Cross-border Funding (2011)
September 29, 2011
The CGAP Cross-border Funder Survey provides an overview of the microfinance funding landscape and global trends in cross-border funding. It is based on data reported by the major cross-border funders, complemented with data from the Symbiotics MIV Survey and CGAP estimates where indicated.
Global commitments to microfinance have increased over the last four years.
CGAP estimates that cross-border funders increased their global commitments to microfinance by around 13% in 2010 up to at least US$24 billion. This estimate includes funding from public funders (DFIs, multilaterals, bilaterals) and private funders (foundations, institutional and individual investors).
Spotlight on the largest 20 funders: Commitments increased by US$ 1 billion in 2010, but growth rates are diminishing.
The 20 largest cross-border funders of microfinance committed US$14.7 billion as of December 2010. Commitments increased by US$ 1 billion in 2010, representing a growth rate of 7% compared to 12% in the previous year in US dollar terms. The smaller growth in commitments is due to projects terminated in the survey year, rather than a slowdown in new projects. The 20 largest funders approved more new projects in 2010 than in previous years.
The five largest funders in terms of total commitments remained unchanged over the past three years: KfW, World Bank, AsDB, IFC and EBRD.
Commitments for capacity building account for 14% of total commitments.
The bulk of cross-border funding (86%) is used for on-lending to retail clients. The share of commitments dedicated to capacity building remained at 14% over the last four years.
The share of equity funding and guarantees increased; grant funding decreased for the first time in the last four years.
Debt is the main instrument used by cross-border funders to fund microfinance. Debt represents 60% of total commitments, while equity represents 13%, grants 11% and guarantees 10%. The remaining 6% includes different structured finance products.
Equity investments increased by 12%, a much slower growth rate than in the previous year (57%). The amount committed through guarantees increased by 93%, mostly driven by four large new guarantee programs. Grant commitments decreased for the first time in 2010 by 9%, mostly due to projects coming to an end in 2010 and a relative slowdown in new commitments.
In 2010, around 40% of debt funding is loans from multilateral agencies to governments. Governments can use the funds to on-lend to MFIs or as grants to support capacity-building initiatives at the retail, market infrastructure, and policy levels.
The regional allocation of funding did not change significantly over the last four years.
SA, ECA, and LAC remain the regions receiving the highest amounts of cross-border funding. These three regions combined receive more than 60% of total commitments. However, commitments to ECA have decreased compared to 2009.
Commitments to SSA represent 11% of global commitments and increased steadily over the last four years, albeit at slower growth rates than commitments globally.
MENA and EAP remain the regions receiving the least funding for microfinance. Commitments to EAP represent 9% of global commitments. However, commitments to EAP increased by 49%, the highest growth reported in any region in 2010. Commitments to MENA represent around 4% of global commitments and increased by 5% in 2010.
DFI funding is concentrated on few MFIs and MIVs.
The 10 DFIs surveyed in 2011 reported commitments to microfinance of US$ 9.1 billion as of December 2010. In 2010, as in the past 3 years, half of the commitments of these DFIs (US$4.4 billion) were concentrated on only 30 recipients, including 12 MFIs and 18 MIVs, holdings, local banks and funds.
Among DFIs, there is a clear trend towards indirect funding, i.e. funding microfinance investment vehicles (MIVs) and holdings that channel funding to retail financial service providers. Over the last four years, the share of DFI funding via MIVs and holdings has increased from 22% in 2008 to 29% in 2010 (10 DFIs in our sample).
About the CGAP Cross-border Funder Survey
The CGAP Cross-border Funder Survey is based on data reported by the major cross-border funders, complemented with CGAP estimates where indicated. In 2011, the CGAP surveyed a subset of 20 microfinance funders that together represented 85 percent of total commitments in the previous survey year. Estimates on global cross-border funding are based on data from this subset complemented with data from the 2011 Symbiotics MIV Survey. Survey participants in 2011: ABP, AECID, AFD Proparco, AfDB, AsDB, CIDA, DCA USAID, DFID, EBRD, EC, EIB, FMO, Gates Foundation, GIZ, IFAD, IFC, KfW, MIF IADB, OPIC, World Bank.
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