SANABEL's sixth annual conference

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SANABEL's sixth annual conference
Beirut May 2009
2008 MIX Global 100 Composite Rankings
Charles Cordier
Lead analyst Africa and MENA
MIX ( Microfinance Information Exchange)
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Background

• Why a Composite Ranking?
• Rankings on single results are too simplistic
• Performance has many aspects to it
• Composite creates a picture of well rounded MFI,
  balanced scorecard
• What performance does it attempt to measure?
• Build long term profitability
• Increase access to financial services
• Minimize costs of those services
• Disclose results

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How does it work

• Sample
• FY07 results published in MIX Market
• 971 MFIs, 651 included in ranking
• Process
• Remove MFIs with missing data
• Exclude MFIs that do not meet minimum
  profitability requirements
• Rank MFIs by 11 individual variables
• Average ranks by performance area or pillar
  (i.e. outreach)
• Average performance area rankings for overall
  ranking
• Methodology Percentile ranking

Efficiency
Transparency
Outreach
Profitability
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Methodology
Full sample (971 MFIs)
Screened for profitability (651 MFIs)

• Ranked on 11 variables under three pillars
• Outreach (1)
• Efficiency (2)
• Transparency (3)

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1 Overall Percentile Ranking
MBK Ventura (Indonesia) Profitability
screen OSS 2007 101 Max in last three years
123
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1 Outreach Percentile Ranking
Borrowers Absolute outreach (max) Market
penetration Relative outreach (max) Growth in
Borrowers Pace of increase in outreach
(max) Depositors / Borrowers Deposits / Loan
Portfolio Offering more than just credit (max)
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1 Efficiency Percentile Ranking
Cost per Borrower / GNI per capita Relative
transaction cost per borrower (min) Profit / Loan
Portfolio Amount of profits built into yield
(min) Write-off Ratio Portfolio at Risk gt 30
days Cost of actual or potential credit loss
(min)
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1 Transparency Percentile Ranking
Annual Reporting on MIX Market Years of publicly
available information (max) Audits on MIX Market
Years of publicly available audits (min)
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Distribution by Charter
NGOs dominate top 25 to top 500 rankings Banks
represented a small group in the overall ranking
yet, half their sample claimed spots in the top
100 8 in 10 MFIs from top 10 are  for profits 
ones.
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Distribution by Region
Latin America ranked most MFIs, 28 in top 100. 7
MFIs from Colombia and 6 from Ecuador. Asia gets
9 MFIs in top 10 thanks to their size
(borrowers), growth in borrower and
efficiency. 14 Arab region MFIs are included in
top 100, with higher regional representation in
top 100 than any other region, given the small
number of MFIs from the region.
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MENA Ranking
TOP 100

• 26 Arab MFIs in the Top 500 ranking
• 5 goes down and 7 goes up from 2006 and 2007

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Distribution Percentile Rankings
Top 100 MFIs still improving efficiency,
averaging 56th percentile, with majority below
60. Outreach averaging 73rd percentile, only a
few below 60th percentile.
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Observations and Feedback

• Rankings capture important industry developments
• Change in rankings reflected gains in efficiency
• Ranking changes reflected real changes in MFI
  performance
• Market Feedback
• Single most commented MIX piece, incl. drawing
  MFI attention to their own data
• Confusion of prior year ranking changes
• Outreach is underweighted
• No data on social performance disclosure

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2009 Improvements

• Improve methodology
• Seek guidance from an Advisory Panel
• Review and revise methodology, as necessary,
  which may include disclosures on Social
  Performance

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MICROFINANCE INFORMATION EXCHANGE, INC.
The leading provider of business information and
data services for the microfinance industry.
Web www.themix.org Email
info_at_themix.org Africa Office BP 23035 Dakar,
Senegal Other Locations Washington, D.C. ?
Lima, Peru ? Guragon, India ? Jakarta,
Indonesia