Cross-Border Funding for Microfinance

East Asia and the Pacific

Results of the CGAP Cross-border Funding Surveys 2010

About the surveys

The CGAP surveys focus on cross-border funding for microfinance.

Over 150 institutions and funds have participated in CGAP’s 2010 surveys on microfinance funding, representing 85 to 95% of the total estimated cross-border funding to microfinance.

CGAP collects data from major funders (bilateral and multilateral agencies, development finance institutions, foundations) and from microfinance investment intermediaries (MIIs) such as Microfinance Investment Vehicles (MIVs) and holdings.

All data is as of December 2009.

For any questions or data requests please contact Barbara Gähwiler at bgahwiler@cgap.org.

At a Glance

27 Public Donors and Investors

(Multilaterals, Bilaterals, DFIs)

$0.95 billion

Private Donors and Investors

(Foundations, Institutional and Retail Investors)

$0.55 billion

Microfinance(Support for microfinance at all levels of the financial system: retail, market infrastructure, and policy)

42 Microfinance Investment

Intermediaries (MIIs)

Commitments to Microfinance for EAP as of December 2009: $1.5 billion*

* CGAP surveys capture 85 to 95% of the total cross border funding to microfinance

$0.94 bln

Ap

exes

$0.54 bln $0.01 bln

$0.5bln

Ap

exes

$0.01 bln

$1.5 billion committed to EAP

• Cross-border funders committed $1,546 million to EAP as of 2009, representing 7% of total cross-border funding to microfinance.

• Commitments to EAP increased by 19% in 2009, compared to 17% globally.

• 27 public funders (bilateral and multilateral agencies and development finance institutions - DFIs), 12 foundations/NGOs and 42 Microfinance Investment Intermediaries (MIIs) are active in EAP.

21,313 (100%)

1,546 (7%)

6,188 (29%)4,724 (22%)

787 (4%)

4,064 (19%)

2,544 (12%)1,461 (7%)

Total East Asia & the Pacific

(EAP)

Eastern Europe & Central Asia

(ECA)

Latin America & the Caribbean

(LAC)

Middle East& North Africa

(MENA)

South Asia (SA)

Sub-Saharan Africa (SSA)

Multi-Region

Committed Amount (million USD)+17%

+4%

+21%+22%

+19% +38%+22%

+1%

Number of respondents: 61 and CGAP estimates based on 90 MIVs

AnnualGrowth Rates for 2008 to 2009

Public funding dominant, but private funding growing faster

• Public funders provide 63% of total commitments (compared to 69% globally). Private funders (foundations, institutional investors and individual investors) account for 37%.

• However, private funding grew by 47% in 2009 (compared to 33% globally), while public funding increased by only 7% (compared to 12% globally).

• Among public funders, multilateral agencies decreased their commitments by -3%, while bilateral agencies increased by 2% and DFIs by 18%.

69%63%

68%

54%

87% 84%

75%

60%

31% 37% 32%46%

13% 16%25%

40%

Total EAP ECA LAC MENA SA SSA Multi-Region

Commitments by Type of Funder

Public Funders Private FundersNumber of respondents: 61 and CGAP estimates based on 90 MIVs

Higher commitments for capacity building than in most regions

• 83% of commitments to EAP are used to refinance retail financial service providers, directly or indirectly, compared to 88% globally.

• With 17% of commitments used for capacity building, EAP is the region with the second highest share of funding used for capacity building.

• $250 million are committed to capacity building in EAP. A third of these funds are used at the market infrastructure and policy levels. Indonesia, China, Vietnam receive ~75% of capacity building funds to EAP.

• Funding for on-lending increased by 26% in 2009, mostly driven by China. Funding for capacity building increased by 17%, driven by Lao and Indonesia.

88%83%

99%91%

84%88%

67%76%

12% 17%

1%9% 16% 12% 33% 24%

Total EAP ECA LAC MENA SA SSA Multi-Region

Commitments by Purpose

Onlending Capacity Building

Number of respondents: 58 and CGAP estimates based on 90 MIVs

Debt is the main instrument, but grants and guarantees increased

• 41% is provided by funders directly or channeled through local governments, compared to 45% globally; the remaining 59% are channeled via intermediaries such as MIIs.

• While debt remains the main financial instrument used by funders, grants represent 38% of direct commitments compared to 21% globally. Out of the $260 mln committed in grants, ~50% are to Indonesia.

• DFIs provide the majority of direct equity investments. Cambodia, Mongolia and Indonesia represent more than 75% of all direct equity investments.

• Guarantees are used only in Indonesia, Philippines and Cambodia.

• Debt and equity have decreased in the region, while grants and guarantees increased by more than 40% each in 2009.

66%

5%

21%

4%4%

Direct Funding by Instrument (TOTAL)

Other

Guarantee

Grant

Equity

Debt

45%55%

Commitments by Type of Funding (TOTAL)

Direct Indirect

51%

6%

38%

5%

Direct Funding by Instrument (EAP)

Guarantee

Grant

Equity

Debt

41%59%

Commitments by Type of Funding (EAP)

Direct Indirect

Number of respondents: 58 and CGAP estimates based on 90 MIVs

China receives more than a third of funding to EAP

• Funders are active in 14 countries in EAP.

• Commitments to China represent around a third of total commitments to EAP and are growing faster than in other countries. The top 5 countries, China, Indonesia, Vietnam, Cambodia, Philippines, represent ~80% of total commitments to EAP.

Commitments by Country as of Dec. 2009, and 2008/2009 TrendCountry allocation is available for 63% of EAP commitments

↑↑ increases, more than 20 mln

↑ increases, 5 to 20 mln

→ same or change less than 5 mln

↓ decreases, 5 to 20 mln

↓↓ decreases, more than 20 mln

$2 to 50 mln

$51 to 100 mln

$101 to 300 mln

$301 to 500 mln

<$2 mln

2009 Commitments

2008/2009 Growth

Cambodia $100 to 300 mln ↓China $300 to 500 mln ↑↑Indonesia $100 to 300 mln ↑Lao PDR $2 to 50 mln ↑Malaysia <$2 mln →Marshall Islands <$2 mln →Mongolia $50 to 100 mln →Myanmar $2 to 50 mln ↑Papua New Guinea $2 to 50 mln →Philippines $50 to 100 mln ↓↓Solomon Islands <$2 mln →Thailand <$2 mln →Timor-Leste <$2 mln →Vietnam $100 to 300 mln →

Country breakdown is available only for direct funding

Active Funders in EAP

KfW 11%World Bank 10%

AsDB 6%IFAD 6%GTZ 5%

Top 5 Funders in EAP% of Commitments to EAP

Active Funders in EAP

Multilateral & UN Agencies Bilateral AgenciesAsDB AusAIDEC CIDA Accion Gateway Lux MDFIFAD Finland MoFA Advans MFLO-LCILO GTZ Alterfin MicroCred HoldingUNCDF JICA ASN-Novib MicroCreditWorld Bank Lux Dev BOLD I MicroVest I

Norad BOLD II MinlamDevelopment Finance USAID BOMS I OikocreditInstitutions (DFIs) BOPEF Opportunity LGFAECID Foundations & NGOs Consorzio Etimos OTIAFD Proparco Citi Foundation CRESUD Planet MicroFundBIO Cordaid DBMDF respA GMFCDC Doen Foundation DBMF-1 respA MFDCA USAID Ford Foundation Dignity respA MLFEBRD Gates Foundation DMCF SNSEIB Grameen Foundation DWM MF SNS MF IIFMO Hivos EMF Symbiotics DRFICDF ICCO Finethic Triodos FSFIFC Omydiar Network GCMC Triodos MFKfW Oxfam Novib Grameen CAMF Triodos-DoenNorfund Rabobank Foundation Hivos-Triodos Wallberg GMFOPIC Whole Planet Foundation KCD Global XXEB

Microfinance Investment Intermediaries (MIIs)

Method and Definitions

• Method: Figures are based on data reported by 61 funders and 90 microfinance investment intermediaries. CGAP used data provided by microfinance investment intermediaries to estimate funding from individual investors and institutional investors. All data is as of December 2009. Growth rates are based on a subset of respondents for which data is available for all years covered by the surveys. Country breakdowns are based on funding for which country allocation is available.

***

• Cross-border funding for microfinance: Like other development sectors, microfinance receives funding from public and private funders in developed countries. Depending on local capital markets and the regulatory environment, microfinance institutions in developing countries can also access local funding sources, such as client deposits or loans from local commercial banks. The CGAP surveys focus exclusively on foreign, or cross-border, funding for microfinance.

• Commitments: A common way to measure funding for microfinance is to look at funders’ commitments. Total commitments represent the total amount of all currently active investments and projects, whether the funds have been disbursed or are yet to be disbursed during the remaining lifetime of a project. As such, total commitments describe the stock of funds set aside for microfinance at a given time (i.e. December 2009 for the data above). To understand the actual flow of money to the microfinance sector, it is also necessary to look at annual disbursements.

• Microfinance Investment Intermediaries: Microfinance Investment Intermediaries (MIIs) are investment entities that have microfinance as one of their core investment objectives and mandates. MIIs can provide debt, equity or guarantees (directly or indirectly) to microfinance service providers. The main types of MIIs are Microfinance Investment Vehicles (MIVs), Holding Companies and others such as peer-to-peer lending platforms.

Survey Participants

Public funders

Multilateral and UN agencies

N=8 AfDB, AsDB, EC, IFAD, ILO, IsDB, UNCDF, World Bank

Bilateral agencies

N=15 AusAID, CIDA, DANIDA, DFID, Finland MoFA, GTZ, Italy MoFA, JICA, Lux Dev, MCC, Netherlands MoFA, NORAD, SDC, Sida, USAID

Development finance institutions (DFIs)

N=18 AECID, AFD Proparco, BIO, CAF, CDC, DCA USAID, EBRD, EIB, Finnfund, FMO, ICDF, IFC, IIC, KfW, MIF IADB, Norfund, OPIC, SIFEM

Private funders

Foundations and NGOs

N=16 Foundations: Citi, Doen, Ford, Gates, Grameen, Grameen Jameel, Mastercard, MSDF, Rabobank, Stromme, Whole Planet; NGOs: Cordaid, HIVOS, ICCO, Omidyar Network, Oxfam Novib

Individual Investors n/a CGAP estimates*

Institutional InvestorsN=4 + CGAP estimates*

ABP, ING, PGGM, TIAA Cref, and CGAP estimates*

*CGAP estimates are based on data from 90 MIIs. For more information on MIIs see http://www.cgap.org/p/site/c/template.rc/1.11.142715/

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