Microfinance Market Niches and Client Profiles in Bolivia
The paper seeks to establish connections between key characteristics of the clients and features of the lending technologies that lead to the matching of classes of borrowers with particular organisations, and that influence the choice of market niches.
Data on loan sizes suggest the existence of different but broadly overlapping market niches associated with three tiers of clients. The sharpest distinction is between urban and rural clients. The matching between clients and organizations also reflects a weak but positive correlation between levels of poverty and loan sizes. According to an index of basic needs fulfillment of their clients, these organizations can be ranked as: FIE and Caja Los Andes (first tier), BancoSol (second tier), and PRODEM and Sartawi (third tier).
The same ranking is obtained when clients are ordered according to loan size, the ratio of loan size to the value of sales, and the value of monthly sales. The three tiers of clients are associated with different socio-economic features of their household-enterprises: sex, education, household size, access to electricity, water supplies and sewage facilities, employment- generating capacity of the enterprise, informality and separation of household and enterprise, occupations and the like.
Trade-offs between loan size, interest rates, and guarantee requirements attract different subsets of the clientele. Joint liability seems to be appropriate for very poor people, but group borrowers eventually outgrow this relationship. Caja Los Andes and FIE have shown that it is possible to supply individual loans to poor people and be profitable. Most clients are satisfied with the services received. The lowest satisfaction concerns loan sizes as loan-size rationing may be widespread.
