2010 WAEMU Microfinance Analysis & Benchmarking Report

This paper discusses trends in the microfinance sector in West African Economic and Monetary Union (WAEMU).

WAEMU includes Senegal, Burkina Faso, Mali, Niger, Côte dIvoire, Guinea Bissau, Togo and Benin. The microfinance sector of the WAEMU experienced slowed growth due to indirect effects of the financial crisis, after more than a decade of strong growth. The study analyzes a sample of 39 MFIs and a trend sample for 2007-2009 to measure changes in sector performance. Findings include:

• Microfinance in WAEMU continues to grow;
• MFI restructuring and application of the new regulatory framework should reinforce the sector and increase its profitability and outreach;
• Strengthening of professional associations, creation of microfinance-specific audit firms and future creation of a credit bureau should promote healthy growth;
• Growing number of MFIs placed under receivership shows the fragility of some aspects of the industry;
• Liquidating MFIs in WAEMU could mean loss of clients' savings and sector destabilization.

The paper highlights the role of supervision in the evaluation of MFI management and governance. It suggests that MFI supervision provisions under the new rules should contribute to strengthening controls and limit the likelihood of bankruptcy.