 57%, no
ly, on delivery of financial services targeted at low-income 41%, n/a 2%
clients whose income sources are typically informal, rather Legal form: bank 9%, regulated nonbank financial institution
than wages from registered employers. Among these financial 32%, credit union/co-op 13%, NGO 38%, rural bank 6%, other
services, microcredit predominates in most MFIs today, but or n/a 2%
savings, insurance, payments, and other money transfers are Target market: low micro 42%, broad micro 49%, high micro
being added to the mix, as well as more varied and flexible 5%, small business 4%
forms of credit. MFIs take many formsfor instance, informal
Financial intermediation (voluntary savings): >1/5 of assets
village banks, not-for-profit lending agencies, savings and
39%, up to 1/5 of assets 17%, none 44%
loan cooperatives, for-profit finance companies, licensed spe-
cialized banks, specialized departments in universal commer- Age: 14 years 10%, 58 years 19%, >8 years 69%, n/a 2%
cial banks, and government programs and institutions. Borrowers: <10k 48%, 10k30k 23%, >30k 29%
Document cls Microcredit Interest Rates and Their Determinants, 20042011, Access to Finance Forum Reports by CGAP and Its Partners, no. 7, June 2013
18 Midi de la microfinance
The data set and the methodology used to gener- is profit (or loss). A simplified version of the relevant
ate our results are discussed further in this papers formula is
Annex. Our main purpose here is to survey market Income from loans = Cost of funds + Loan loss
developments over the period; there will not be expense + Operating Expense + Profit4,5
much discussion of the appropriateness of interest
In other words, interest incomethe amount of
rates, costs, or profits. A major new feature of this
loan charges that microlenders collect from their
paper is that it is complemented by an online data-
customersmoves up or down only if one or more of
base, described later in the paper, that readers can
the components on the right side of the equation
use to dig more deeply into the underlying MIX
moves up or down.
dataand in particular, to look at the dynamics of
That formula provides the structure of this paper:
individual country markets.
Not surprisingly, five more years of data re- Section 1 looks at the level and trend of micro-
veal some important changes in the industry. For lenders interest rates worldwide, and breaks
instance, them out among different types of institutions
(peer groups).
Globally, interest rates declined substantially
through 2007, but then leveled off. This is partly Section 2 examines the cost of funds that micro-
due to the behavior of operating (i.e., staff and lenders borrow to fund their loan portfolio.
administrative) costs, whose long-term decline
Section 3 reports on loan losses, including worri-
was interrupted in 2008 and 2011. Another fac-
some recent developments in two large markets.
tor has been a rise in microlenders cost of
funds, as they expanded beyond subsidized re- Section 4 presents trends in operating expens-
sources and drew increasingly on commercial es, and touches on the closely related issue of
borrowings. loan size.
Average returns on equity have been falling, and Section 5 looks at microlenders profits, the most
the percentage of borrowers loan payments that controversial component of microcredit interest
go to profits has dropped dramatically. This is rates.
good news for those who are worried about ex- A reader without time to read the whole paper
ploitation of poor borrowers, but may be more may wish to skip to Section 6, which provides a
ambiguous for those concerned about the finan- graphic overview of the movement of interest
cial performance of the industry. rates and their components over the period and
For the subset of lenders who focus on a low- a summary of the main findings.
end (i.e., poorer) clientele, interest rates have The Annex describes our database and method-
risen, along with operating expenses and cost ology, including the reasons for dropping four
of funds. On the other hand, low-end lenders large microlenders6 from the analysis.
are considerably more profitable on average
than other lenders (except in 2011, when the A dense forest of data lies behind this paper. To
profitability of the group was depressed by a avoid unreasonable demands on the readers pa-
repayment crisis in the Indian state of Andhra tience, we have limited ourselves to the tops of
Pradesh). some of the more important trees. But MIX has
posted our data files on its website, including Excel
The percentage of borrowers interest payments
that went to MFI profits dropped from about one-
4. Operating expense is the term MIX uses to describe person-
fifth in 2004 to less than one-tenth in 2011. nel and administrative costs, such as salaries, depreciation,
As in the 2009 paper, we will look not just at in- maintenance, etc.
terest rates but also at their componentsthat is, the 5. A fuller formula is
Income from loans + Other income = Cost of funds + Loan loss
main factors that determine how high interest rates
expense + Operating expense + Tax + Profit
will be. Lenders use their interest income to cover 6. BRI (Indonesia), Harbin Bank (China), Postal Savings Bank
costs, and the difference between income and costs of China, and Vietnam Bank for Social Policy.
Document cls Microcredit Interest Rates and Their Determinants, 20042011, Access to Finance Forum Reports by CGAP and Its Partners, no. 7, June 2013
Midi de la microfinance 19
pivot tables where readers can slice the data any way more than 800 different data cuts that were avail-
they like (http://microfinance-business-solution. able. Most of the information presented here is in
mixmarket.org/rs/microfinance/images/Interest the form of global cuts, often broken out by peer
Rate Paper Supporting Data.zip). The pivot tables groups, such as region, for-profit status, loan meth-
allow a user to select among 14 financial indicators odology, etc. But for many readers, the most rele-
and display 20042001 adjusted or unadjusted re- vant peer grouping will consist of the micro-
sults (weighted averages and quartiles) broken out lenders operating in a particular country. We
in any of nine different peer groupings, including strongly encourage these readers to use the online
individual countries. pivot tables to customize an analysis of what has
In choosing which groupings of these data to in- been happening in any specific country.
clude in the paper, we have had to select among
Document cls Microcredit Interest Rates and Their Determinants, 20042011, Access to Finance Forum Reports by CGAP and Its Partners, no. 7, June 2013
20 Midi de la microfinance
1
Section
Document cls Microcredit Interest Rates and Their Determinants, 20042011, Access to Finance Forum Reports by CGAP and Its Partners, no. 7, June 2013
Midi de la microfinance 21
ed the MF Transparency APR by an average of Finally, we emphasize that the issue discussed above
about 6 percentage points. However, the sample applies only to data about interest rates. It poses no
was too small to allow for much generalization of problem for the majority of our analysis, which deals
this result. with the determinants of interest rates, namely cost
Given the limitations of the MIX interest yield of funds, loan losses, operating expenses, and profit.
measure, why are we using it in this paper? One
reason is that the MIXs much broader coverage
provides a better sample of the worldwide micro- Level of interest Yields in 2011
credit market: more than 105 countries for 2011,
compared to MF Transparencys 17. An even more Figure 1 shows a global median interest yield of
important reason is that MIX, having started col- about 27 percent. Distribution graphs like this one
lecting data long before MF Transparency, has remind us that there is wide variation in microcred-
many more years of data, allowing trend analysis it rates, so any statement about a median (or aver-
that is not yet possible for the latter. We think it age) rate is a composite summary that veils a great
highly likely that interest yield trends and APR deal of underlying diversity. The regional distribu-
trends would move approximately in parallel tion indicates that rates vary more widely in Africa
over a span of years. A detailed discussion of this and Latin America than in other regions. Also, we
point will be posted along with our under- notice that rates are substantially lower in South
lying data (http://microfinance-business-solution. Asia than elsewhere: the relative cost of hiring staff
mixmarket.org/rs/microfinance/images/Interest tends to be lower there, andat least in Bangla-
Rate Paper Supporting Data.zip). deshthe political climate and the strong social ori-
How, then, should the reader regard the mean-
ingfulness of interest yield data? Here is our view:
1. Actual effective rates paid for specific loan prod- FiguRe 1
ucts at a point in time. Interest yield probably un-
MFi interest Yield Distribution, 2011
derstates these by varying and often substantial
100
amounts.
90
2. Peer group differences (e.g., how do rates at for-
profit and nonprofit microlenders compare on 80
50
among the groups in what their average bor-
rowers pay. However, some caution is appropri- 40
ate here, because the gap between interest yield 30
and true APR can vary from one peer group to
20
another.9
10
3. Time-series trends. Trends in interest yields (the
0
main focus of this section) are probably quite a WORLD Africa EAP ECA LAC MENA S. Asia
good indicator of trends in what typical borrow-
Note: Interest and fee income from loan portfolio as % of average GLP,
ers are actually paying, on the plausible assump- 866 MFIs reporting to MIX. The thick horizontal bars represent medi-
tion that the gap between interest yield and APR ans; the top and bottom of the solid boxes represent the 75th and 25th
percentiles, respectively; and the high and low short bars represent the
stays relatively stable on average from one year 95th and 5th percentiles, respectively. So, for example, 95 percent of
to the next. the MFIs in the sample are collecting an interest yield below about 70
percent. Data here are unweighted: each MFI counts the same regard-
less of size. EAP = East Asia and Pacific, ECA = Europe and Central
9. This is particularly true when comparing MFIs that focus on
Asia, LAC = Latin America and the Caribbean, MENA = Middle East
smaller loans to poorer clients, as against MFIs with a broad
and North Africa.
suite of loan products, some of which serve clients that might
not fit ones particular definition of micro.
Document cls Microcredit Interest Rates and Their Determinants, 20042011, Access to Finance Forum Reports by CGAP and Its Partners, no. 7, June 2013
22 Midi de la microfinance
entation of the industry have probably led manag- On the assumption that the microcredit market
ers to focus more on keeping rates low.10 is getting more saturated and competitive in quite a
few countries, we might have expected a different
result. Analysis of individual countries where the
global average interest rates have market is thought to be more competitive shows
stopped declining in recent years continued interest rate decline post-2006 in some
(e.g., Bolivia, Nicaragua, Cambodia) but not in oth-
Figure 2 shows a drop in average global microcredit ers (e.g., Mexico, Bosnia/Herzegovina, Indonesia).
rates through 2007, but not thereafter. (Inflation- Sorting out the evidence on the effects of competi-
adjusted rates fell in 2008 because few micro- tion would require more detailed country analysis
lenders raised their rates enough to compensate for than we were able to do for this paper.
the spike in worldwide inflation that year.)11 The
analysis of interest rate determinants later in the
paper suggests that the main reason world average Peer group patterns
rates didnt drop after 2007 is that operating (i.e.,
staff and administrative) costs stayed level.12 The regional breakout in Figure 3 shows that over
the full 20042011 period, Latin America is the only
region with no significant decline in average inter-
FiguRe 2 est yield. However, there is important regional vari-
ation since 2006: Africa and East Asia/Pacific show
global interest Yield trends, 20042011 substantial continued declinesperhaps because
35 they were the least developed markets in 2006. At
Nominal any rate, these two regions are the ones that sub-
30
stantially improved their operating expenses since
25 2006 (see Figure 12). But reported average rates ac-
tually went back up in Latin America, the most
20 Real commercialized of the regions.
Percent
Document cls Microcredit Interest Rates and Their Determinants, 20042011, Access to Finance Forum Reports by CGAP and Its Partners, no. 7, June 2013
Midi de la microfinance 23
Percent
26% 27% 25%26%
25%
25 23% 23%
MFIs tend to make smaller loans that require high- 22%
21%
20
er operating costs per dollar lent. Rates among non-
15
regulated microlenders have been rising substan-
10
tially since 2006.
5
0
14. Regulated refers to banks and other finance companies that WORLD Africa EAP ECA LAC MENA S. Asia
are subject to prudential regulation and supervision by the 0.4% 2.4% 1.3% 1.0% 0.0% 0.6% 1.1%
countys banking and financial authorities. The rest of the +0.1% 2.5% 1.5% 0% +0.7% +0.2% 0.4%
MFIs are categorized as nonregulated: like any other busi- Avg. change per year, 20042011 Avg. change per year, 20062011
ness, they are subject to some regulation (e.g., consumer pro-
tection) but not to prudential regulation whose objective is to Note: Interest and fee income from loans as percentage of average GLP for
guard the financial health of an institution taking deposits the period, weighted by GLP. The Africa series begins in 2005 rather than
from the public. MFIs are categorized based on their status 2004.
in 2011.
FiguRe 4 FiguRe 5
For-Profit vs. nonprofit interest Yields, interest Yields by target Market, 20042011
20042011 40
Low End
35 35
For-profit MFIs
30 30
Broad
25 25
Percent
Nonprofit MFIs 20
20 High End
Percent
15
15
10
10
5
5 0
2004 2005 2006 2007 2008 2009 2010 2011
0
2004 2005 2006 2007 2008 2009 2010 2011
Note: Total interest and fee income / average total GLP, weighted by
GLP, nominal. MFIs are grouped by depthaverage loan balance
Note: Total interest and fee income/average total GLP, weighted by per borrower as % of per capita gross national income. For the low
GLP. MFIs are assigned to for-profit or nonprofit depending on end market, depth is <20% or average loan balance < US$150. For
their legal status in 2011. broad, depth is between 20% and 149%. For high end, depth is
between 150% and 250%. For the small business market, which is
not included in this graph, depth is over 250%.
Document cls Microcredit Interest Rates and Their Determinants, 20042011, Access to Finance Forum Reports by CGAP and Its Partners, no. 7, June 2013
24 Midi de la microfinance
20
factor is that funding costs for low-end lenders have
15
been rising, as we will see in Figure 8.
10 The fact that costs and thus interest rates are ris-
5 ing for microlenders who focus on poorer clients
has a bearing on the perennial argument over
0
2004 2005 2006 2007 2008 2009 2010 2011 whether to protect the poor by imposing interest
Note: Total interest and fee income/average total GLP, weighted by rate caps. As costs rise for low-end microlenders, a
GLP. given fixed-interest rate cap would put (or keep)
more and more of them out of business as the years
go by.
Having sketched a few important patterns and
trends in interest rates, we now turn to the princi-
pal elements that determine (or drive) those rates.
To repeat, the simplified description of this rela-
tionship is
Income from loans = Cost of funds + Loan loss
expense + Operating Expense + Profit
After looking at these determinants individually,
we will put them back together again in Section 6
to show how the trends in these elements combine
to produce the trends in interest yields.
Document cls Microcredit Interest Rates and Their Determinants, 20042011, Access to Finance Forum Reports by CGAP and Its Partners, no. 7, June 2013
Midi de la microfinance 25
Comment la microfinance peut-elle prtendre servir le progrs conomique et social alors que ses
taux dintrt sont souvent compris, dans les pays en dveloppement, entre 30% et 70% par an ?
Si depuis le Prix Nobel de M. Yunus, on a beaucoup parl du microcrdit, cette question na gure
t voque. Pourtant le niveau des taux mrite dtre assum et expliqu, afin de comprendre
quelles conditions il pourrait baisser.
De fait, malgr des taux dintrt levs, la demande de microcrdit est massive, avec plus de cent
millions de clients dans le monde. Dans les pays en dveloppement, plus de 80% de la population na
pas accs aux banques. Pourtant, emprunter est souvent une ncessit : pour faire face un imprvu,
grer son budget, profiter dune opportunit conomique En comparaison des taux des usuriers
(200% 1000% par an), les taux des institutions de microfinance (IMF) sont attractifs. Bien utiliss
par des micro-entrepreneurs aux activits souvent rentables (commerce de proximit, services,
artisanat), les microcrdits permettent de dgager un bnfice suprieur aux intrts pays. Un taux
de 30% par an pour un prt de 500 euros sur 6 mois ce nest jamais que 1,50 euro dintrt par
semaine. Pour un petit commerant ce nest pas cher pay si le prt lui ouvre une opportunit. Son
souci premier nest pas le taux, mais la rapidit daccs au crdit.
Du cot de loffre, les taux levs des IMF sont ncessaires pour couvrir leurs charges : dune part le
cot du capital prt, car elles lempruntent elles-mmes en partie, des taux qui varient de 8%
20% ; dautre part, leurs cots de fonctionnement qui reprsentent gnralement de 20% 50% des
sommes prtes. Loctroi de crdits gnre en effet des charges fixes (rencontrer le client, suivre le
remboursement) et plus les crdits sont petits, plus ces cots sont proportionnellement levs. Les
IMF les ont rduits leur niveau actuel en adoptant des mthodes novatrices (prts des groupes
demprunteurs solidaires, proximit avec les clients) qui assurent en outre dexcellents taux de
remboursement souvent suprieurs 95%. En grandissant, les IMF ralisent de surcrot des
conomies dchelle : les clients fidles accdant des prts plus importants, le volume des crdits,
et donc les revenus dintrts, croissent plus vite que les charges.
Ainsi, mme si la grande majorit des IMF est aujourdhui dficitaire, certaines dgagent dj des
bnfices. Vont-elles pour autant baisser leurs taux (en rponse leur finalit sociale) ou les
maintenir (dans un objectif de rentabilit) ? Face cette dualit dobjectifs, chaque IMF doit trouver
son propre quilibre. On observe gnralement que mme les IMF les plus sociales, qui ne visent
que la rentabilit ncessaire leur prennit, ne baissent pas leurs taux. Elles profitent des gains de
productivit pour mieux servir leur mission par exemple, toucher des clients plus pauvres. En
ralit, le vritable moteur de la baisse des taux, cest la concurrence entre IMF. En Bolivie, ils ont
t ainsi diviss par trois entre 1992 et 2003. Au Mexique, o la concurrence a t plus tardive, les
taux restent trs levs.
Ds lors, comment les pouvoirs publics peuvent-ils influer sur la baisse des taux ? Trois mesures
savrent contreproductives. La premire est daccuser les IMF de prosprer aux dpens de leurs
clients argument dmagogique, parfois utilis par des politiciens, comme au Bnin lors de la
rcente campagne prsidentielle. La deuxime est de plafonner les taux par la loi ; pour maintenir
leurs revenus, les IMF doivent alors octroyer des prts plus levs, donc des personnes moins
pauvres. Le troisime cueil, pour un acteur public en qute de popularit, est de distribuer lui-mme
des microcrdits. Ils sont alors perus comme des cadeaux , mal rembourss, et lactivit tombe
rapidement en faillite, dcourageant au passage les acteurs privs. En Afrique de lOuest, la nouvelle
Banque Rgionale de Solidarit risque de connatre ce triste sort.
Document cls Microcrdit : comment faire baisser des taux dintrt trop levs ? Jrmy Hajdenberg, janvier 2007
26 Midi de la microfinance
En revanche il existe au moins deux faons de favoriser la baisse des taux : 1) imposer aux IMF une
plus grande transparence, car la diversit des mthodes de calcul des intrts et des commissions
rend difficile la comparaison des offres par les clients ; 2) subventionner la cration dIMF l o la
concurrence est encore faible. En effet, elle tend se concentrer sur le segment troit des petits
entrepreneurs urbains dj installs. Les publics plus difficiles servir sont dlaisss, en zones
rurales en particulier.
Enfin, du fait de son taux lev et de sa faible dure (six mois en moyenne), le microcrdit, dans sa
forme la plus courante, nest pas adapt pour des dpenses non-productives - habitat, dpenses de
sant, scolarit. De plus en plus dIMF proposent de nouveaux produits - pargne flexible, crdits
plus longs, micro-assurance - plus adapts ces dpenses. Mme si ces besoins dordre social
appellent des rponses bien plus larges, le dveloppement de ces produits peut jouer un rle essentiel
et doit tre encourag, notamment par des fonds publics.
Sbastien Boy et Jrmy Hajdenberg sont auteurs avec Christine Poursat du Guide de la
microfinance (Ed. dOrganisation, 2006). Michal Cheylan est fondateur et responsable de CAPafrique
(www.capafrique.org).
Document cls Microcrdit : comment faire baisser des taux dintrt trop levs ? Jrmy Hajdenberg, janvier 2007
Midi de la microfinance 27
ECUADOR
Ecuador has one of the fastest growing microfinance sectors in the Latin American region. Following the governments recent
determined effort to reform the existing supervisory framework and provide access to funding for microfinance institutions,
the future outlook of the sector looks positive. The leading providers of microfinance are downscaling commercial banks,
regulated loans and saving cooperatives, registered cooperatives and non-government organizations. The gap in market
penetration between urban and rural areas are relatively high, represents a significant untapped demand for financial services.
The Transparent Pricing Initiative in Ecuador has published standardized pricing data from 27 microfinance providers,
representing over three quarters of Ecuadors active microfinance borrowers. Launched in 2010 the Initiative is delivered in
partnership with the Red Financial Rural (RFR) and is funded by the Ford Foundation.
The Price Graph showing Ecuadors microfinance pricing was constructed using two formulas the standardized national
formula (Tasa Efectiva Anual) and the Effective Interest Rate (EIR) including security deposit. Microloan prices in Ecuador
range from 10% to 40% TEA.
Minimal variations in microloan pricing are seen across institution type, geographic location and product purpose. Nearly
100% of the institutions analysed use the declining balance interest rate calculation method. The use of fees and other
charges were reported among many of the participating institutions.
KENYA
Kenya has a high rate of financial inclusion relative to other East African countries. The microfinance industry in Kenya is
one of the most developed in Sub-Saharan Africa, serving an estimated 23% of the adult population. The industry has grown
enormously over the last 10 years, both in terms of the gross loan portfolio disbursed and the number of active borrowers
served. This growth has been aided by the rapid expansion of mobile banking and complimentary regulatory policies related
to deposit collection, branchless banking and agent banking. The introduction of a Credit Information System has also played
an instrumental role in the growth and success of the industry. The main types of microfinance service provider in Kenya
include downscaling commercial banks, non-bank financial institutions, licensed saving and credit cooperatives and NGOs.
The Transparent Pricing Initiative in Kenya has published standardized pricing data from 18 institutions, representing the
vast majority of Kenyas active microloan borrowers. The Kenya Initiative was launched in January 2010 with a range of
pricing and transparency workshops.
The pricing dynamics of the Kenyan microfinance market mirror the global trends observed, with an increase in prices
correlating with a decrease in loan sizes. Prices observed when applying the APR (interest+fees+insurance) formula range
from 10% to 70%, varying with the size of the loan amongst other factors.
The Kenyan microfinance industrys favored pricing calculation method is flat interest rate with just 13% of the products
analyzed using the declining balance method. A significant difference in prices between institution type is not observed and
whether an institution is regulated was not found to be a cause for differences in microloan prices.
CAMBODIA
The Cambodian microfinance market is one of the worlds fastest growing and most well developed microfinance sectors. The
transition of the sector from NGO projects to commercialization and later to an integral part of the main stream economy has
been assisted by the steady economic growth in the country, a favourable flow of foreign investment to the sector and the
supportive and long standing regulatory environment.
Although the flow of foreign funds to the sector was affected by the global financial crisis in the late 2000s, the Central
Banks permission to mobilize local deposits by registered MFIs has helped the recovery of many fund strapped microfinance
institutions.
The Transparent Pricing Initiative in Cambodia has published standardized pricing data from 14 microfinance providers,
representing the majority of Cambodias microfinance borrowers. Launched in 2009 the Initiative is delivered in partnership
with Planet Rating and is funded by the Netherlands Plaform for Microfinance. The initial data collection was sponsored by
MicroNed and TripleJump and supported by key local stakeholders including the Central bank of Cambodia and local network
organizations.
The price graph presented below shows the prices of all the microloan products in the Cambodia dataset. Each data-point
represents a real loan given to a real borrower, calculated using original loan documentation from the institution. The size
of the data-point correlates with the number of borrowers that have a loan of that product at that loan amount. The color of
the data-point correlates with the Transparency Index of the sample. The interactive legend beneath the graph can be used
to change the graph axis and labels. Try the custom feature to see price correlations with attributes such as loan purpose,
institution type, loan term and percent of gross national income.
The market average APR curve is relatively flat showing a limited range in price relative to loan size. This is mainly due
to improved efficiency and competition among microfinance institutions. One of the interesting features of Cambodian
microfinance is the relative absence of extra charges in fees and commissions. This, together with the outlawing of flat
interest rate shows that the industry has been practising a high level of transparency in its pricing.
NOTES
Midi de la microfinance 31
NOTES
32 Midi de la microfinance
NOTES
Midi de la microfinance 33
Intervenants
Marek Hudon
Marek Hudon dtient un doctorat en Economie et en Sciences de gestion et une matrise
en philosophie. Il est actuellement professeur la Solvay Brussels School of Economics
et Management (SBS-EM), Universit Libre de Bruxelles (ULB), Belgique. Il est galement
co-directeur du Centre Europen de Recherche en Microfinance (CERMi), et co-directeur
du Centre d'Etudes Economiques et Sociales de l'Environnement (CEESE). Il a initi et est
toujours coordinateur scientifique du European Microfinance Programme (EMP). Il a men des
recherches en Inde, le Kenya, le Mali, le Maroc, le Vietnam et la Rpublique dmocratique du
Congo.
En 2009, il a reu la fois le prix CEDIMES pour des tudes post-doctorales et le prix Merlot-
Leclerq en conomie publique. En 2010, il a reu, en collaboration avec Marc Labie et Ariane
Szafarz, le Prix Wernaers pour la recherche et la diffusion des connaissances, par le FNRS.
Aldo Moauro
Aldo Moauro est un conomiste financier spcialis en microfinance qui compte plus de
quinze ans d'exprience dans ce domaine. Aldo est membre fondateur et Directeur excutif de
MicroFinanza Rating, lune des principales agences de notation spcialise en microfinance.
Avant de fonder MicroFinanza Rating, Aldo Moauro a travaill en tant que gestionnaire de
portefeuille de microfinance de ETIMOS, un consortium financier international, en charge du
portefeuille des investissements en microfinance.
Aldo Moauro dtient une vaste exprience en notation des institutions de microfinance.
Il a ralis plus de 150 missions d'valuation sur les 4 continents. Aldo est galement
spcialis en valuation de programmes, en assistance technique et de conseil ainsi quen
planification financire et stratgique. Une expertise quil a acquise dans divers pays d'Europe,
d'Amrique latine, du Moyen-Orient et dAfrique. Aldo preste rgulirement en tant que matre
de confrence dans certains des principaux programmes internationaux de formation en
microfinance, tels que Boulder.
Annexes Intervenants
34 Midi de la microfinance
Partenaires Luxembourg
BP 2273
L-1022 Luxembourg
tel | +352.29.58.58.255
fax| +352.29.58.58.200
contact@lrtm.lu
www.lrtm.lu
Partenaires Bruxelles
Febelfin, i.e. the Belgian Financial Sector Federation, KBC is an integrated bancassurance group, catering
wants to take up the challenge of playing an important mainly for retail customers, small and medium-sized
role as a go-between for its members on the one hand enterprises and private banking clientele. It occupies
and several parties at the national and European level leading positions on its home markets of Belgium
on the other hand, such as policy-makers, supervisory andCentral and Eastern Europe, where it specialises
authorities, trade associations and pressure groups. in retail bancassurance and asset management
activities, as well as in the provision of services to
Febelfin closely follows trends and developments and businesses. The group is also active in a selection
helps its members in taking up the right position. The of other countries in Europe in private banking and
Federation provides its members with information and services to businesses. Elsewhere around the globe,
guidance in fields such as product technology, law, the group has established a presence in selected
taxation, prudential supervision and social law. countries and regions.
For further information, please contact: For further information, please contact:
Ivo VAN BULCK Veerle Demol
Director Commercial Banking CSr Communications Officer
Febelfin KBC
Cera is not a bank anymore. Cera is a co-operative with Assuralia is the industry association of insurance
around half a million members. We invest in community and reinsurance companies operating on the Belgian
projects at regional, national and international level that market. It was established in 1920 and its membership
reflect the values of our co-operative, viz. collaboration, represents nearly all direct business on the domestic
solidarity and respect for the individual. The targeted market. It includes co-operative, mutual and joint-stock
areas of investment are: poverty and social exclusion, companies of both local and foreign origin. Some of
Cera Competence Centre for Businesses, Art and its members focus on specific lines of business (like
culture, Agriculture, horticulture and the countryside, workmens compensation insurance) while others
Medical and social, local education initiatives and offer a diversified range of general and life insurance
Solidarity-based banking and insurance in developing (insurance companies are the most important providers
countries through BRS. of occupational retirement schemes in Belgium). Its
purpose is to represent the interests of its members at
Cera has a shareholding of over 30% in KBC Group. national and international level and to promote insurance
as a solution for societal needs as well as for those of
For further information, please contact: businesses and retail consumers. Along with vocational
Hilde Talloen training, joint studies and lobbying, Assuralia is in charge
Communication Co-ordinator of dialogue with all stakeholders, representatives of
civil society and public authorities involved in insurance
issues. It has no commercial activities, but has been
Cera instrumental in developing common service platforms
meeting its members needs.
Philipssite 5 b10, 3001 Leuven-Belgium
Tel. + 32 16 27 96 79 For further contact:
Fax + 32 16 27 96 91 Wauthier Robyns
E-mail : Hilde.Talloen@cera.be Member of the Management Committee
www.cera.be
Assuralia
la Coopration
Maria Teresa de Luxembourg. La Grande-
Duchesse sengage activement dans la lutte
contre la pauvret extrme, notamment par
Micro what?
Three billion people on this planet still do not have access to financial
Bankassurance: the African way services. Microfinance and micro-insurance organisations in developing
countries offer a solution, by developing services for non-creditworthy
Through Belgian non-governmental and uninsurable people. These are not miniature-sized financial
organisation (NGO) Louvain institutions, but rather organisations with a specific business model.
Coopration, BRS is supporting the Credit activities are often preceded by training. After all, its impossible
launch of a health mutual in the West- to imagine setting up a medical insurance business without investing in
African country of Benin. Thanks to health prevention. Other organisations offer bank insurance model avant
that mutual, the members only pay la lettre (see insert).
a quarter of the price for visits to a
doctor and prescription medicines! BRS: launched with 100 years of experience
The medical insurance that covers all The basic conditions in the developing countries in which these
other expenses costs three euros per organisations are set up are, on the whole, similar to the situation during
year. Since this financial threshold the early years of what used to be the cooperative CERA Bank, in the late
was lowered, the members of the 19th century. In 1992, on the occasion of the banks 100th anniversary,
mutual health insurance go sooner to Belgische Raiffeisenstichting (or BRS) was formed. A hundred years of
the doctor when they are ill. experience with cooperative banking and later insurance would be
made available to microfinance institutions (MFIs) and microinsurance
Local microfinance institution CMEC institutions working according to principles of solidarity.
(Caisse Mutuelle dEpargne et de
Crdit) concluded an agreement with Unique position: offering both finance and advice
the mutuals: clients are only eligible BRSs experience of organising savings and credit groups and setting
for a line of credit of 45 euros or more up cooperative structures is a real help when supervising projects.
if they place one third of the sum in a Its close link with the KBC group allows BRS to tap into a valuable
savings account and if they take out source of banking and insurance know-how. A group of KBC managers
the medical insurance. In this way, and executives volunteer their expertise and experience to BRS as
CMEC encourages everyone to join consultants. They assist BRS in researching new projects and evaluating
the mutual. Such agreements are also existing projects. They not only study the files, but also visit the actual
very interesting for savings and credit projects. While the projects are under development, they assist and
cooperatives. The medical insurance advise their fellow bankers in the southern hemisphere at strategic
means that borrowers are less likely moments.
to encounter unforeseen payment
difficulties, as their costs in the event Training and awareness
of illness are limited. This results in With its up-to-date knowledge of banking and insurance combined with
a much greater likelihood that the its years of experience of cooperative projects, BRS has the perfect know-
credit will be repaid to CMEC. how in-house to create specific training material and to offer courses on
micro-financing, both in the southern and northern hemispheres.
(See the movie A day in Honhou The topics addressed include the cooperative concept, saving, credit,
(Benin) on www.brs.coop) insurance and financial analysis. This makes BRS more than simply a
financier of projects, but rather a true partner, that counsels and assists
start-up organisations during the growing pains and other problems,
with a group of interested and active supporters in Belgium.
Leverage
BRS also calls on the expertise of Belgian NGOs in the selection and monitoring
of microfinance and microinsurance projects. Organisations such as Trias, SOS
Faim and Louvain Coopration have their own staff on the field to take care of
the daily supervision of the projects. Moreover, thanks to this cooperation, BRS
can avail itself of a great deal of financial leverage. The Belgian and European
authorities contribute several times the amounts contributed by BRS. Half a
million euros of aid becomes over two million euros by the time it reaches the
ultimate beneficiaries: a fantastic return!
Guarantee fund
BRS believes it important that microfinance institutions have connections with
established local financial institutions, and vice versa. BRSs guarantee fund
helps to realise this objective: it covers lines of credit extended to microfinance
institutions by local banks or financial institutions. This cover is subject to the
condition, however, that those local banks also bear part of the risk. Experience
shows that this is not an easy condition, but that it is possible. In Ethiopia, after
almost 18 months of negotiations, BRS succeeded in reaching an agreement
with Awash Bank to bear 45% of the risk for a line of credit granted to the MFI
Wasasa. Thanks to a 90 000 euro guarantee, Wasasa has a line of credit in the
amount of 200 000 euros, which it uses to meet the credit demands of over
2 000 clients.
Long-term commitment
Sadly, the financial resources that are set aside for microfinance by various
development programmes and investors also mean that young, promising
organisations are forced to grow too quickly. Structures such as cooperatives,
which involve their members in their policy decisions, threaten to fall behind
because of their decision-making and control processes.
In addition, the influence on the policies of external financiers is often greater
than that of the organisations own members. Under those conditions, such
For further information, organisations are given little opportunity to develop their own dynamics.
That is why BRS consciously opts for direct cooperation and a longer-term
contact:
commitment.
Microfinance
History as a source of inspiration
Kurt Moors - 016 27 96 43
A lot of water has passed under the bridge, but F.W. Raiffeisens principles still
kurt.moors@brs.coop
apply to this day. BRS does not look back for the sake of nostalgia, but considers
history to be a source of inspiration in the support it provides.
Microinsurance
BRS still uses its knowledge and insight in offering the necessary support to
Bert Opdebeeck - 016 27 96 13
start-up savings, credit and insurance institutions in the southern hemisphere.
bert.opdebeeck@brs.coop
In this way, the past gives these organisations a future to believe in.
www.brs.coop
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Address
ADA asbl2, rue Sainte ZitheL-2763 Luxembourg
Contact
Tel +352 45 68 68 1Fax +352 45 68 68 68
adainfo@microfinance.lu
Bank
CCP LU64 1111 1189 2705 0000
BIC/Swift CCPLLULL
www.microfinance.lu