The Impact of the Financial Crisis on Microfinance Institutions and Their Clients
May 2009, Reille, X., Kneiding, C. & Martinez, M.
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Results from CGAP’s 2009 Opinion Survey

CGAP surveyed MFIs in March 2009 to monitor the impact of the financial crisis. Over 400 MFI managers responded, providing a good representation of regions and institutional sizes. 

According to respondents, sustained high food prices, severe economic contraction and massive job losses are hurting MFI clients most. Findings include:

• Clients are prioritizing food expenditures and have greater difficulties repaying their loans;
•  Many MFIs are finding it harder to access funding, and their microcredit portfolios are stagnant or shrinking;
• Crisis' effects on microfinance differ from country to country;
• MFIs in Eastern Europe appear to be the most affected, while those in the Middle East and North Africa (MENA) region are generally less impacted. 

The credit crunch and economic recession have forced most MFIs to slow the growth of their microcredit portfolios. MFIs are facing a liquidity crunch and the quality of their portfolios is deteriorating. They have been coping by decreasing hiring, while keeping interest rates steady. The situation might worsen as the sector experiences the full impact of the crisis. Ultimately, the fate of microfinance will depend on how the crisis will impact its clients.

21 Aug 2010

mayada ben slama university of economics and law Tunisia

26 May 2009

Manoj Gupta Asmitha Microfin Limited India

20 May 2009

Impact of the financial crisis on MFI and their clients results

1.Impact survey of financial crisis on the client is not clear since it is the opinion of the managers of MFIs on their clients for rating. Do the clients feel exactly what their financial masters/controller opined.? 2.Regarding spending more for food due to high price consequent to financial crisis and in Asia, reported % need to be debated in the context of public distribution of heavily subsidized essential food items to the poor - as the case in India PDS supplies food item at cheaper rate to the poor having ration cards. Further in state like Tamilnadu nutritious noon meals are given to children ( poor households) in the public schools and massive debt relief scheme (loan waiver in formal sector). There is inflation more due to global oil price volatility and national fiscal policy and internal demand and supply situation : therefore it is not due to financial crisis . There is therefore no impact of the crisis in India where high % of Asian poor live. 3.The continuous growth in MFsector is reported (NABARD- the state of the sector report 2008)in India indicating no impact of the said crisis . It is to be noted that MFIs in India are also getting financial resources from the banking system which is also not much affected by the above crisis. Hence the other factors such liquidity constrains, repayment, resilience , interest rate in Indian context (Asia) need to be relooked. 4.In the last, most of the MFIs confine to micro credit only and invariably cover non poor as their clients. (MIX) Can we declare that the said survey portrays the holistic picture of MF sector.? 5. The survey has the risk of self selection bias with more reporting from who are affected. Hence the global picture is ambiguous .

Varadarajan Rengarajan Independent consultant -Microfinance India

19 May 2009

Zambia

19 May 2009

The Impact of the Financial Crisis on Microfinance Institutions and Their Clients

DARA NAGESWARARAO SASYAMALAM SOCIETY FOR RESEARCH & TRAINING FOR SUSTAINABLE RURAL DEVELOPMENT India

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