WASHINGTON, Dec., 2012 /PRNewswire-USNewswire/ — International funding for microfinance reached at least $25 billion in 2011, CGAP’s Cross-Border Funder Survey shows. The total amount committed has increased over the past five years, though at a slower rate in the last two years: average annualized growth decreased from 17 percent per year between 2007 and 2009 to six percent per year between 2009 and 2011. Even though funders committed the same amount to new projects in 2011 compared to 2009, more projects closed in the past two years, which accounts for the slower growth rate.
The bulk of cross-border funding continues to be provided by public funders. As of December 2011, public funding was estimated at around $17 billion, while funding from private sources reached around $8 billion, though funds from private sources are growing at a faster rate. Seventy-seven percent of total commitments (US$13.5 billion) was used for refinancing loan portfolios of retail providers.
Three regions combined – South Asia (SA), Europe and Central Asia (ECA), and Latin America and the Caribbean (LAC) – receive more than 60 percent of total commitments. The regional landscape is shifting, however, with commitments to ECA declining by 5 percent per year during 2009-2011 while commitments to Sub-Saharan Africa (SSA), the Middle East and North Africa (MENA), and East Asia and the Pacific (EAP) increased during the same period. Of all the regions, MENA and EAP still receive the least amount of funding.
Despite the slowdown of growth in commitments during the past two years, cross-border funders expect microfinance to remain important to their development agendas and are committed to pushing the frontier to expand financial services for the poor. Survey respondents say that agricultural finance, rural finance, branchless and mobile banking, and responsible finance are all priorities for the next five years. The shift toward a broader vision for financial inclusion indicates that cross-border funders will likely continue to adjust their priorities moving forward.
“Public funders are beginning to expand their funding beyond microfinance institutions as markets mature and more private investment comes into the sector,” said Mayada El-Zoghbi, Senior Microfinance Specialist at CGAP. “We expect this trend to continue.”
Read the brief and explore the supporting data on CGAP.org: http://www.cgap.org/publications/current-trends-cross-border-funding-microfinance