Cross-Border Funding for Microfinance

Latin America and the Caribbean

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

32 Public Donors and Investors

(Multilaterals, Bilaterals, DFIs)

$2.5 billion

Private Donors and Investors

(Foundations, Institutional and Retail Investors)

$2.2 billion

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

67 Microfinance Investment

Intermediaries (MIIs)

Commitments to Microfinance for LAC as of December 2009: $4.7 billion*

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

$2.1 bln

Ap

exes

$2.1 bln $0.1 bln

$2.5bln

Ap

exes

$0.4 bln

High growth in commitments in 2009

• Cross-border funders had $4,724 million committed to LAC as of 2009, representing 22% of total cross-border funding to microfinance.

• High growth in commitments, with a rate of 21% compared to 17% globally.

• 32 public funders (15 bilateral and multilateral agencies and 17 development finance institutions – DFIs), 13 foundations/NGOs and 67 Microfinance Investment Intermediaries (MIIs) are active in LAC.

• LAC is the region with the largest number of private investors, DFIs and MIIs.

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

Private funding close to balancing public funding

• Public funders provide 54% of total commitments to LAC, compared to 69% globally. Private funders (foundations, institutional investors and individual investors) account for 46%.

• Private funding increased by 28% in 2009 (compared to 33% globally), while public funding increased by only 15% (compared to 12% globally).

• Among public funders, bilateral agencies decreased their commitments by -5%, whereas the three multilateral agencies and the 17 DFIs increased their commitments by 3% and 20% respectively.

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

Focus on refinancing retail financial service providers

• 91% of commitments to LAC are used to refinance retail financial service providers, directly or indirectly, compared to 88% globally.

• $431 million are committed to capacity building in LAC. 80% of these funds are used to strengthen retail service providers; 20% are used at the market infrastructure and policy levels. Mexico represents more than 60% of capacity building funds to LAC, due to one large World Bank project.

• Funding for on-lending increased by 23% in 2009, while funding for capacity building increased by only 1%.

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 by far the main instrument used by funders

• Only 36% of commitments to LAC is provided by funders directly or channeled through local governments, compared to 45% globally; 64% are channeled via intermediaries such as MIIs.

• Debt remains the main financial instrument used by funders.

• Funders committed $230 mln in grants, a third of which to associations, networks, and the rest directly to retail financial service providers. Grants represent 12% of direct investments, compared to 21% globally. Honduras, Haiti and Ecuador received at least a third of total grant funding to LAC.

• Guarantees represent 5% of direct investments, compared to 4% globally, but have been decreasing in 2009 (-23% in direct investments).

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

76%

5%12%5%2%

Direct Funding by Instrument (LAC)

Other

Guarantee

Grant

Equity

Debt

36%64%

Commitments by Type of Funding (LAC)

Direct Indirect

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

5 countries receive 60% of funding to LAC

• Funders are active in 26 countries in LAC.

• In 2008 and in 2009, Peru and Mexico represent more than a third of the funding committed to LAC; the top 5 countries (Peru, Mexico, Ecuador, Bolivia, Colombia) receive more than 60% of total funding to LAC.

2009 Commitments

2008/2009 Growth

2009 Commitments

2008/2009 Growth

Argentina $2 to 50 mln → Haiti $2 to 50 mln ↑Belize $2 to 50 mln → Honduras $50 to 100 mln →Bolivia $100 to 300 mln ↑ Jamaica $2 to 50 mln ↓Brazil $2 to 50 mln ↑ Mexico $300 to 500 mln ↓↓Chile $50 to 100 mln → Nicaragua $100 to 300 mln ↓Colombia $100 to 300 mln → Panama $2 to 50 mln →Costa Rica $2 to 50 mln ↑ Paraguay $50 to 100 mln →Cuba $2 to 50 mln → Peru $300 to 500 mln ↑↑Dominican Republic $100 to 300 mln ↓ St. Kitts and Nevis <$2 mln →Ecuador $100 to 300 mln → St. Vincent <$2 mln →El Salvador $50 to 100 mln ↑ Suriname $2 to 50 mln ↑Guatemala $2 to 50 mln ↓ Uruguay $2 to 50 mln →Guyana $2 to 50 mln → Venezuela $2 to 50 mln →

↑↑ 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

Commitments by Country as of Dec. 2009, and 2008/2009 TrendCountry allocation is available for 42% of LAC commitments

$2 to 50 mln

$51 to 100 mln

$101 to 300 mln

$301 to 500 mln

Country breakdown is available only for direct funding

Active Funders in LAC

KfW 10%AECID 9%

World Bank 6%IFC 5%

MIF IADB 4%

Top 5 Funders in LAC% of Commitments to LAC

Active Funders in LAC

Foundations & NGOs Bilateral Agencies

Citi Foundation AusAID Accion AIM GMF Group Planet MicroFund

Cordaid CIDA Accion Gateway GPMF 2005, 2006, 2008 Procredit Holding

DOEN Foundation GTZ Alterfin Gray Ghost respA GMF

Ford Foundation Italy MoFA ASN-Novib Hivos-Triodos respA MF

Gates foundation JICA BBVA CODESPA I&P respA MLF

Grameen Foundation Lux Dev BOLD I Impulse Rural Impulse

Hivos MCC BOLD II Incofin SIDI

ICCO Netherlands MoFA BOMS I KCD Global SNS

MasterCard Foundation Norad BOPEF KCD Latinamerika SNS MF II

Omydiar Network SDC Consorzio Etimos LocFund St Honore

Oxfam Novib Sida CRESUD Lux MDF Symbiotics DRF

Rabobank Foundation USAID DBMDF MF Enhancement Facility Triodos FSF

Whole Planet Foundation DBMF-1 MFLO-LC Triodos MF

DID-Partnership MFLO-SubDebt Triodos-Doen

Development Finance Institutions (DFIs) Dignity MicroAccess2007 Unitus EF

AECID ICDF DMCF MicroCred Holding Wallberg GMF

AFD Proparco IFC DWM MF MicroCredit XXEB

BIO IIC ELF MicroVentures

CAF KfW EMF MicroVentures SICAR

CDC MIF IADB FIG MicroVest I Multilateral

DCA USAID Norfund FINCA MF Minlam & UN Agencies

EIB OPIC Finethic NICA EC

Finnfund SIFEM GCMC Oikocredit IFAD

FMO Global MF equity fund OTI World Bank

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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