Johannesburg, South Africa, February 12,
2014—IFC, a member of the World Bank Group, together with the Consultative
Group to Assist the Poor, CGAP, today released a research study that examines
the successes and challenges of the greenfield microfinance business model
as a tool for increasing financial inclusion in Sub-Saharan Africa.
Greenfield MFIs in Sub-Saharan Africa:
A Business Model for Advancing Access to Finance finds that after five
years in operation, greenfield MFIs on the continent attain larger size,
greater reach, higher loan quality and better profitability than MFIs with
no strong holding or network affiliation.
Greenfield microfinance institutions are
newly created local institutions set up by a regional or international
network or holding company that backstops operations, provides standard
policies and procedures, and co-brands the subsidiaries in the network.
The model can be considered a type of franchise and has been employed in
the region since 2000, with more than 30 greenfield MFIs now spread over
12 countries. Local examples include AccessBank in Liberia and Advans Banque
in the Democratic Republic of Congo.
Julie Earne, IFC microfinance specialist
and co-author of the research paper, said, “African greenfield MFIs now
have a sufficient track record for us to fully review their performance
and role in the market. This is valuable information for future investment
in microfinance and for the global effort to increase access to affordable
financial services for low-income individuals and small-scale entrepreneurs.”
The study found that greenfield MFIs have
had positive effects on responsible market development in several countries,
and on innovation and product development. These institutions often make
a significant contribution to the professional development of staff in
the local banking and microfinance sectors, creating paths for long-term
careers in the broader financial industry.
One challenge shared by most of the holding
companies behind the greenfield MFIs was the relatively high cost of doing
business in Sub-Saharan Africa compared to other parts of the world.
The study was authored by experts from IFC
and CGAP, and funded by the Partnership for Financial Inclusion, a joint
initiative between IFC and The MasterCard Foundation that aims to increase
the scale of sustainable microfinance and develop mobile financial services
in Sub-Saharan Africa. An important part of the Partnership is to advance
and share research from the program with the industry and general public.
A 4-page summary and the full Forum publication
are available on the Resources link at: www.ifc.org/financialinclusionafrica
About the Partnership for Financial
In January 2012 IFC and The MasterCard Foundation
launched the $37.4 million Partnership for Financial Inclusion to bring
financial services to an estimated 5.3 million previously unbanked people
in Sub-Saharan Africa in five years. The program aims to develop sustainable
microfinance business models that can deliver large-scale low-cost banking
services, and provides technical assistance to mobile network operators,
banks and payments systems providers in order to accelerate the development
of low-cost mobile financial services. To find out more, please visit www.ifc.org/financialinclusionafrica
CGAP (the Consultative Group to Assist the
Poor) is a global partnership of 34 leading organizations that seek to
advance financial inclusion. CGAP develops innovative solutions through
practical research and active engagement with financial service providers,
policy makers, and funders to enable approaches at scale. Housed at the
World Bank, CGAP combines a pragmatic approach to responsible market development
with an evidence-based advocacy platform to increase access to the financial
services the poor need to improve their lives. More at www.cgap.org.
IFC, a member of the World Bank Group, is
the largest global development institution focused exclusively on the private
sector. Working with private enterprises in more than 100 countries, we
use our capital, expertise, and influence to help eliminate extreme poverty
and promote shared prosperity. In FY13, our investments climbed to an all-time
high of nearly $25 billion, leveraging the power of the private sector
to create jobs and tackle the world’s most pressing development challenges.
For more information, visit www.ifc.org