The State of Microfinance Investment 2011: 6th Annual Survey and Analysis of MIVs

This paper evaluates performance and risk in MFIs and microfinance funds, also known as microfinance investment vehicles (MIVs).

The study builds on data collected since 2005 and interviews with 80 leading MIV executives and portfolio managers covering 92 percent of global assets under management. Findings Include:

• Global financial crisis of 2008 led to the decline in MFIs demand for funding in 2009-10 and consequent increase in excess capital with MIVs. This led to intense competition among funders in certain markets like Peru, Kyrgyzstan, and Cambodia;
• Improving local economic conditions and the cleanup of loan portfolios during the growth hiatus of 2009-2010 has rekindled MFI funding demand across most regions;
• Factors that helped growth include improved MFI credit fundamentals, increased demand from MFIs and stabilization and improvement in countries of investment post-crisis;
• Public institutional investment increased from 27 percent in 2009 to 35 percent in 2010 and nonprofits accounted for 5 percent of MIV shareholders.

The paper predicts positive quality of growth for the MIV industry for the remainder of 2011 and 2012 in view of the qualitative improvements in business practices at the MFI level and the more rigorous procedures at the MIV level.