Damian von Stauffenberg

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A is for Alpha(Tricks and Trends)

• Damian von Stauffenberg
• April 11th, 2007

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What Shapes MFIs ?
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What Shapes MFIs?

• Growth

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Portfolio Growth 40 Latin American MFIs
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40 Latin American MFIs
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Two Examples

• 2000 2006
• WWB Cali
• Portfolio (mm) 12.8 146.2
• Clients 33,000
  149,000
• Crear Arequipa
• Portfolio (mm) 2.3 29.0
• Clients 2,400 26,100

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What Shapes MFIs ? (Contd)

• Do the Clothes Still Fit? Where to look
• Consistent Methodology
• Delegation
• Controls
• Governance
• Organ. Staff
• Financial Structure

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How Do We Rate ?

• Microfinance Operations
• Portfolio Quality
• Management Organization
• Governance Strategic Positioning
• Financial Position

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Main Trends (In addition to growth)

• Increasing Competition
• Dropping Rates
• Greater Efficiency
• More (and better) Products
• Commercial Funds Have Replaced Donor Money
• NGOs Convert into Financial Intermediaries

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Bumps on the Road (MFIs)

• Over- Indebtedness of Borrowers
• Some MFIs will Overreach
• Populist Politics
• Economic Cycles havent ended!

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Bumps on the Road (Funders)

• Oversupply of Foreign Funding
• Crowding Out
• Too many MIVs chasing too few MFIs?
• Lack of Transparency
• Returns dont match risks
• No Benchmarks
• No Independent Performance Evaluation

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Direct International Financial Institution
Investments in Microfinance Institutions
Source CGAP Public Investor Microfinance
Portfolio - 2005 Survey
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International Financial Institutions Lending to
Latin American MFIs Rated by MicroRate 2005
Growth Ratesby Rating Grade
In 2005, IFIs increased their investments in the
strongest MFIs and decreased their investments in
the weakest MFIs.
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Growth of Microfinance Investment Vehicles
(MIVs)2003-2005
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Thank You !