Benchmarking African Microfinance 2006

This report examines the regional performance of microfinance in Africa in 2000, explores trends across the sector, and brings to light the particularities of microfinance in the region. The report states that in the year 2006:

• The African microfinance industry created and grew formal and semiformal financial institutions across the region;
• Microfinance institutions (MFIs) varied in scale, institutional design, and target markets;
• Savings continued to form a fundamental part of financial services, much more so than in any other global region;
• Clients were offered an increasing number of financial services, although at a high cost;
• African MFIs continued to face tremendous operating hurdles in sustainably serving their clientele.

It then identifies the following tends in African microfinance in 2006:

• Growth was disparate across Africa, with spectacular growth in certain markets an among specific MFIs;
• Most MFIs continued to rely on client savings to finance their activities;
• Profitable MFIs benefited from positive returns in achieving scale;
• Larger loans to clients improved the efficiency of African MFIs.

In conclusion, the report states that:

• Microfinance in Africa is witnessing a split between large, sustainable and efficient institutions, and those MFIs that have yet to achieve scale and cost control;
• MFIs will increasingly have to turn towards technological innovations to best deliver their loan and savings services;
• African MFIs will have to continue to strive towards profitability so as to build long-lasting, inclusive financial systems for the poor.