2011 Middle East & North Africa Regional Snapshot
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- 1. MIX and Sanabel Analysis of Key Trends2011 Middle East and North Africa Regional Snapshot February 2012The Premier Source for MicrofinanceData and Analysis 2012, MIX and Sanabel. All rights reserved.
2. Data Sources Performance of Microfinance MIX MarketInstitutions (MFIs) MIX Market Funding Structure Data Funding Structure of MFIs Arab spring Sanabels post revolution survey Cross-Border Funders InvestmentsCGAP Cross-Border Funder Survey Macroeconomic DataWorld Development Indicators Iraq Microfinance Tijara-Iraq 2 2012, MIX and Sanabel. All rights reserved. 3. Indicators Indicator Value Number of countries 10 Population* 258 million Number of Microfinance institutions surveyed64 Total Number of Borrowers, Millions 2.2 Gross loan Portfolio, USD Billion 1.2 Average Loan Balance, USD 610 Number of offices More than 1800 Offices Legal structure More than 70% are NGOsSource: *World Development Indicators, MIX Market, National Associations, Central Banks.3 2012, MIX and Sanabel. All rights reserved. 4. Regulatory Framework SavingsInterest Rate Cap Credit Bureau/info sharingMF SpecificMFIs PostalBanksMFIs/ BanksNBFI NGO-MFIsLegislationNGOsEgypt Pending PendingIraqJordan PendingPendingLebanon PendingMoroccoPalestine Pending Sudan PendingPendingSyria TunisiaYemen Being testedSource: 2009 State of industry presentation, Ranya Abdel-Baki4 2012, MIX and Sanabel. All rights reserved. 5. Lowest Outreach in MENA 70,00070,000 60,00060,000 50,00050,000ThousandsIn terms of total outreach andMillions 40,00040,000scale, the Arab region 30,00030,000 recorded the lowest comparedto its global peers. 20,00020,000 10,00010,000The region has among the - -lowest average loan balances,at 16 percent of GNI percapita, following South Asiaand East Asia.Gross Loan Portfolio Number of active borrowers http://www.mixmarket.org/profiles-reports/crossmarket-analysis-report?rid=MwzqVtDK 5 2012, MIX and Sanabel. All rights reserved. 6. MENA in the Global Context 62% of loans in MENA are to female borrowersthough theirproportion declined in Lebanon, Palestine,Sudan and Yemen. Compared to other regions, MENA has a low outreach to rural clients. Corporate and SME portfolio represent just 5% of MENAs total portfolio.http://public.tableausoftware.com/views/ECAmicrofinanceclients/MENAclients?:embed=yData on women borrowers: http://www.mixmarket.org/profiles-reports/crossmarket-analysis-report?rid=Pbf7EMju 6 2012, MIX and Sanabel. All rights reserved. 7. Steady Geographic Outreach Trends100%90%80%70%60%50%40%Urban30% Rural20%10% 0% 200820092010Middle East and North AfricaNumber Of Active Borrowers The proportion of rural outreach remains steady compared to the levels of 2008 and 2009, despite the overall growth in the region7 2012, MIX and Sanabel. All rights reserved. 8. Efficiency and Profitability: Lowest Financial Expense in MENA0 12 34 56 735%35%30%30%25%25% Administrative expense/ assets20%20% Operating expense/ assets15%15% Provision for loan impairment/ assets10%10% Financial expense/ assets Financial revenue/ assets 5%5% 0%0% Africa East Asia and EasternLatin AmericaMiddle East South Asia the PacificEurope andand The and NorthCentral Asia CaribbeanAfricahttp://www.mixmarket.org/profiles-reports/crossmarket-analysis-report?rid=kpymUxkNMENA has low costs compared to other regions thanks to its considerably low cost of funds at1.7%, followed by Africa with 2.8%. This is attributed to its limited ability to secure commercialfunds, rather than an ability to secure commercial funds at low cost. 8 2012, MIX and Sanabel. All rights reserved. 9. Efficiency and Profitability: Highest ReturnsAs a result of its low total expenses and average financial revenue, MENA recorded the highest Return on Assets at 4.69%, followed by East Asia and pacific at 2.83%. Return on Assets5%4%3%2%1%0%Middle East and North East Asia and theEastern Europe and Latin America and The South Asia AfricaAfrica PacificCentral AsiaCaribbeanhttp://www.mixmarket.org/profiles-reports/crossmarket-analysis-report?rid=SkMR8GXd9 2012, MIX and Sanabel. All rights reserved. 10. Efficiency and Profitability: Returns Levels by CountriesGreat variations are observed per country: where Egypt shows an increase of more than 5% between 2008 and 2010, Iraq shows a phenomenal drop of almost 10 percentage points but remains above average with a 5.7% ROA.Return on assets18%16%14%12%10%8%6%4%2%0%-2% MENA region: http://www.mixmarket.org/profiles-reports/crossmarket-analysis-report?rid=t2CQZcht MENA Countries: http://www.mixmarket.org/profiles-reports/crossmarket-analysis-report?rid=6sgA8eS410 2012, MIX and Sanabel. All rights reserved. 11. High Portfolio Quality7%6%5%4%3%Portfolio at risk > 30 daysWrite-off ratio2%1%0% Africa Latin America Eastern Europe East Asia and South Asia Middle East and and Theand Central Asiathe PacificNorth AfricaCaribbeanhttp://www.mixmarket.org/profiles-reports/crossmarket-analysis-report?rid=o5XwUbfYMENA Arab Region maintained a high portfolio quality with the lowest median portfolio at risk > 30days at 2.09%.11 2012, MIX and Sanabel. All rights reserved. 12. Portfolio Quality: Post-Crisis trends in Morocco8%7%6%5% Portfolio at risk 30 days4%3% Write-off ratio2%1%0%MENA 08 MENA 09MENA 10 Morocco 08Morocco 09 Morocco 10MENA: http://www.mixmarket.org/profiles-reports/crossmarket-analysis-report?rid=qASDye6aMorocco: http://www.mixmarket.org/profiles-reports/crossmarket-analysis-report?rid=zr43BvbdPortfolio at risk > 30 days dropped more than one percent in one year due to support from thegovernment, confidence in the sector from different stakeholders including commercialbanks, investors, and donors, as well as responsible actions from the MFIs responding to the crisis. 12 2012, MIX and Sanabel. All rights reserved. 13. Recovery in MoroccoThe Moroccan sector is recovering from the delinquency crisis thanks to the measurestaken by different stakeholders to restore confidence: MFIs Donors & Commercial Moroccan GovernmentFunders Acquisition ofZakoura byFondation Banque Populaire pour le Secured $46milliontoMicroCrdit (FBPMC) in mid-2009 Played a key role in supporting strengthen MFIssystemsand the sector by continuing fundinginternal control Creation of credit information the sector and directing 70% ofsharing systems and tightening ofthe total funding of the sector incredit processes as a reaction toyear end 2009 to the Moroccanmultiple lending sectorhttp://www.cgap.org/gm/document-1.9.41164/BR_Microfinance_Sector_Morocco.pdfhttp://www.themix.org/sites/default/files/2010%20Arab%20Microfinance%20Analysis%20Benchmarking%20Report%20-Final_3.pdf13 2012, MIX and Sanabel. All rights reserved. 14. Limited funding through debt and depositsDebt to equity ratio (median) 54.5 43.5 32.5 Debt to equity ratio 2(median)1.5 10.5 0 Middle East and Africa East Asia and Eastern Europe Latin America South AsiaNorth Africa the Pacific and Central Asia and The Caribbean http://www.mixmarket.org/profiles-reports/crossmarket-analysis-report?rid=JLGCFRNi MENA has received the fewest cross-border funds historically and depends primarily ondonations. Very few MFIs in the region use saving for funding except in Yemen, Syria, and Sudan wheresavings mobilization is allowed. 14 2012, MIX and Sanabel. All rights reserved. 15. Funding Structure by Regions% of Total Funders40%35%30%25%20%15%10%5%0%Dec.07 Dec. 08 Dec. 09 Dec. 10 EAPECALAC MENASASSASource: CGAP funders survey 2011MENA remains the region receiving the least funding for microfinance. Commitments to MENArepresent a mere 6% of global commitments and increased by 5% in 2010. 15 2012, MIX and Sanabel. All rights reserved. 16. Funding Structure Financial InstitutionFund Government OtherDFI0 50,000,000100,000,000 150,000,000 200,000,000 250,000,000 300,000,000 350,000,000 400,000,000 450,000,000MENA funding classified by funders type: http://www.mixmarket.org/profiles-reports/funding-structure-report?rid=P5qxV8no 462 financial institutions (with a large proportion of commercial banks) secured a total of USD 5,850 billion which represent almost 40% of the total funds committed to the region. Morocco, followed by Lebanon and Egypt were the main recipients. 16 2012, MIX and Sanabel. All rights reserved. 17. Arab SpringAs a result of inequality, corruption, concentration of wealth and power in hands of very few, Arab youthlead revolutions in Tunisia followed by Egypt, Libya, Bahrain, Yemen, and Syria calling for changingregimes.Microfinance is one of the sectors that suffered most from the Arab spring revolutions. Sanabel hasconducted a survey to measure the impact of the revolutions on 23 MFIs from 4 countries(Tunisia, Egypt, Syria, Yemen). Some common factors among the countries summarized in the following: The revolutions impacted internal operations of MFIs, especially those operating in the urban metropolis (shutting down, changing working hours to suit curfews, etc.) Increase in operating expenses for MFIs due to collection during difficult times No MFI had a full-fledged contingency plan in place prior to the revolutions and uprisings Actual affiliation or perception of affiliation to government bodies or some commercial / business entities proved to be harmful (i.e. both in Tunisia and Egypt MFIs that were perceived to be affiliated to govt officials or businessmen faced greater difficulty in collection) Either no government intervention or not useful for the industry (i.e. in Egypt 3 months postponement of repayment to clients had a negative impact on repayment) High levels of social commitment to clients and community in times of need (i.e. Tunisia: refugees from Libya)17 2012, MIX and Sanabel. All rights reserved. 18. Arab Spring: Impact on the Microfinance SectorOn MFIs Level: Disruptions in work schedules: staff working from home at times and collection being done earlier in the day Issuance of new loans ceased or under stricter terms, renewals cautiously maintained Staff spirit and morale affected, demonstrations to require more benefitsEgyptYemen Tunisia Some branches closed off MFIs put greater time and Endas branches impacted to effort into collection Loan ceiling brought down:some extent: some banks were closed and -windows broken, Shorter working hours forCBE placed a ceiling on-equipment looted, banks impacted installmentdisbursement -one branch burned payments by clients and salary payments for MFI staff SFD decision to postpone Special efforts required from repayment for 3 months for allstaff to fulfill commitment to High operational costs of clients impacted collection clients during difficult times administrative processes due to delayed repayments and Field dangerous for loan higher PARofficers (cases of attacks) Increase instaff Absence of police forces and resignation, especially non-functioning courts system females affectedrepayment and litigations 18 2012, MIX and Sanabel. All rights reserved. 19. Arab Spring: Impact on the Microfinance SectorOn Client Level:Yemen Microenterprises(mostlycommercialand service Egyptbusinesses) affected byshortage in basic needs and Ceaseordecrease ofservices microenterprises operations due to military-imposed curfew, lackTunisia Microenterprises closed down of security, and theftfor a given period/worked for Microenterprisesshorter periods Handicrafts, tourism related attacked, looted, burned down activities, and manufacturingwhile some were damaged or-Withdrawalfrom labour most impacted whereas food closedmarket,industries benefited - loss of business activity, Few deaths among Endas - displacement(i.e. Abyan), Lossof businessmicro-entrepreneurs or their - injuries or deaths amongactivity, injuries or deaths family members. clients, or members ofamong clients, or members of their households. their households. Individual savings depletedto meet consumption needs19 2012, MIX and Sanabel. All rights reserved. 20. Arab Spring: Impact on the Microfinance SectorMeasures taken by MFIs: Yemen Modifying credit policies, halting some financing processes, and increasing procedures for otherfunding Decrease in loan size Minimal rescheduling of loans Increase in securities and decrease in lending to casual workers Ceased issuance of consumer loans due to high demand / high risk Ceased loan issuance in remote areas (far from MFI) Postponing the disbursement of funds that do not meet certain criteria Making adjustments to the withdrawal of savings Making multiple back-up files of databases and other data sources Emphasizing the independence of the MFIs and not taking side with any party involved in theconflicts Making adjustments to the cash-in and cash-out within branches on a daily basis and decreasingthe size of sundry accounts 20 2012, MIX and Sanabel. All rights reserved. 21. Arab Spring: Impact on the Microfinance SectorMeasures taken by MFIs: EgyptTunisia Case-by-case basis (complete No penalties for late paymentsloan write off, partial write-off during January, interestfreeloans, postponement /deferment Special loans provided to rebuildof due loan installments for onelost stocks and interest ratesmonth, reschedulingloan lowered for particular cases.payments by extending the loanperiod,combined installment Indemnities paid tothe mostrepayments for clients) severely affected clients Offering of new loan products Enda took aclear public(emergency loan)commitment (TV and radio) to standby its clients in these difficult times Organization of exhibitions forclients Enda provided support to refugeesfrom neighboring Libya21 2012, MIX and Sanabel. All rights reserved. 22. Quick Look at Figures: Before, During, and AfterSource: Sanabel - based on data collected from 23 MFIs Tunisia (1 MFI) Egypt (9 MFIs) Yemen (10 MFIs) Syria (3 MFIs)The revolutions did not impact employment levels: during 2011, median staff levels increased in Tunisia, Yemenand Syria and dropped by only 1% in EgyptMFIs in all four countries have witnessed an increase in median number of loan officers over the period.Yemen witnessed the largest increase in loan officers at 88%, followed by Tunisia, Egypt and Syria.Loan officers are the profit generating resource within any MFI and despite the conditions, MFIs have opted toincrease investments in their most productive assets instead of slowing down hiring or laying off staff. 22 2012, MIX and Sanabel. All rights reserved. 23. Quick Look at Figures: Before, During, and After? Outstanding Active Borrowers (Actuals): 10,000(10,000)(30,000)Egypt(50,000)(70,000)Syria(90,000)Tunisia(110,000) YemenSep. -Oct. - Nov. - Dec.Jan. -Feb. -Mar. -Apr. - May - June - July - Aug. - Oct. Nov.Dec. 2010 - Feb. Mar.Apr.May June JulyAug. Sept. 2010 2010 2010 Jan.2011 2011 2011 20112011 20112011 20112011Source: Sanabel - based on data collected from 23 MFIs Tunisia (1 MFI) Egypt (9 MFIs) Yemen (10 MFIs) Syria (3 MFIs) Egypt witnessed the greatest decrease in actual number of borrowers over the past year compared t...