CGAP/MIX Study on MFI Demand for Funding: Report of Survey Results
The Consultative Group to Assist the Poor (CGAP) and the Microfinance Information eXchange (MIX) recently completed a study on the demand for microfinance funding. The primary objective of the survey was to help CGAP and the MIX understand the types of funding that microfinance institutions (MFIs) demand and the barriers that prevent them from accessing these funds. Secondary objectives were to evaluate how much contact MFIs have with different types of funders, and how many reporting formats MFIs must complete for funders.
The results of the survey have been an important input in formulating CGAP's strategy on promoting the commercial financing of microfinance, for instance through linkages between banks and MFIs. For the MIX, these results provide valuable insights on the information that you most value, and will help the MIX Market improve information already available on the funding available to MFIs.
The results indicate that MFIs generally perceive funding as the biggest constraint to growth. The majority of respondents, whether financially-sustainable, licensed, or unprofitable, ranked grants and donor loans as the most appropriate sources of financing. However, MFIs in South and East Asia ranked commercial funding sources such as equity, debt and bank loans as more appropriate than MFIs elsewhere. While the major constraint to obtaining donor funds (for institutions not already financially sustainable) was the lack of contact with these funders, most institutions listed regulation as a major obstacle to sourcing commercial bank loans or taking deposits.
About half of all MFIs in each region have had contact with donors and social investors, and commercial banks, but far fewer have interacted with equity investors. Overall, more respondents have had contact with commercial banks than donors in the past year. Globally, about 45% of respondents were required to report using less than 3 formats in 2002, but about one-third of respondents in Latin America and South Asia used 6 or more reporting formats that year.
