IFC Financing to Micro, Small, and Medium Enterprises Globally (FY2012) Lack of access to financial services is a key barrier to the growth for long-term finance (including $1.6 billion for funds supporting of micro, small, medium enterprises (MSMEs1). IFC is working to MSMEs), and $1.6 billion for trade finance. In fiscal year (FY) 2012 develop solutions to close the MSME financing gap, collaborating alone, IFC MSME commitments globally were $5.4 billion (down with 268 financial institutions (FIs) across 84 countries globally. By 11.4 percent from $6.1 billion), $1.9 billion of which attributed to partnering with many types of financial intermediaries, including long-term finance. microfinance institutions (MFIs), commercial banks, leasing companies, and private equity funds, IFC reaches many more small By the end of calendar year (CY) 2011 IFC’s MFI clients had and medium enterprises (SMEs) than it could directly. 16.1 million micro loans outstanding globally (5.0 million in CY2010), totaling $13.4 billion ($5.2 billion in CY2010). Similarly, IFC offers a wide range of financial products, including loans, equity IFC’s SME financial institutions (SME FI) clients had 2.6 million and risk management solutions, to help financial institutions scale small and medium loans outstanding by the end of CY2011 (up up to enter the MSME market. As of June 2012, IFC committed 70 percent from 1.5 million in CY2010), totaling $154.9 billion a total of $13.7 billion to MSME finance globally2, $12.0 billion globally (up 25 percent from $123.8 billion in CY2010). MSME Financial Intermediary Portfolio, FY2012 (as of June 2012) IFC Committed Portfolio to MSMEs3 IFC Total Committed Portfolio to MSMEs Globally ($ Million) (% of Total Portfolio) 12,000 Growth of Committed Portfolio: 10,000 Europe and Central Asia 31.9% => -7.6% drop in FY 2012 YOY $2,551 => 17.0% CAGR since 2000 Latin Amera and the Caribbean 18.3% 8,000 East Asia and the Pacific 18.2% 6,000 $5,815 Sub-Saharan Africa 12.9% 4,000 Middle East and North Africa 9.2% 2,000 South Asia 7.9% $1,932 World 1.7% 0 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Micro Enterprise Small Enterprise Medium Enterprise MSME Loans by Type of IFC Clients, CY2011 MSME Loans by Microfinance Institutions MSME Loans by SME Financial Institutions IFC was able to survey or extrapolate outreach data from 93 MFIs in IFC was able to survey or extrapolate outreach data from 175 SME 51 countries, 41 percent of these clients received advisory services FIs in 68 countries, 29 percent of these clients received advisory from IFC. services from IFC. Outstanding Loan Average Number of Outstanding Loan Average Number of NPL NPL Portfolio Loan Loans to Portfolio Loan Loans to %5 %5 Number ‘000$ Size Women4 Number ‘000$ Size Women4 Micro Loans 16,110,764 13,413,492 833 72.4% 4% Micro Loans 3,599,004 6,428,873 1,786 11.5% 10% Small Loans 649,205 12,647,865 19,482 28.3% 3% Small Loans 1,801,285 34,056,943 18,907 16.7% 8% Medium Loans 45,301 13,749,251 303,510 8.4% 2% Medium Loans 793,950 120,798,555 152,149 16.9% 7% 1. MSME firm size definitions: IFC’s Financial Institutions Group categorizes its clients’ sub-borrowers according to the following definitions: (1) Microfinance Institution if loan < $10,000 at origination; (2) Small Enterprise if loan < $100,000 at origination; (3) Medium Enterprise if loan < $1 million at origination ($2 million for advanced countries). 2. The share of committed loans to microfinance enterprises in MSME committed portfolio increased from 17.3 percent in FY2012 to 18.8 percent in FY2013; small enterprises accounted for 56.5 percent in FY2013 (59.9 percent in FY2012); medium enterprises accounted for 24.8 percent in FY2013 (22.8 percent in FY2012). 3. The committed portfolio in MSME FIs below does not include commitments for commercial banking trade finance and collective investment vehicles. 4. Estimated percentage of outstanding loans to women in each loan size category. Data was reported by 51 MFIs and 22 SME FIs. 5. Nonperforming Loan (NPL) = > 90 days past due loans. MSME Loans by Region, CY2011 Number of MSME Loans by MFIs Number of MSME Loans by SME FIs 2% 2% 6% 17% 20% East Asia and the Pacific (EAP) East Asia and the Pacific (EAP) 14% Europe and Central Asia (ECA) Europe and Central Asia (ECA) 6% Latin America & the Caribbean (LAC) Latin America & the Caribbean (LAC) 40% Middle East & North Africa (MENA) Middle East & North Africa (MENA) South Asia (SA) 25% South Asia (SA) 33% 29% Sub-Saharan Africa (SSA) Sub-Saharan Africa (SSA) 6% Number of Micro Loans by MFIs Number of SME Loans by SME FIs 2% 2% 5% 4% 17% East Asia and the Pacific (EAP) East Asia and the Pacific (EAP) Europe and Central Asia (ECA) Europe and Central Asia (ECA) 6% 36% Latin America & the Caribbean (LAC) 24% Latin America & the Caribbean (LAC) 40% Middle East & North Africa (MENA) Middle East & North Africa (MENA) South Asia (SA) South Asia (SA) 29% Sub-Saharan Africa (SSA) Sub-Saharan Africa (SSA) 6% 29% MSME Portfolio Composition by Loan Size Globally, CY2011 MFI Portfolio SME FI Portfolio MFI Micro Loans Small Loans Medium Loans SME Micro Loans Small Loans Medium Loans 2006 51.0% 31.8% 17.2% 2006 4.4% 20.5% 75.2% 2007 62.6% 24.4% 13.0% 2007 3.6% 24.8% 71.6% 2008 52.8% 20.7% 26.5% 2008 4.8% 28.1% 67.1% 2009 57.3% 16.3% 26.4% 2009 5.0% 19.6% 75.3% 2010 56.7% 29.8% 13.5% 2010 6.2% 29.6% 64.2% 2011 33.7% 31.8% 34.5% 2011 4.0% 21.1% 74.9% Total Portfolio Composition by Loan Size Globally, CY2011 MFI Portfolio Composition: Volume of Loans SME FI Portfolio Composition: Volume of Loans 100% 100% 90% 90% 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Corporate Medium Small Micro Retail Corporate Medium Small Micro Retail Growth Trends • Volume of the loans grew consistently over time following the 9.9 percent of dollar portfolio and grew by 57.3 percent since growth in number of IFC Partners. Number of MFI Partners CY2010; SME Loans (85.4 percent of which were generated by increased by 29.2 percent in CY2011, which added $30.6 bln to SMEs) represent 90.1 percent of the entire MSME dollar portfolio the MSME loans portfolio YOY. While number of SME Partners and demonstrated improvement by 41.8 percent in dollar terms. increased by 16.7 percent, extending SME portfolio by $30.1 bln in dollar terms since CY2010. • A total of 225 clients reported in CY2010 and CY2011. During this period, the number of MSME loans they provided grew by • The product structure remains consistent: Micro Loans 64.7 percent and volume increased by 15.6 percent. (82 percent of which were generated by MFIs) account for Volume of Micro Loans, $ Bln Volume of SME Loans, $ Bln 15 200 200 200 175 175 155 153 150 155 153 150 150 150 150 Number of Clients Number of Clients 10 Volume, $ Bln Volume, $ Bln 108 108 90 93 100 90 93 100 87 100 87 68 72 72 60 68 5 60 47 47 50 50 50 0 0 0 0 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Number of MFI Clients Number of SME Clients Number of MFI Clients Number of SME Clients Micro Loans by SME FIs Micro Loans by MFIs SME loans by SME FIs SME loans by MFIs Change in Deposits Volume CY2009-CY20116 Volume of Micro Loans and Deposits Volume of Small/Medium Loans and Deposits by MFIs Globally ($ Billion) by MFIs Globally ($ Billion) $25 $45 $40.4 $19.2 $40 $20 $35 $30 $26.4 $15 $13.4 $25 $10 $20 $5.7 $5.2 $15 $5 $10 $4.7 $4.2 $1.9 $3.2 $4.0 $0.3 $5 $- $- 2009 2010 2011 2009 2010 2011 Micro Deposits Micro Loans Small/Medium Deposits Small/Medium Loans Volume of Micro Loans and Deposits Volume of Small/Medium Loans and Deposits by SME FIs Globally ($ Billion) by SME FIs Globally ($ Billion) $120 $109.2 $350 $292.8 $100 $300 $250 $80 $63.2 $200 $164.0 $60 $154.9 $150 $123.8 $101.4 $97.1 $40 $100 $20 $7.8 $5.1 $7.4 $6.4 $50 $- $- 2009 2010 2011 2009 2010 2011 Micro Deposits Micro Loans Small/Medium Deposits Small/Medium Loans 6. The deposits data includes retail, MSME and commercial portfolio in accordance with definition of relevant loan size. Trend Analysis of Compounded Annual Growth Rate (CAGR)7 CAGR Trend – Micro Loans by MFIs Globally CAGR Trend – SME Loans by SME FIs Globally 50% 45.6% 50% 41.1% 41.9% 40% 40% 34.7% 30% 30% 20% 20% 10.6% 12.0% 12.8% 10% 10% 6.5% 4.8% 0% 1.2% -1.7% -0.8% 0% -10% 2004-2007 2008-2009 2010-2011 2004-2007 2008-2009 2010-2011 Number of Micro Loans Volume of Micro Loans Number of SME Loans Volume of SME Loans In addition to making investments, IFC provides advisory services that strengthen and build capacity of FIs to effectively provide financial services to MSMEs. IFC Advisory Services range from developing new financial products to setting up full MSME banking operations in commercial banks. Much of IFC’s advisory services work is conducted by its regional teams, with client contribution and funding assistance from partnerships with donor governments and other multilateral institutions. 7. Compounded annual growth rate (CAGR) from 30 reporting and repeated clients in CY2004-CY2007 period, 108 reporting and repeated clients in the CY2008-CY2009 period, 112 reporting and repeated clients in the CY2010-CY2011 period, excluding greenfield institutions and FIs that are closing their operations. Martin Hommes | Mhommes@ifc.org Aksinya Sorokina | ASorokina1@ifc.org