Cairo, Egypt, June 12, 2018—A
new study by IFC, a member of the World Bank Group, has investigated the
potential benefits of transforming microfinance institutions (MFIs) from
not-for-profit organizations into for-profit organizations.
Microfinance Institutions in The Arab World,
carried out jointly with Sanabel, the Microfinance Network of Arab Countries,
takes a closer look at the challenges and costs of transforming into a
for-profit company in the region. It also highlights the benefits, which
include increased access to capital, improved governance and ownership,
and increased financial products and services, which can make MFIs more
competitive and sustainable.
The study surveyed 20 MFIs, of which
11 are not-for-profit. Of these, eight operate in regulatory environments
that allow for transformation. Several Arab countries, including Syria,
Yemen, Sudan, Egypt, Tunisia, Jordan, and Palestine have made regulatory
changes recently that allow for transformation; however, some still have
no clear road map for how the move can take place.
“Nearly 2.5 billion people in developing
countries have little or no access to formal financial services,” said
Mohammed Khaled, IFC Head of Microfinance Advisory Services in the Middle
East and North Africa. “Supporting the transformation of microfinance
institutions could help boost access to financial services and allow MFIs
to reach more low-income people more efficiently.”
The report is the third in a series of
papers developed jointly with Sanabel, the Microfinance Network of Arab
Countries, and supported by IFC’s MENA Transition Fund.
In fiscal year 2017, IFC’s microfinance
teams invested $833 million in 39 projects globally, including nine in
fragile and conflict-affected countries. The portfolio also includes 44
advisory projects across six regions.
IFC—a sister organization of the World
Bank and member of the World Bank Group—is the largest global development
institution focused on the private sector in emerging markets. We work
with more than 2,000 businesses worldwide, using our capital, expertise,
and influence to create markets and opportunities in the toughest areas
of the world. In FY17, we delivered a record $19.3 billion in long-term
financing for developing countries, leveraging the power of the private
sector to help end poverty and boost shared prosperity. For more information,