Microfinance Market Outlook 2015

Growth driven by vast market potential

Executive Summery
November 2014
Key findings

■ The global microfinance market should once again achieve growth of 15-20% in 2015.
Asia is displaying the strongest growth momentum. A particularly impressive development
in this region is the revival of India’s microfinance market. Central Asia is being impacted
by the economic crisis in Russia, leading to a slight slowdown in financial sector
development compared to previous years.

■ According to the International Monetary Fund (IMF), economic growth in the 20 most
important microfinance markets will increase from 4.4% to 4.8% in 2015. This means
that microfinance countries will probably grow at twice the rate of developed economies.

■ The 32 experts interviewed by responsAbility for this report have not seen any evidence of
a backlog in reforms in their respective countries. Instead, they believe that the institutional
environment for microfinance institutions (MFIs) is improving – both in terms of regulatory
supervision by the authorities and market infrastructure.

■ These experts take a critical view of the reduced portfolio quality of MFIs. This calls for
stricter risk management on the part of MFIs as well as the asset managers investing in
them.

■ In terms of financing, local sources of financing are becoming increasingly important.
International investors continue to play a major role but MFIs are seeking to focus on a
smaller number of stronger financing partners.
Dear reader

The publication of our Microfinance Market Outlook in late are decision-makers at MFIs and rating agencies, as well as
autumn of each year has become something of a tradition. It investors and advisors. We wish to thank the following indi-
is intended to provide you with an in-depth yet concise outlook viduals for their valuable input:
for the microfinance markets. As one of the leading independ-
Roberto Andrade (Banco Solidario), Pedro Arriola (Consultant),
ent investors in this area, we are able to use our network of
Carlos Avalos (Vision Banco), Patricio Diez de Bonilla (Banco
experts across the different markets when producing this Compartamos), Nikolas Drude (EBRD), Malkhaz Dzadzua (Crystal),
report, while also drawing on high-quality key data gathered Thomas Engelhardt (LFS Financial Systems), David Ferrand (FSD
each month from around 300 microfinance institutions (MFIs). Kenya), Jeff Flowers (Finca), Tony Fosu (Sinapi Aba), Ralph Guerra
(Compartamos Financiera), Jhale Hajiyeva (Azerbaijan Microfinance
The fifth edition of Microfinance Market Outlook provides us Association), María Clara Hoyos (Asomicrofinanzas), Hout Ieng Tong
with a welcome opportunity to look back at the past five years, (HKL), Emmanuelle Javoy (Consultant), Mejra Juzbasic (Finance
in Motion), Mona Kachhwaha (Caspian), Michaël Knaute (Oxus),
while also looking forward to the next five. Our review of the
Kurt Koenigsfest (BancoSol), Anne-Lucie Lafourcade (IFC), Aldo
last half decade clearly demonstrates the development poten-
Moauro (MicroFinanza Rating), Clive Moody (dfe Partners), Zaza
tial that is to be found in the microfinance markets: While the Pirtskhelava (Credo), Felipe Portocarrero (IFC), Karlygash Raikhanova
financial markets experienced a rollercoaster ride and inves- (KMF), Eric Savage (Unitus Capital), Sanavbar Sharipova (IMON),
tors were caught on the wrong foot on numerous occasions Alex Silva (Omtrix), Senacheert Sim (PRASAC), Gagik Vardanyan
during this period, the microfinance markets achieved very (Kamurj), Arnaud Ventura (MicroCred), Styopa Zakinyan (ACBA).
consistent and reliable growth.
To assess potential levels of demand over the next five years,
we also carried out an analysis of the microfinance markets
“The global microfinance market should using a model-based simulation for the period to 2019.
grow by 15-20% again in 2015.” The results of our analysis can be found on page 5. In addi-
tion, this Microfinance Market Outlook provides a current
overview of the investment universe and offers an economic
Although they displayed strong growth rates, the 77 microfi- outlook for the target markets in 2015. We have also sought
nance markets in which responsAbility invests evolved at a to provide an investor-oriented interest rate outlook and we
steady pace in structural terms, with each phase of their explore the results of this year’s expert survey in greater detail.
development being clearly visible. This is an encouraging
picture that reflects the hard work of hundreds of MFIs. As a final point, the publication once again turns the spotlight
on India, thus providing continuity in our analysis of this boom-
Investors are, of course, interested in finding out if and how ing market for our readers. The increasing role of private equity
this trend will continue. To evaluate how the microfinance investing in the field of microfinance is another pertinent topic
world is likely to develop in future, we conducted detailed that we examine in this Microfinance Market Outlook.
interviews with 32 experts from all major microfinance markets
worldwide to gauge their expectations. The experts interviewed We hope you enjoy reading the publication.

Christian Etzensperger
Senior Research Analyst, responsAbility Investments AG

responsAbility Microfinance Market Outlook 2015 3

Microfinance sector:
Facts and figures

The aim of microfinance is to build financial sectors that are of low-income households. Like in other sectors, competitive
closely interconnected with the local economy – thus facili- forces naturally also lead to changes in market leadership
tating lending to micro and small entrepreneurs, enabling within the microfinance sector. MFIs are increasingly compet-
payment systems to be established and, in particular, creat- ing to win the favour of clients and investors, and emerging
ing new savings opportunities for private households. This providers are taking over the market positions of stagnating
approach – which is efficient in many respects – enables institutions.
capital to be put to productive use in the local economy. In
other words, the microfinance business contributes to the This publication focuses on the group of around 500 well-
quantitative growth of other sectors of the economy, such as structured financial services providers that are suitable for
small-scale industry, construction and trade. This is accompa- investment based on the above-mentioned factors. They can
nied by a process of ongoing formalization, i.e. the numerous be roughly divided into two groups:
steps that a provider undergoes as it makes the transition
from the shadow economy to becoming a tax-paying enterprise ■ Tier 1 MFIs (at least 100): These institutions generate sus-


with contractual commitments, as is the norm in developed tained returns, serve a large and well-diversified client base,
countries. Consequently, financial sector development provides and have an experienced management team in place. In reg-
small enterprises and households with market access – leading ulatory terms, their potential has largely been realized.
to their inclusion in the regional and ultimately the global
economy.1 ■ Tier 2 MFIs (at least 400): These are smaller and younger


MFIs that have developed a viable business model and have

The growth of the financial sector is underpinned by compa- already implemented it to a significant extent. They want to
nies that provide a range of financial services. If we consider develop further in regulatory terms in order to become an of-
the number of end-consumers that exist, it is clear that the ficially recognized financial institution in their countries.
strongest growth potential is to be found in the lower-income Abbildung 4: Reales BIP-Wachstum
segment – the microfinance segment. The providers that are Figure 1: Microfinance investment universe
active in this segment are known as microfinance institutions
or “MFIs”. However, this generic term now encompasses Tier 1 (~100 MFIs)
Structurally
thousands of providers with different legal statuses that are investable
Tier 2 (~400 MFIs)
at varying stages of operational development.

For investors, the only financial services providers that are

attractive are those that operate profitably and meet regulatory Tier 3
requirements as effectively as possible. They need to have (~10,000 MFIs)
professional structures and processes in place to fulfil strict
requirements in key areas such as accounting and risk manage-
ment. Around 500 such institutions exist worldwide, spanning
around 80 countries. In each market, we focus on those
providers that are most successful in serving the needs Source: responsAbility Research

1
See responsAbility Perspectives 2014, pages 10-13, and the webcast
“Microfinance is financial sector development” at www.responsAbility.com.

responsAbility Microfinance Market Outlook 2015 4

 Medium-term outlook: Increasing demand in the years leading up to 2019
The microfinance markets have grown significantly at a global level in Bank as input for the model in order to produce a model output based
recent years – but can investors assume that the favourable environ- on the mathematically defined context. The linear panel data model
ment will continue? All markets that display impressive double-digit estimates the depth of the financial sector for each country using
growth rates over a number of years are periodically confronted with the statistical regression method. The expected ratio of loans to gross
questions about this growth’s sustainability. How much can the domestic product (GDP) is determined in this context. In a further
market absorb? Will it potentially be oversupplied or undersupplied? step, a microfinance market simulation was carried out using infor-
mation from the data platform Mixmarket.org; in the reference year of
These questions can justifiably also be asked in the case of the 2012, it contained data sets from 1,270 MFIs. As the final part of
microfinance markets. In 2014, the responsAbility Research team our analysis, we made some corrections so that the resulting invest-
performed pioneering work in this area: It carried out a systematic ment universe is in line with responsAbility’s investment criteria. This
study to analyse the investment capacity of the microfinance markets ensures that the results correspond to the real investable microfi-
at a global level for the first time. The study, which took account of nance market.
country-specific and market-specific factors, delivered encouraging
results: The findings suggest that the microfinance market will In the case of the 30 most important microfinance markets, we esti-
probably continue to expand at its current rate – which stands at mate the current market capacity to be USD 5,728 million. Taking
19.3% p.a. according to our model calculation – for at least the next this as a starting point, our model considers factors that drive or in-
five years (the detailed results are provided after the description of hibit growth. Factors that drive growth include GDP growth, the size
the model below). of the economy and a favourable institutional environment. The
factors we consider as growth inhibitors include an increase in savings
Medium-term growth potential in the area of microfinance can be volumes as a rival sources of financing, as well as a concentration of
estimated using a regression model. The question we asked is: “How providers. According to our model, market capacity will continue to
much will the investment volume considered investable for special- grow substantially and in regular stages in the coming years. It should
ized asset managers grow to in the markets covered by the study by already come close to USD 7 billion in 2015. It is likely that market
2019?” We examined this question using econometric modelling. The volume will increase to almost USD 14 billion by 2019 (see grey area
first step was to identify factors that had a decisive impact on growth in Figure 2).
in the past. We then used projected values from the IMF and World
Within this context, responsAbility could achieve annual growth of
Figure 2: Model-based projection of medium-term 23% based on modelled microfinance market growth and assuming
its share of the underlying markets remains unchanged (see line in
demand USD million
Figure 2)2. In view of the still high absolute market capacity, we are
also optimistic that we will be able to further expand our market share
16,000
if investor interest remains strong – without having significant impact
14,000
on our competitors. According to this scenario, we will invest around
13,861
12,000 USD 4.5 billion in the 30 most important microfinance markets by
11,700
10,000 2019 – corresponding to an annual increase of 30%. responsAbility
9,875 does not, however, set itself any growth targets of this nature. Instead,
8,000
8,350 we will do everything necessary to effectively and sustainably meet
6,000 6,907
demand in developing economies and emerging markets.
5,728 4,546
4,000 3,497
2,690
2,000 1,224 1,592 2,069 The calibrated model is used in the area of active portfolio manage-
ment at responsAbility. Based on the findings regarding the saturation
0
2014 2015 2016 2017 2018 2019 of individual markets, investment volumes can be reduced in advance.
Forecast demand from MFIs Forecast rA exposure With this approach, responsAbility also indirectly prevents the over-
Forecast rA exposure (if market shares remain unchanged) indebtedness of borrowers and observes the United Nations Principles
Source: responsAbility Research for Responsible Investment (UNPRI).3

2 3
r esponsAbility’s portfolio allocation to the different markets is not In this respect, responsAbility is one of the largest providers of capital involved
proportional to the size of the markets. This explains the differences in financing the MIMOSA Project – a global field study conducted by an
between the respective growth rates. independent body to analyse the risks of overindebtedness with an
unprecedented degree of accuracy. The researchers plan to present their initial
findings in summer 2015.

responsAbility Microfinance Market Outlook 2015 5

Economic upturn in
target markets

As a result of the current turbulence in the equity markets, Figure 3: Forecasts for real GDP growth in
fundamental trends are not being properly recognized. This responsAbility’s 20 most important microfinance markets
applies especially to the ongoing recovery of the global econ-
omy. According to the latest IMF forecasts, growth across all Real GDP growth (%) 2014 2015
regions is likely to be even stronger in 2015 than in 2014.
Peru 3.6% 5.1%
Azerbaijan 4.5% 4.3%
In the case of regional microfinance markets, the conditions Cambodia 7.2% 7.3%
are certainly favourable. If the individual regions are taken India 5.6% 6.4%
into account, it can be seen that the US has returned to a Georgia 5.0% 5.0%
robust growth path. This upturn is underpinned by an increase Ecuador 4.0% 4.0%
in exports. In addition, the transfer of money by migrants in Costa Rica 3.6% 3.6%
Armenia 3.2% 3.5%
the US back to their home countries means that the US also
Kenya 5.3% 6.2%
serves as an important source of economic momentum for
Kyrgyzstan 4.1% 4.9%
Central America and its Caribbean neighbours. The tentative Tajikistan 6.0% 6.0%
recovery in the Eurozone has led to a slight easing of con- Mongolia 9.1% 8.4%
ditions in Eastern Europe. Meanwhile, China’s soft landing Paraguay 4.0% 4.5%
has resulted in solid economic conditions in Asia and fa- Kazakhstan 4.6% 4.7%
vourable conditions in South American countries bordering Russia 0.2% 0.5%
on the Pacific. It should be noted that certain weaker Bolivia 5.2% 5.0%
Turkey 3.0% 3.0%
emerging markets that have a strong weighting in emerging
Bosnia and Herzegovina 0.7% 3.5%
market or frontier market indices are of virtually no signifi-
Ghana 4.5% 4.7%
cance for the microfinance business. Examples include Colombia 4.8% 4.5%
Venezuela, Argentina, Brazil, South Africa, Thailand and Average 4.4% 4.8%
various states in the Middle East. Microfinance markets are Source: IMF World Economic Outlook Database, October 2014
not immune to the economic crisis in Russia. This topic is
examined in greater detail in the chapter “Pleasing outlook,
regional shifts”.

The 20 most important microfinance markets are listed in

Figure 3 together with the corresponding IMF forecasts. If
the real GDP growth of these countries is calculated using a
simple average, this produces a growth rate of 4.8% for 2015,
compared to 4.4% for 2014. The outlook for growth in individ-
ual markets is also analysed in greater detail in the chapter
“Positive outlook, regional shifts”.

responsAbility Microfinance Market Outlook 2015 6

A closer look at these countries reveals that the vast majority 2015 – thus already achieving the average level expected in
have a disciplined fiscal policy and a relatively independent the medium term. The IMF suggests that the world’s most
monetary policy – strengths that are reflected by their com- important microfinance countries will see a slight increase in
paratively low rates of inflation. The central banks still hold momentum in the forecast period that runs to 2019, achieving
substantial foreign currency reserves and thus have greater real GDP growth of 5%. Consequently, the difference in growth
flexibility to manage their currencies. In view of their stability, between these two worlds will tend to widen (see Figure 4).
developing economies and emerging markets are attracting According to the IMF data series, South and East Asia as well
record volumes of foreign direct investment according to the as Sub-Saharan Africa will be the main drivers of growth in
UN Conference for Trade and Development (UNCTAD): The the medium term.
annual growth rate over the past four years was 10%. Foreign
direct investment also had a positive impact on local develop-
ment in the areas of infrastructure, salary growth and tax “Emerging markets can clearly not be
revenues, as well as in other areas of economic life. Viewed lumped together. In terms of their focus on
overall, favourable conditions are in place to enable the spiral
of success to continue in these emerging markets.
reforms, there are vast differences between
them that have a direct impact on the
Across the target markets, the economic outlook remains private sector.”
favourable: According to current IMF forecasts, wealthy Nouriel Roubini, Economist,
countries will generate real GDP growth of 2.3% in in Zurich, 16 October 2014

Abbildung 4: Reales BIP-Wachstum

Figure 4: Real GDP growth

10%

8%

6%

4%

2%

0%

-2%

-4%

-6%
1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

The 20 most important microfinance countries Industrialized nations

Source: IMF World Economic Outlook Database, October 2014

responsAbility Microfinance Market Outlook 2015 7

 Microfinance remains attractive even
in a rising interest rate environment
Six years after the start of the financial crisis, key interest rates in investors to move their assets. Any such reversal of capital flows
most developed economies are still close to zero as central banks would also take its toll on emerging markets, which attracted
seek to counter deflationary trends and signs of stagnation. However, investors with their comparatively high interest rates and more stable
this could soon change: The US Federal Reserve already indicated environment. Those emerging markets that depend on international
in spring 2013 that it intends to return to a more normal monetary financing are likely to be most severely impacted by outflows of
5
policy. It began taking these steps in early 2014, tapering its bond- assets, as already witnessed in summer 2013 . Renewed outflows of
4
buying programme . Despite weak economic growth in the first half capital – especially in the area of portfolio investments – are therefore
of 2014, the US Federal Reserve is expected to announce its first likely in countries such as Turkey, Brazil or South Africa, which are
interest rate rise in 2015. Meanwhile, the European Central Bank is relatively well integrated into the international financial markets. This
continuing to pursue an expansionary monetary policy. trend and the foreseeable strengthening of the US dollar are also
likely to adversely impact the currencies of these countries. As stated
Unlike conventional bonds or bond funds, microfinance investment above, however, many emerging markets are now in a relatively good
vehicles such as those at responsAbility are not negatively impacted position to absorb a degree of market volatility. In addition, the
by a possible rise in interest rates. responsAbility’s fixed income funds foreseeable rise in interest rates will be preceded by a further recovery
are not valued at market prices but at cost, minimizing the volatility of the US economy, which will have a positive effect on emerging
of fund performance due to changes in interest rates. The interest markets since many of them are strongly dependent on the US as an
rate level of the investments, which are predominantly made in US export partner.
dollars, comprises the corresponding US swap rate plus a credit
risk premium. If US interest rates were to rise while the credit risk While experience has shown that listed companies and indices tend
premium remains unchanged, the refinancing rate for the investments to be the first to mirror changes in market conditions, the microfi-
would increase – positively impacting the performance of the funds. nance sector – which is closely connected to the real economy of a
Furthermore, the average term to maturity of responsAbility fund in- country – should only be affected by macroeconomic fluctuations to
vestments is relatively short at 20 months. Consequently, there is a limited extent. Although MFIs will have to expect their refinancing
little delay in adapting them to the prevailing interest rate environ- costs to increase if the US reference interest rate rises, financing
ment and this occurs without any below-average performance relative costs are only a secondary factor influencing their overall cost struc-
to other investments in the long term. It is, however, possible for the ture – with operating costs being the main determining factor. MFIs
credit risk premium to decrease due to a decline in demand (that is will therefore be able to absorb a slight increase in refinancing costs
actually unwarranted) following a nominal increase in the cost of re- relatively well. Furthermore, strict investment criteria minimize the
financing. That said, we have succeeded in the past in maintaining it risk of the MFIs in the responsAbility portfolio experiencing an imbal-
at a relatively constant level. It is therefore to be assumed that the ance in balance sheet terms, should the currency of the country in
anticipated marginal reduction in the risk premium can be more than question depreciate against the US dollar.
offset by the rise in the US swap rate. Microfinance investments
remain attractive even in a rising interest rate environment, as the While it is to be expected that rising interest rates will have a positive
investments are valued at cost and have short maturities. These impact on fixed income microfinance investments due to an advanta-
features offer a degree of protection against price losses in the event geous fund structure, it can also be assumed that classic microfinance
of a sharp hike in interest rates. countries will not be strongly impacted by volatility in the international
financial markets. Hence, a higher interest rate environment has
As monetary policy slowly begins to normalize, however, the markets an effect on the microfinance sector in the form of slightly higher
of developed economies will once again appear more attractive. Clear refinancing costs but we still expect to see sustained strong market
signs of a future rise in interest rates would be expected to prompt growth, as explained in the next chapter.

4 5
 ince 1 October 2014, the US Federal Reserve has invested just
S  en Bernanke, the then Chairman of the US Federal Reserve, raised the
B
USD 5 billion in monthly bond purchases, compared to USD 85 billion possibility of a reduction in bond purchases in a speech he made in May 2013.
at the height of its quantitative easing programme. This created nervousness among investors, provoking a significant outflow of
capital from emerging markets. This was ultimately the main reason for the
strong depreciation of certain currencies.

responsAbility Microfinance Market Outlook 2015 8

Positive outlook,
regional shifts

Like other countries, the emerging markets are subject to of the overall economic growth of developing countries, the
economic cycles – and these cycles are duly taken into financial sector is therefore likely to expand at least three
account in this Microfinance Market Outlook. What is inter- times more rapidly than the economy as a whole.
esting from an investor perspective is that emerging markets
are, however, mainly characterized by catch-up growth result- The development of the financial sector also results in the
ing from decades of pent-up demand. In other words: The continued integration of financial services providers into the
growth occurring in these markets is primarily the result of the overall economy. From an investor perspective, greater atten-
chronic undersupply of goods and services, which has nega- tion needs to be focused on the macroeconomic environment
tively impacted millions of private households. The financial as this development process advances. Providers of equity cap-
sector, which should facilitate the flow of financial resources ital participate directly in both positive and negative changes
between households and companies and is therefore rightly in the economic environment. However, experience has shown
viewed as key to the functioning of the economy, should be that providers of debt capital tend to be well protected against
analysed in particular in this context. economic volatility, since only extreme events would seriously
impair the ability of carefully selected companies to repay
The financial sectors of developing economies and emerging their loans. In microfinance markets, debt investments per-
markets are generally underdeveloped. Their capacity has often form better in the medium term because the growing loan
not evolved sufficiently relative to the overall size of the econ- portfolios of MFIs can lead to additional refinancing needs in
omy: The volume of lending to other sectors of the economy a flourishing environment. From this perspective, it is under-
typically amounts to 20-30% of GDP in these countries, com- standable that providers of debt capital also want to be in-
pared to 100-200% of GDP in developed economies. As part formed in detail about changes in the market environment.

Figure 5: Growth forecasts for the microfinance sector by region

(real annual increase in gross loan portfolio)

20 –35%
10 –20%
5–10%

Source: responsAbility Research

responsAbility Microfinance
responsAbilityMarket
Research
Outlook
Insight
2015 9
 Figure 6: 2015 forecasts for regional die regionalen
responsAbility is responding to this need with the latest Figure 6: 2015 forecasts for regional microfinance markets
Microfinance Market Outlook: To provide a more detailed Forecast
insight into the microfinance environment in key markets, Region portfolio growth in 2015
we conducted no fewer than 32 interviews with a wide range
South America 10-15%
of experts. We also examined the current portfolio data gath- Central America 10-15%
ered each month from around 300 MFIs, from which 100 Sub-Saharan Africa 10-20%
MFIs are used for our representative model portfolio, that Middle East and North Africa (MENA) 15%
remains unchanged over time. In addition, our overall picture Central Asia 10-15%
is based on IMF macroeconomic forecasts. Drawing on this Eastern Europe 5-10%
broad range of data, we expect the global microfinance sector Asia-Pacific 30-35%
Total 15-20%
to achieve growth of 15-20% in 2015 (see Figures 5 and 6).
Source: responsAbility Research

The individual regions are likely

to develop as follows:

Figure 7: South America, GDP forecasts for m and Paraguay is expected to be 4.5%. Peru has overcome
selected countries the economic weakness caused by falling metal exports and
should be back on track to achieve its growth potential by
South America 2014 2015 the end of 2015. Bolivia held elections in October 2014 at
which the current leadership – which has been in power since
Peru 3.6% 5.1%
Ecuador 4.0% 4.0%
2006 – was re-elected. Colombia remains the driving force
Paraguay 4.0% 4.5% in the region: Investor interest in the country has been bol-
Bolivia 5.2% 5.0% stered by the prospect of a “peace dividend” resulting from
Colombia 4.8% 4.5% negotiations with FARC rebels.
Countries in which responsAbility invests
Source: IMF, responsAbility Research Based on our expert survey, we expect the microfinance portfo-
lio to grow by 10-15% for these countries. Peru’s microfinance
market – which is at an advanced stage of development – is
currently undergoing consolidation and is likely to expand only
There has been no shortage of negative headlines in recent slowly again in 2015 following a subdued 2014. The growth
months about weak economic growth in South America. rate in Bolivia and Ecuador is higher but regulatory uncertainty
However, these headlines always refer to Brazil’s stagnation is weighing on their microfinance sector; this uncertainty is the
or to the massive contraction of the economies of Argentina result of the introduction of new regulatory frameworks. The
and Venezuela. In stark contrast, large microfinance countries outlook in Colombia and Paraguay remains positive, provided
along the Pacific Coast and in the Andes region are continuing there is no serious unrest in the neighbouring countries of
to grow. IMF forecasts suggest that Peru and Bolivia will grow Venezuela and Argentina.
by just over 5% in 2015, while the growth rate for Colombia

responsAbility Microfinance Market Outlook 2015 10

Figure 8: Central America, GDP forecasts for m enormously from a quantitative and qualitative perspective.
selected countries These countries are today generating strong domestic de-
mand that is largely driven by private consumption. With
Central America 2014 2015 the exception of Ghana, all of the larger economies have
succeeded in keeping inflation in single digits, resulting in
Costa Rica 3.6% 3.6%
Mexico 2.4% 3.5%
the stabilization of their currencies. Financing conditions
Nicaragua 4.0% 4.0% have also improved: In a notable development in 2014,
El Salvador 1.7% 1.8% Kenya and Ivory Coast were able to access the international
Honduras 3.0% 3.1% capital markets by issuing Eurodollar bonds. According to
Countries in which responsAbility invests the IMF, Kenya is likely to grow by over 6% in 2015, while
Source: IMF, responsAbility Research Tanzania and Nigeria may achieve growth of as much as
7%. At 4.7%, Ghana’s growth rate remains relatively
The economies of Central America that are strongly focused moderate and is therefore significantly below the average
on the US are experiencing a moderate but continued recovery for Africa. The economic impacts of the Ebola virus in West
– reflecting developments in the world’s largest economy. Ac- Africa are still difficult to assess. responsAbility does not
cording to the IMF, Mexico and Costa Rica are likely to grow currently have direct investments in the countries that are
by 3.5%, Nicaragua by 4%, Honduras by 3% and El Salvador affected on a large scale. In view of the urgent demand for
by almost 2%. In view of its strong dependence on energy capital, it will, however, consider investing there once
supplies as part of the questionable Venezuelan PetroCaribe business returns to normal. With regard to portfolio devel-
programme, Nicaragua is being monitored especially closely. opments at MFIs, the experts interviewed were more con-
Based on this sound economic picture – and because the servative in their forecasts: They expect the major African
growth in lending was moderate in recent years – the microfi- microfinance markets to achieve growth rates of 10-20%
nance markets of Central America are likely to achieve similar in 2015; this is around 10 percentage points below the
growth in 2015 to those in South America. level defined for 2014.

Figure 9: Sub-Saharan Africa, GDP forecasts for m Figure 10: Middle East and North Africa (MENA), m
selected countries GDP forecast for selected countries

Sub-Saharan Africa 2014 2015 MENA 2014 2015

Kenya 5.3% 6.2% Turkey 3.0% 3.0%

Ghana 4.5% 4.7% Tunisia 2.8% 3.7%
Tanzania 7.2% 7.0% Morocco 3.5% 4.7%
Nigeria 7.0% 7.3% Jordan 3.5% 4.0%
South Africa 1.4% 2.3% Lebanon 1.8% 2.5%
Countries in which responsAbility invests Countries in which responsAbility invests
Source: IMF, responsAbility Research Source: IMF, responsAbility Research

The countries in Sub-Saharan Africa are continuing their Viewed overall, the countries in the Middle East and North
success story. In Kenya, Nigeria, Ghana and, to some Africa (MENA) region are continuing their economic recovery
extent, also in Tanzania, the private sector has developed despite some political uncertainty. The IMF expects Turkey to

responsAbility Microfinance Market Outlook 2015 11

achieve growth of 3%, driven by expansionary monetary policy, Russia. Even before the start of the conflict with Ukraine and
while Tunisia and Morocco are expected to see a significant the associated economic sanctions, Russia was suffering from
acceleration in growth of more than 1 percentage point. various problems and adverse trends, such as population
Turning to Jordan, the Syria conflict has not yet had any sub- decline, an arbitrary judicial system, limited investor confi-
stantial political or security-related impacts on its economy dence, inadequate capital expenditure and dependence on
but the continued influx of refugees is placing an increasing income from commodities exports, which have fallen sharply.
burden on the country. The microfinance markets of Tunisia, The IMF has forecast that Russia’s economy will stagnate in
Morocco and Jordan are likely to grow by around 15% accord- 2015. Georgia does not have any material economic ties with
ing to the expert survey. This encouraging growth rate is mainly Russia and is likely to continue growing at 5%. In Armenia
attributable to the improved market infrastructure, adequate and Azerbaijan, however, GDP growth has weakened to 3.5%
regulation and the existence of credit bureaus. In the case of and 4.3%, respectively. IMF economists expect Tajikistan to
the Tunisian market, it is particularly pleasing to note that it is grow by 6% and Kyrgyzstan by almost 5%.
experiencing an upturn four years on from the Jasmine Revolu-
tion. This process has been underpinned by the establishment Russia’s financial sector has not yet felt the full impacts of
of a series of MFIs. the sanctions. Caution is therefore needed, even if the micro-
finance model has proved remarkably resilient in various crises
around the world. For example, states in the former Soviet
Figure 11: Central Asia, GDP forecasts for m Union were able to absorb the impacts of Russia’s severe
selected countries 2009 recession relatively well. The first negative effects are
now becoming apparent in the field of consumer financing but
not in the area of traditional microloans. The SME lending
business and the microloans business in Russia are, however,
also likely to be impacted in 2015 – with stagnation being the
best-case scenario. The experts interviewed for the survey
expect the still healthy microfinance markets in the Caucasus
Central Asia 2014 2015
and in Central Asia to experience a moderate fall in demand,
Azerbaijan 4.5% 4.3% which is likely to be most pronounced in Armenia, Kyrgyzstan
Georgia 5.0% 5.0% and Tajikistan. One expert pointed, in particular, to the
Armenia 3.2% 3.5% difficult conditions in Russia’s struggling labour market
Kyrgyzstan 4.1% 4.9%
and to the large number of migrants returning to Central
Tajikistan 6.0% 6.0%
Asia. This particular trend is likely to result in a significant
Countries in which responsAbility invests
Source: IMF, responsAbility Research
decline in monthly transfers of funds by migrants back to
their home countries. Another expert pointed to signs of a
withdrawal by Russian banks from neighbouring markets
The growth path being followed by the economies of Central and to the increased scope this will create for local microfi-
Asia and the Caucasus is threatened by the economic crisis in nance banks.

responsAbility Microfinance Market Outlook 2015 12

Figure 12: Eastern Europe, GDP forecasts for m Figure 13: Asia-Pacific, GDP forecasts for m
selected countries selected countries

Eastern Europe 2014 2015 Asia-Pacific 2014 2015

Bosnia 0.7% 3.5% Cambodia 7.2% 7.3%

Kosovo 2.7% 3.3% India 5.6% 6.4%
Moldavia 1.8% 3.5% Mongolia 9.1% 8.4%
Serbia -0.5% 1.0% Sri Lanka 7.0% 6.5%
Albania 2.1% 3.3% China 7.4% 7.1%
Countries in which responsAbility invests Countries in which responsAbility invests
Source: IMF, responsAbility Research Source: IMF, responsAbility Research

Eastern Europe is participating in Western Europe’s tentative Asia-Pacific is displaying impressive economic momentum.
recovery as a result of strong economic ties with the region. Domestic markets in the region are booming without price
The impacts of the Ukraine crisis have so far been very limited. stability appearing to be under threat. The labour markets are
In the case of Bosnia, the IMF is forecasting growth of 3.5% healthy, the demographic age structure is favourable and
– the strongest expansion of its economy since the beginning financial conditions are extremely robust due to inflows of
of the Euro crisis. One reason for this is the momentum gener- capital. As a result, direct investment and portfolio investment
ated by reconstruction measures following the catastrophic recently rose to a new record high. In Cambodia, tensions
floods of spring 2014. A recovery is visible in Kosovo and between the government and the opposition have diminished.
Serbia, while the economies of Romania and, in particular, The IMF has forecast a growth rate of over 7% for Cambodia’s
Moldavia – which has an exposure to Ukraine – are making economy for the fifth consecutive year. All Asian markets will
very slow progress. The experts interviewed by responsAbility benefit from China’s soft landing – with its economy now on
expect the microfinance portfolio to generate single-digit growth a moderate growth path of 7%. In contrast, the negligent
again in 2015 due to the moderate quality of the portfolio. treatment of foreign investors in Mongolia led to increased
risks, with the result that its banking sector – which has grown
substantially – is now being monitored. In India, a stable
government that is not dependent on coalition partners is in
power for the first time in 30 years. In terms of India’s econ-
omy, the very strong level of capital expenditure and the re-
covery of exports are aspects that should be highlighted in
particular. This generally pleasing picture has prompted the
IMF to raise its GDP growth forecast for India to 6.4%. In both
India and Cambodia, which are by far the most important mi-
crofinance markets for investors in this region, the experts inter-
viewed by responsAbility expect portfolio growth to exceed
30% in 2015.

responsAbility Microfinance Market Outlook 2015 13

Revival of
India’s microfinance market
In 2011, market commentators predicted the end of India’s microfi- India’s microfinance sector thus set sail in a new direction. What was
nance market. At the time, the government of the state of Andhra still missing was a strong tailwind to help propel it forward. This new
Pradesh was seeking to prohibit the microloans business. Each issue impetus was provided by Indian voters in the parliamentary elections
of the Microfinance Market Outlook published since then has included of April/May 2014: For the first time in 30 years, the world’s largest
a special report on India. Today, it can be said that the microfinance democracy elected a stable one-party government that is not depend-
sector in the Indian subcontinent has emerged from this crisis stronger ent on coalition partners and is therefore less susceptible to political
than before. Our confidence in the Indian market is demonstrated coercion. The new government led by Narendra Modi won the election
by the fourfold increase in our volume of investments in India since with a programme that focuses on boosting the private sector and on
then – from USD 30 million to USD 120 million. development. Immediately after coming to power, the government
clearly stated that it considered the improved provision of financial
This optimism is mostly due to the radical realignment of India’s services to be a core issue on its agenda. Fears that the government
financial sector: The Reserve Bank of India (RBI) – which has been and the RBI would collide in their efforts to achieve this were largely
headed by the eminent economist Raghuram Rajan since September dispelled in September 2014 when Arvind Subramanian – a university
2013 – has called on banks to now finally ensure that the 800 million friend of the RBI Governor Raghuram Rajan – was appointed Chief
adults living in India can access basic financial services. This initiative Economic Advisor to the Indian government.
by the RBI was prompted by the unsatisfactory findings of an assess-
ment of what has so far been achieved: The efforts of lethargic state- The efforts of the Indian government and the RBI are also being sup-
owned banks and the small private financial sector to supply basic ported by macroeconomic developments: According to IMF forecasts,
financial services to the population were increasingly subject to re- India is likely to return to a growth path of over 6% in 2015 following
prehensible delays. three years of weaker economic growth. Since summer 2014, the inte-
rest of foreign investors has suddenly returned. responsAbility funds
Interestingly, the policy defined by the RBI requires the expansion of have been investing in India since 2008 and a local team has been
the offering of financial services and consequently greater competition operating in the Indian market from our Mumbai office since 2011.
between financial institutions. In this respect, it has opened up the
financial sector to new market powers. This is reflected by the fact A detailed analysis can be found in our latest Research Insight
that in its very first licensing round, the RBI granted a banking license “The rise, fall and dynamic revival of India’s microfinance market”
to an MFI. at www.responsAbility.com.

responsAbility Microfinance Market Outlook 2015 14

Expert survey: MFIs look for
strong financing partners

responsAbility uses a representative portfolio of 100 key insti- Based on this representative portfolio, the microfinance
tutions that is unchanged over time to observe the investable market grew by 15% in the first half of 2014 (see Figure 13).
microfinance market, as defined at the beginning of this At present, we are seeing an acceleration of the growth rate,
Microfinance Market Outlook. These 100 MFIs are recognized which is why we regard the expert forecast of 15-20% port-
providers in their respective markets and are located across 38 folio growth for 2015 as a conservative estimate.
key markets – thus ensuring that they are geographically re-
presentative of the microfinance sector. At present, these 100
MFIs collectively have around USD 52 billion of assets under
management and serve 25.5 million borrowers. They account
for USD 1.2 billion of responsAbility’s total investment volume.
Abbildung 4: Reales BIP-Wachstum
Figure 14: Portfolio growth of the 100 MFIs

25% 60,000

50,000
20%

40,000
15%

30,000

10%
20,000

5%
10,000

0% 0
Q4/2012

Q1/2013

Q2/2013

Q3/2013

Q4/2013

Q1/2014

Q2/2014

Q3/2014

Q4/2014

Q1/2015

Q2/2015

Q3/2015

Q4/2015

Growth compared to previous year (left axis)

Gross loan portfolio in USD million (right axis)

Source: responsAbility Research. Figures for Q4 2014 onwards are projections

responsAbility Microfinance Market Outlook 2015 15

Decisions by the US Federal Reserve have limited impacts Closely monitored portfolio quality
The experts interviewed for the survey anticipate that the A strict benchmark is applied when determining portfolio
normalization of the US interest rate policy – which is widely quality in the world of microfinance. It separates the loans
expected to begin in 2015 – will have only a limited effect on that are repaid on time by millions of end-clients from loans
the microfinance markets (see Figure 15). More than half of that are overdue. While bank statistics from wealthy countries
the experts interviewed, i.e. 17 participants, suggested that only show loans as non-performing after 90 days, the microfi-
this development will have a slight impact, while a further 9 nance sector applies much stricter rules based on a period
of these microfinance specialists believe it will have no impact of 30 days. Refinanced loans and write-offs are additionally
whatsoever. However, five of the experts expect it will lead to taken into account, ensuring that all potentially problematic
medium-level changes and one of the experts suggested that loans are recorded. As of mid-2014, 94.4% of loans were
there could even be significant impacts as a direct result of repaid on time. However, a negative trend was visible: Com-
the changing interest rate environment. It is reassuring to note pared to the previous year, the proportion of non-performing
that most of the experts who expect the impacts to be minimal rose from 3.1% to 3.4%. While refinancing stagnated at
were able to provide a detailed justification for their assess- 0.7%, write-offs rose from 1.24% to 1.48% on an annual-
ment. Their low level of concern should not therefore be inter- ized basis.
preted as a sign that they have too few reliable indicators
What is striking about their responses is, for example, that The deterioration in portfolio quality was partly due to the
they are keen to highlight the adequate supply of liquidity at temporary slowdown in growth in Peru, which had a noticeable
present in the markets they observe, while focusing little atten- impact due to the fierce competition in Peru’s microfinance
tion on the risk of a general rise in financing costs as a result market. Another reason was the dent in growth in India, which
of an increase in key interest rates. was particularly visible in the area of microloans for hauliers;
the increase in credit risk is a direct consequence of the falling
Figure 15: Anticipated impacts of an increase in key prices for second-hand trucks. In both markets, a significant
US interest rates (expert survey) improvement is to be expected in 2015 according to our ex-
pert survey. Portfolio quality is likely to decline in markets
affected by Russia’s economic crisis: This assessment app-
No impact lies primarily to Ukraine, Belarus, Armenia, Tajikistan and
Kyrgyzstan. Overall, portfolio quality in these countries will
Slight impact nevertheless remain above the global average.

Medium impact

Strong impact

0 2 4 6 8 10 12 14 16 18

Source: responsAbility Research

responsAbility Microfinance Market Outlook 2015 16

Of the 32 experts interviewed, 17 expect portfolio quality to Figure 17: Assessment of the institutional environment
remain unchanged in their markets, while 11 believe it will (expert survey)
deteriorate and only 4 expect it to improve. This deterioration
is not considered alarming in any individual case. Instead, it
More of a
is viewed as a gradual trend that is often the result of mount- deterioration
ing competition between MFIs. The experts believe that
More or less
closer monitoring and stricter risk management are needed the same
in response to this trend.
Clear
Abbildung 4: Reales BIP-Wachstum improvement
Figure 16: Portfolio quality of the 100 MFIs
0 2 4 6 8 10 12 14 16 18

8%
Source: responsAbility Research
7%

6%

5% Credit information bureaus: Cost reductions needed

4% Credit information bureaus are firmly established as an impor-
3% tant part of the market infrastructure in most countries. They
2% reduce the risks associated with lending. Credit information
1% bureaus assess the creditworthiness of borrowers by gathering
0% information from other lenders. As a result, households require
less physical collateral when seeking to obtain a loan, and house-
Q4/11

Q1/12

Q2/12

Q3/12

Q4/12

Q1/13

Q2/13

Q3/13

Q4/13

Q1/14

Q2/14

holds without a bank account can still obtain a credit rating. In

addition, the fact that all of the loans held by a borrower are re-
Overdue Refinanced Written off
Source: responsAbility Research
ported reduces the risk of an individual becoming overindebted.
Around 100 credit information bureaus currently operate in our
target markets. In the survey, almost half of the experts described
Continued improvement in the institutional environment the level of market coverage by credit information bureaus in
The operating environment for MFIs is improving according to their respective market as high. A further 12 experts described
the experts interviewed for the survey. Half of the experts have the level of coverage as low to moderate but rapidly increasing.
observed a significant improvement – contradicting frequent Five experts considered the level of coverage to be low, with
suggestions that there is a backlog of reforms in developing little progress being made. The fact that several major market
economies and emerging markets. Almost one-third of the participants – typically traditional banks – are not supporting
experts believe that the level of improvements and setbacks the exchange of credit information was mentioned repeatedly.
is balanced in their respective markets; just under one-fifth
believe there is an overall deterioration in conditions. All of
the experts view regulation as the pivotal issue: The general “Credit information bureaus work
assessment is that central banks and bank regulators are dis- extremely well. Two private companies
playing a greater understanding of the microfinance sector.
They expressed lower levels of confidence in politicians, whose
and the regulator gather data in order
tendency towards short-term populism all too often eclipses to reduce the risk of overindebtedness.
their understanding of development policy. A deterioration Following painful experiences in the
of conditions was identified in individual markets in South past, the exchange of information is
America and Central Asia. This mainly takes the form of re-
gulatory and state intervention, such as the introduction of
now a highly accepted practice within
interest rate caps, state-imposed lending quotas for certain the industry.”
sectors of the economy, and capital regulations. Kurt Koenigsfest, BancoSol

responsAbility Microfinance Market Outlook 2015 17

The greatest obstacle standing in the way of improved cover- “The deposits business will have an impor-
age is said to be the costs associated with credit information tant role to play in the long term. However,
services. However, these costs could be reduced through the
use of appropriate technologies and through competition
the level of local savings is still much
between a number of providers. Furthermore, although the too low and unstable at present. Reliable
costs are clearly visible, the benefits – in the form of sub- international partners will therefore remain
stantially lower default rates at MFIs – are hidden, thus indispensable in the coming years.”
exaggerating the problem of costs. Senacheert Sim, CEO, PRASAC

Figure 18: Market coverage by credit information bureaus

(expert survey) However, providers that are active in the deposits business
have to comply with strict regulatory requirements. Strong
Low or
MFIs are now capable of overcoming these significant hurdles.
moderate coverage, What still sounded like an illusion in India until very recently
tending to stagnate
is set to become a reality in 2015: An Indian MFI will be able
Low to
moderate coverage, to offer savings products for the first time. In this respect, it
rapidly improving
is not surprising that the other half of our experts believe that
High level of coverage if anything, the importance of international refinancing for
MFIs is tending to decline. At the same time, only 15% of the
0 2 4 6 8 10 12 14 16
experts interviewed believe that these international capital
Source: responsAbility Research flows will decrease in absolute figures. In summary, there are
plenty of indications that MFIs are now increasingly able to
tap local sources of financing – which makes sense – but they
Continued demand for specialized financing partners are still reliant on proven international partners in order to
in the future diversify their balance sheets.
The importance of local financing is continuing to grow in
developing economies and emerging markets: Almost two- Figure 19: Increase in the importance of financing
thirds of the experts stated that the role of savings and loans sources (expert survey)
from local banks is set to increase further in the microfinance
markets. Around half of the experts believe that the impor-
Local debt
tance of international debt financing is continuing to grow. financing
Almost one-third of them referred to equity capital from inter-
Local
national and local sources (see page 19: “Direct participation: savings
Private equity in the microfinance business”). Meanwhile, not
International
one of the 32 experts has seen an increase in the significance debt financing
of donations and non-repayable loans.
International
equity
The trend towards an increase in savings in the balance sheets
Local
of MFIs is well documented. The 100 MFIs in our reference equity
portfolio have grown their volume of deposits by almost 30%
Grants/
to a total of USD 29.2 billion over the last two years. This is donations
evidence that the development of the financial sector in various
0 5 10 15 20 25
emerging markets is bearing fruit. Secure savings options are
very important for low-income households. Source: responsAbility Research

responsAbility Microfinance Market Outlook 2015 18

Direct participation:
Private equity in the microfinance business
The growth in the volume of equity invested in the microfinance busi- ingly also in Africa (see Figure 20). Growing transaction volumes
ness globally will once again exceed the growth in the volume of debt and increasing multiples have, in particular, been observed recently
capital in 2015. Our Equity team expects to see a 30% increase in in the Indian microfinance market, which has achieved an impressive
equity transactions, corresponding to the average for the last three recovery following the crisis. Transactions in countries in Central
years. The Asia-Pacific region is likely to be the main contributor to Asia and the Caucasus tend to have a significantly lower valuation
this growth. relative to book value. In Eastern Europe, the number of equity
transactions is very limited and they are carried out at or below
In the area of primary transactions, several large transregional holding book value.
companies and established microfinance banks are raising significant
volumes of new capital. As the microfinance market develops increas-
ingly, we are seeing a rise in the number of secondary transactions Figure 20: Valuation of equity transactions
with mature MFIs and also SME banks. This trend will become more Valuation of
pronounced in the coming years, since a series of closed-end funds equity America
Latin transactions 1.5x book value and higher
launched before the financial crisis are now nearing maturity. Accord- South and South East Asia 1.5x book value and higher
ing to surveys conducted by market observers Luminis and Microrate, Africa 1.5x book value and higher
at least eight equity or hybrid funds with equity investments of close Central Asia and the At book value or slightly higher,
to USD 600 million will reach maturity between 2014 and 2016 and Caucasus with several outliers that are higher
will therefore need to find buyers for their positions. The geographical Eastern Europe At book value or lower
realignment of transregional holding companies will lead to further
acquisition opportunities.
In the microfinance sector, responsAbility wants to participate in
Capital raising by larger holding companies and the increase in the increasingly dynamic equity capital market and has therefore
secondary transactions in more mature institutions is leading to significantly strengthened its Equity team: Operating out of Zurich,
larger transaction sizes. The majority of microfinance investors are Lima and Bangkok, its expanded team is very well positioned to
unlikely to invest more than USD 10 million in a single institution, analyse and oversee attractive investment opportunities in more
resulting in an increase in the number of club deals. This trend opens mature market such as Colombia, Bolivia, Cambodia or Kenya. It is
up attractive investment opportunities for recently established funds in these markets in particular that growth financing and acquisition
that are focusing on more mature MFIs and are therefore also better financing is becoming available to larger market participants that
placed to meet the needs of these institutions. exceed the capacity of many conventional equity funds in the field of
microfinance. There is also a growing level of interest on the part of
Information concerning the valuations of such equity transactions local SME banks. In addition to established market participants, less
is, of course, confidential and is rarely made public. However, recent mature MFIs are continuing to offer attractive investment opportuni-
studies contain a series of regional benchmark multiples. We are con- ties – especially in Africa and South Asia. Investments in MFIs that
tinuing to see the highest valuations – with multiples of more than are currently in the process of becoming regulated commercial banks
1.5 times book value – in Latin America and Asia-Pacific, and increas- are particularly attractive.

responsAbility Microfinance Market Outlook 2015 19

About responsAbility

responsAbility Investments AG is one of the world’s leading About the author:

independent asset managers specializing in development-
Christian Etzensperger is a Senior Research
related sectors of emerging economies. They comprise the
Analyst at responsAbility Investments. He
areas of finance, agriculture, energy, healthcare and education. holds an MA in Economics and an MSc
responsAbility provides debt and equity financing to non-listed (Distinction) in Economic Development from
companies with business models that target the lower-income the University of Glasgow Adam Smith Bus-
section of the population and can thus drive economic growth iness School. He is also a Chartered Alter-
and social progress. responsAbility offers professionally-man- native Investment Analyst. Before joining
aged investment solutions to both institutional and private responsAbility Investments in 2010,
Christian Etzensperger worked as a quantitative analyst at Bank Von-
investors.
tobel and as a macroeconomist and industry analyst at Credit Suisse.

Founded in 2003, responsAbility currently has USD 2.4 billion Christian Etzensperger, Senior Research Analyst
of assets under management, which are invested in over 500 [email protected], +41 44 254 32 79
companies in more than 90 countries. responsAbility is head-
quartered in Zurich and has local offices in Paris, Lima, Mumbai
and Nairobi. Its shareholders include a broad range of reputable The Microfinance Market Outlook 2015 is also dis-
institutions in the Swiss financial market as well as its own cussed by its author in an interview that can be found
employees. responsAbility is regulated by FINMA. at www.responsAbility.com/multimedia/en together with
all responsAbility research studies, publications and
As one of the world’s largest microfinance investors, responsAbility webcasts.
has invested or reinvested a total of USD 882 million in microfi-
nance companies over the past 12 months,6 corresponding to
an increase of 26.8% compared to the previous year. The volume
of assets invested in microfinance markets has now reached
USD 1.85 billion, distributed across 77 countries. This significant
growth has been achieved as a result of a strong and slightly
increased presence across different continents. Factors that
contributed to this successful expansion include active portfolio
management and the efficiency of its joint investment process.

6
Third quarter of 2013 to third quarter of 2014.

This document was produced by responsAbility Investments AG. The information contained in this document (hereinafter “information”) is based on sources considered to be reliable, but its accuracy
and completeness is not guaranteed. The information is subject to change at any time and without obligation to notify the recipient. Unless otherwise indicated, all figures are unaudited and are not
guaranteed. Any action derived from this information is always at the recipient’s own risk. This document is for information purposes only. The information does not release the recipient from making
his/her own assessment.
This document may be cited if the source is indicated.
Picture credits: HKL Cambodia for responsAbility, 2014 (Cover).
© 2014 responsAbility Investments AG. All rights reserved.

responsAbility Investments AG
Josefstrasse 59, 8005 Zurich, Switzerland
Phone +41 44 250 99 30
www.responsAbility.com
responsAbility Microfinance Market Outlook 2015 20