Peru and Bolivia have the best environments for microfinance in global ranking
Eight of the top dozen countries with the best business environment for microfinance are from Latin America, according to the Global Microscope on the Microfinance Business Environment 2011 prepared by the Economist Intelligence Unit (EIU).
This annual study ranks the business environment for microfinance in 55 countries and provides a perspective on both country-specific and global trends. This year’s study reports that the global microfinance industry has begun to enter a more mature and sustainable growth phase, made possible by improvements in corporate governance, regulatory capacity and risk management. The research highlights, however, that regulatory and market gaps still remain, undermining the industry’s ability to realize its potential and enhance financial access to the poorest.
Peru ranks first followed by Bolivia, Pakistan and Kenya, according to the 2011 ranking, which compares the microfinance sector in countries and regions across two broad categories—Regulatory Framework and Practices and the Supporting Institutional Framework. These are complemented by an adjustment factor for political shocks and stability.
The strong results for Latin America have been driven by high scores on elements that enable the microfinance business, particularly the existence of credit bureau infrastructures that are relatively well established in the region.
Other Latin American countries that made into the top dozen include: El Salvador, Colombia, Ecuador, Mexico, Panama and Paraguay. Mexico and Brazil, Latin America’s biggest economies, made important strides in improving the environment for microfinance businesses with both countries now ranked among the top 15 performers.
The report notes that, as a group, Latin American countries perform less well on the Regulatory Framework and Practices, although top performers—Bolivia and Peru—joined by El Salvador, Ecuador and Panama, hold their own in the overall rankings, placing them in the top 10 worldwide.
Other highlights for the region include:
The Global Microscope on the Microfinance Business Environment 2011 offers an in-depth analysis of the microfinance business environment in 55 countries for a third consecutive year. It is also the fifth yearly index to track conditions in the 21 countries of the Latin American and Caribbean region.
The Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank Group; CAF Development Bank of Latin America and the Netherlands Technical Assistance Trust Fund at International Finance Corporation (IFC) have provided support for the study.
The report will be launched on Oct. 12th during the 2011 XIV Inter-American Forum on Microenterprise (Foromic), the most important annual conference on microenterprise in Latin America and the Caribbean, which is taking place in San José, Costa Rica.