2008 Arab Microfinance Analysis and Benchmarking Report

This report reviews the performance of the microfinance sector in the Arab region.Despite the worldwide financial crisis, the microfinance sector in most Arab countries continued to develop in terms of infrastructure and operations. Key trends included:

• Microfinance sector continued to grow in 2008, but at a slower rate, with strong growth in Egypt and Jordan;
• Moroccan microfinance sector faced a crisis due to deterioration in loan portfolio quality;
• Commitments of donors and investors decreased in large markets;
• Financial institutions were the main source of funding;
• High regional disparities were observed in access to funding;
• Arab microfinance sector became sustainable in 2008, maintaining the lowest total expense ratio in the world;
• Arab MFIs, excluding Moroccan MFIs, improved productivity and cost per borrower.

The Arab microfinance sector still faces many challenges, especially at the regulation level. In addition to policy improvements, MFIs also need strong governance, appropriate MIS and internal credit policies and controls.