Global microfinance markets are expected to grow by 10-15 per cent in 2016, although growth rates will differ markedly between regions. This is the key finding of the newly released responsAbility Microfinance Market Outlook 2016 (PDF). The reference publication’s sixth edition presents an in-depth and concise overview of the expected developments in the microfinance industry over the next year.
Led by India and Cambodia, markets in the Asia-Pacific region are expected to grow by an average of 30 per cent. In contrast, markets in Central Asia and the Caucasus region are suffering from their close ties to the stagnant Russian economy, the report says.
Low commodity prices are putting additional pressure on oil-exporting countries like Azerbaijan and Kazakhstan, causing microfinance growth rates to slow to 0-10 per cent in this region.
Markets in Sub-Sahara Africa are expected to continue to grow at above-average rates of 15-20 per cent, followed by the Middle East and North Africa (10-15 per cent), Eastern Europe (10 per cent) and Latin America (5-10 per cent).
According to the report, key trends in the microfinance industry include technological progress, more stringent regulatory frameworks especially in less mature microfinance markets and greater diversification in the funding mix of microfinance institutions.
As a consequence of progressing financial sector development in these markets, microfinance institutions can increasingly rely on financing from local banks or savings deposits alongside loans from international lenders. However, 50 per cent of interviewed experts expect microfinance investment vehicles to continue to gain importance as a source of funding over the next three years.
Commenting on the future development of the microfinance market, Rochus Mommartz, member of the Management Board of responsAbility, said: “Funding penetration in most microfinance markets lags far behind that of developed economies. As a result, catch-up growth is likely to continue over the next few years and produce attractive new investment opportunities for the private sector.”