Microfinance Statistics 2024 By Minute Financial Growth

Introduction

Microfinance Statistics: Microfinance is a transformative financial tool designed to empower underserved individuals and communities by offering tailored services such as microcredit, micro-savings, and microinsurance.

Its historical evolution, from informal savings groups to modern microfinance institutions. This has culminated in global recognition, exemplified by Muhammad Yunus and the Grameen Bank’s Nobel Peace Prize.

It is a compass for policymakers, financial institutions, and development organizations to gauge impact, make informed decisions, and foster financial inclusion and poverty alleviation.

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• As of 2020, the microfinance sector served 200 million borrowers, with a significant majority being women.
• Approximately 65% of these borrowers reside in rural areas where traditional banking services are limited or unavailable, making microfinance a critical source of financial support.
• The industry has demonstrated robust growth, boasting an annual expansion rate of 11.5%.
• The largest microfinancing market in the world is in South Asia, which recorded 85.6 million borrowers in 2018.
• In 2021, the Small Business Administration issued 4,510 microloans to small businesses, with an average loan size of $16,557.
• Astonishingly, over 2 billion people globally lack access to essential financial services, and less than 20% of borrowers in developing nations secure their loans from conventional financial institutions.
• In 2022, microlending and other financial inclusion initiatives were instrumental in advancing 7 out of the United Nations’ 17 Sustainable Development Goals.
• During that year, over 1.4 billion individuals benefited from the services provided by the microfinance sector. Among them, more than a million individuals were in dire poverty when they accessed these financial resources.

Microfinance Statistics by Historical Evolution

• Informal savings and credit systems existed in ancient civilizations within communities. In 19th-century Europe, credit cooperatives and savings banks emerged to serve working-class and rural populations.
• In the early 20th Century, credit unions and rural banks began to provide financial services to underserved communities.
• During the 1970s, modern microfinance started with pioneers like Muhammad Yunus and the Grameen Bank, offering small loans to impoverished individuals.
• In the 1980s and 1990s, microfinance gained global recognition, with organizations like ACCION and FINCA expanding operations.
• In the 2000s, increased scrutiny led to regulation and responsible lending practices in the microfinance sector, and microfinance expanded beyond microcredit to offer savings, insurance, and remittance services.
• Finally, in the 21st Century, digital technology and fintech solutions revolutionized microfinance, enabling broader access to financial services.

(Source: Business and Economics Journal)

Global Performance of Microfinance Institutions

• Starting in 2017, microfinance institutions (MFIs) have extended loans worth hundreds of billions of dollars. With an annual growth rate averaging 11.5% over the past five years.
• During this time, the global count of borrowers continued to climb, albeit slower than the 2000-2010 era, with an average yearly growth rate of 7% since 2012, in contrast to the nearly 20% seen in the prior decade.
• In 2018, about 139.9 million individuals received the benefits of MFI services. Marking a significant upswing from the 98 million borrowers in 2009.
• Among these borrowers, 80% are women, and 65% hail from rural areas. These proportions have remained stable over the last ten years, even with the growing borrower numbers.
• In 2018, MFIs oversaw a credit portfolio estimated at $124.1 billion. Signifying another year of expansion, with an 8.5% increase compared to 2017.
• Over the past ten years, MFIs have enhanced their operational efficiency. Despite a notable increase in the cost per borrower during this period. Rising from an average of $68.4 in 2009 to $106.7 in 2018 (a 56% increase). There has been a reduction of 2.7 percentage points in the operating expense ratio.
• Furthermore, between 2009 and 2018, MFIs have seen improvements in their returns on assets. Which increased by 1.3 percentage points, and returns on equity, which increased by 2.9 percentage points.
• However, it’s worth noting that there has been a slight decline in the quality of the loan portfolio over the entire period. The portfolio at risk (PAR) over 30 days increased from 6.4% in 2009 to 7% in 2018.
• While there was a drop in PAR > 30 days between 2010 and 2012. It increased again and remained stable at around 7% between 2016 and 2018.

(Source: Convergence)

Microfinance Statistics by Institutional Success

• Over a decade, from 2003 to 2013, there was a notable progression in the outreach and impact of microfinance. Reflected in the increasing numbers of borrowers served, particularly among the poorest segments of society.
• In 2003, microfinance institutions (MFIs) reached 81 million borrowers, with 55 million categorized as the poorest.
• This upward trend continued, with 2013 witnessing substantial growth as MFIs extended their services to 211 million borrowers, of which 114 million were among the poorest. This decade marked a significant expansion in the reach of microfinance. Highlighting its effectiveness in reaching and assisting those in need, especially the economically disadvantaged.

(Source: IMF: Microcredit Summit Campaign. State of the Summit Report 2015)

Microfinance Statistics by Small Businesses

• From 2016 to 2020, the Small Business Administration (SBA) approved many microloans, demonstrating a consistent commitment to supporting small businesses.
• In 2016, 4,506 microloans were approved, amounting to $61.2 million.
• This support continued to rise yearly, with 4,958 microloans approved in 2017, totaling $68.5 million, and 5,457 loans in 2018, reaching $76.7 million.
• The trend persisted into 2019, with 5,532 approved microloans totaling $76.7 million.
• By 2020, the SBA had further expanded its efforts, approving 5,890 microloans with a cumulative value of $85.0 million. These figures underscore the SBA’s pivotal role in providing financial assistance to small businesses during this period, aiding their growth and resilience.

(Source: Small Business Administration)

Microfinance Statistics by Demographics

Microfinance Statistics – Distribution According to Gender

• In Africa, despite women constituting over 60 percent of the rural workforce and contributing significantly, up to 80 percent, to food production, their access to credit remains disproportionately low, accounting for less than 10 percent of the total loans extended to farmers.
• Interestingly, while it may seem that women are the primary beneficiaries. Studies indicate that men utilize a considerable portion of loans that women have awarded and repaid.
• The renowned Grameen Bank in Bangladesh, widely emulated, primarily offers credit to those living in extreme poverty. Remarkably, approximately 94 percent of individuals who meet the bank’s criteria and avail themselves of loans are women.
• Moreover, Grameen borrowers maintain an impressive repayment rate of approximately 98 percent. The bank disburses a substantial $30 million monthly to assist 1.8 million individuals facing severe financial hardships.
• In another context, approximately 46.6 percent of all Small Business Administration (SBA) microloans approved in 2020 were directed towards companies owned or controlled by women, amounting to 38 percent of the total disbursed loan amount.

(Source: GDRC)

Microfinance Statistics – Distribution According to Income

• The World Bank’s assessment reveals the presence of over 7,000 microfinance institutions (MFIs) worldwide. Dedicated to assisting approximately 16 million individuals in impoverished regions of developing nations.
• These MFIs collectively handle a substantial cash turnover, estimated at around US$2.5 billion, underscoring the significant potential for further expansion in this sector.
• Accion, a prominent MFI with operations in the United States. This contrasts its microloans in the U.S., which have an average income of approximately $10,000 and range up to $50,000.
• This notably differs from Accion’s affiliate, Compartamos Banco in Mexico. Where the average microloan amounts to around $500 for lower-income groups. This juxtaposition highlights the diversity in loan sizes and the varying financial needs addressed by different MFIs in different regions.

(Source: World Scientific, World Bank)

Regional Analysis of Microfinance Sector Statistics

India

• In the wake of the Andhra Pradesh crisis in 2012, Non-Banking Financial Company-Microfinance Institutions (NBFC-MFIs) emerged as the sole regulated entities providing microfinance services to their clients and borrowers.
• During that period, the sector’s portfolio stood at Rs 17,264 crore as of March 31, 2012.
• Over the subsequent decade, this sector grew remarkably, expanding 16.5 times in size to reach Rs 2,85,441 crore by March 31, 2022.
• Up until March 2015, NBFC-MFIs remained the exclusive providers of microfinance.
• However, in 2016, banks and Non-Banking Financial Companies (NBFCs) entered the microfinance arena, with Small Finance Banks (SFBs) following suit in 2017.
• As of March 2022, the microfinance landscape had diversified, with approximately 202 entities actively participating.
• Banks held the largest share, contributing Rs 1,14,051 crore or 40.0% of the total micro-credit universe.
• NBFC-MFIs ranked second, accounting for Rs 1,00,407 crore or 35.2% of the industry portfolio.
• SFBs constituted 16.9% with a total loan amount of Rs 48,314 crore, NBFCs contributed 6.9%, and other Microfinance Institutions (MFIs) made up 1.0% of the universe.

(Source: Microfinance Institutions Network -MFIN)

United States

• While microfinance has seen substantial global growth, surpassing 140 million borrowers worldwide, its expansion within the United States has been modest.
• Unlike developing nations like Bangladesh or Peru, where microfinance has flourished, the United States has not experienced a similar explosive surge.
• According to a 2020 Federal Reserve survey, 7.1 million people, equivalent to 5.4 percent of U.S. households, were labeled as “unbanked,” signifying that no one in their household held a bank or credit union account.
• Additionally, 13 percent fell into the “underbanked” category, indicating they had bank accounts but struggled with limited access to banking services, often resorting to alternative sources like payday loans.
• Nearly 20 percent of U.S. households found themselves in the unbanked or underbanked segments, with communities of color and immigrant groups experiencing higher rates.
• Notably, more than 40 percent of African-American and 30 percent of Latino households fell into these categories, forming a substantial part of the microfinance customer base in the country.
• Furthermore, 92 percent of U.S. businesses qualify as microenterprises, employing fewer than five workers and accounting for over 41 million jobs. Many of these microenterprises encounter difficulty accessing credit, emphasizing the continued necessity for microfinance solutions in the United States.

(Source: Federal Reserve Survey)

United Kingdom

• Over four years in the United Kingdom (UK), from 2014 to 2017, there was a discernible pattern in the distribution of microloans, both for business and personal purposes.
• In 2014, 8,967 microloans were allocated for businesses, while 20,684 were extended to individuals for personal needs.
• The subsequent year, 2015, witnessed a slight dip in business-related microloans to 6,036, contrasting with a rise in personal microloans to 24,554.
• However, a significant shift occurred in 2016, with business microloans dropping sharply to 980 while personal microloans surged to 32,440.
• By 2017, there was a marginal increase in business microloans to 1,074, accompanied by a further rise in personal microloans to 34,145, illustrating fluctuations in microloan distribution across these categories.

(Source: Statista)

China

• By the conclusion of March 2021, China had 6,841 micro-credit companies operating in the country.
• The outstanding loans from these companies amounted to RMB865.3 billion, showing a decrease of RMB21.2 billion during the first quarter of that year.
• As of March 31, 2021, micro-credit companies in China exhibited a diverse presence across regions, with 6,841 institutions operating nationwide.
• These companies employed 69,039 individuals and possessed paid-in capital amounting to RMB 78.00 billion.
• The outstanding loans extended by these entities amounted to RMB 86.53 billion.
• Regionally, Beijing housed 105 such institutions with a paid-in capital of RMB 1.40 billion and outstanding loans of RMB 1.31 billion.
• Likewise, other regions like Tianjin, Hebei, Shanghai, Jiangsu, and Guangdong displayed significant participation in the micro-credit sector regarding the number of institutions and financial metrics.
• Chongqing stood out with a substantial paid-in capital of RMB 10.88 billion, reflecting its importance in the micro-credit landscape. These statistics illuminate micro-credit companies’ widespread presence and financial activities across China’s regions.

(Source: The People’s Bank of China)

Brazil

• The number of loan accounts at non-deposit-taking microfinance institutions (MFIs) in Brazil exhibited a dynamic trend over the decade spanning from 2007 to 2017.
• In 2007, there were 8,540 loan accounts, but this figure declined to 5,972 in 2008.
• However, there was a gradual increase in the subsequent years, with 2014 marking a significant upswing to 89,248 loan accounts.
• The growth continued, reaching 102,848 in 2015 and then experiencing a remarkable surge to 263,714 in 2016.
• By 2017, the number of loan accounts remained substantial at 277,790, showcasing the evolving microfinance landscape in Brazil during this period, with a notable expansion in loan access and outreach.

(Source: Federal Reserve Bank of St. Louis)

Successful Microfinance Programs Statistics

The SHG-BLP Microfinance Model by Microfinance Statistics

• The SHG-BLP program has significantly expanded its reach, encompassing 140 million families and comprising 11.9 million SHG groups.
• These groups have collectively accumulated savings of INR 47,240.48 crore as of March 31, 2022.
• Impressively, during the fiscal year 2021-22, 3.4 million SHGs were linked to credit, a notable increase from the 2.9 million groups in the previous year, resulting in disbursements amounting to INR 99,729.23 crore.
• As of March 31, 2022, the outstanding credit stood at INR 1,51,051.30 crore, benefiting 6.74 million SHGs with an average of INR 2.24 lakh per SHG.
• The EShakti initiative, which digitized financial and non-financial data of over 1.27 million SHGs, aims to facilitate easier credit linkage with banks.
• Additionally, as of March 31, 2022, 470,000 SHG members received training through Micro Enterprise Development Programs (MEDPs), and 120,000 SHGs underwent comprehensive training under Livelihood Enterprise Development Programs (LEDPs) to prepare them for establishing their enterprises.
• In the fiscal year 2021-22, two innovative projects were sanctioned to FWWB (Friends of Women’s World Banking) and Arth Impact Welfare Foundation to provide end-to-end support for women entrepreneurs.
• Furthermore, a substantial 188 million Joint Liability Groups (JLGs) were established and linked to credit, ensuring financial assistance for landless and tenant farmers who lack formal land rights.
• Cumulatively, loans disbursed to JLGs reached an impressive INR 3,25,937.63 crore as of March 31, 2022. These programs receive support from the Financial Inclusion Fund (FIF).

(Source: NABARD)

Recent Developments

Acquisitions and Mergers:

• CreditAccess Grameen acquires Madura Microfinance: In early 2023, CreditAccess Grameen completed the acquisition of Madura Microfinance for $75 million. This merger aims to expand CreditAccess Grameen’s reach and enhance its financial inclusion efforts in rural India.
• Bandhan Bank acquires Gruh Finance: Bandhan Bank finalized its acquisition of Gruh Finance for $3 billion in late 2022. This merger strengthens Bandhan Bank’s microfinance portfolio and expands its housing finance capabilities.

New Product Launches:

• SKS Microfinance introduces digital loan platform: In mid-2023, SKS Microfinance launched a new digital platform to streamline loan applications and disbursements, making it easier for clients to access microloans through mobile devices.
• MicroEnsure’s microinsurance products: MicroEnsure introduced new microinsurance products in early 2024, providing affordable insurance solutions for low-income individuals in developing countries. These products cover health, life, and agricultural risks.

Funding:

• Accion Microfinance secures $100 million: Accion Microfinance raised $100 million in a funding round in 2023 to expand its microfinance operations and develop new financial products for underserved populations.
• Grameen Foundation receives a $50 million grant: In late 2023, the Grameen Foundation received a $50 million grant from the Bill & Melinda Gates Foundation to support its initiatives in financial inclusion and poverty alleviation through microfinance.

Technological Advancements:

• AI and Machine Learning in Microfinance: Microfinance institutions are increasingly using AI and machine learning algorithms to assess credit risk, automate loan processing, and personalized financial products, improving efficiency and outreach.
• Blockchain for Microfinance: Blockchain technology is being explored to enhance transparency and security in microfinance transactions. It enables secure, immutable records of loan agreements and disbursements, reducing fraud and operational costs.

Market Dynamics:

• Growth in Microfinance Markets: The global microfinance market is expected to grow at a CAGR of 12% from 2023 to 2028. Driven by increasing demand for financial services in emerging economies and government initiatives to promote financial inclusion.
• Rising Demand for Digital Financial Services: The COVID-19 pandemic accelerated the adoption of digital financial services, with microfinance institutions leveraging mobile platforms to provide loans and other financial services remotely.

Regulatory and Strategic Developments:

• Regulatory Reforms in India: The Reserve Bank of India (RBI) introduced new regulations in 2023 to enhance the transparency and governance of microfinance institutions, including caps on interest rates and stricter reporting requirements.
• Africa’s Financial Inclusion Policies: African governments are implementing policies to promote financial inclusion, including subsidies and support for microfinance institutions to reach remote and underserved communities.

Research and Development:

• Impact Studies on Microfinance: Recent studies are focusing on the socio-economic impacts of microfinance. Assessing how access to microloans affects poverty reduction, women’s empowerment, and entrepreneurship in developing countries.
• Sustainable Microfinance Models: R&D efforts are exploring sustainable microfinance models that integrate environmental, social, and governance (ESG) criteria to ensure long-term positive impacts on communities and the environment.

Conclusion

Microfinance Statistics – Microfinance is a powerful financial inclusion and poverty reduction tool, with over 7,000 institutions globally serving around 16 million individuals in developing countries and managing approximately US$2.5 billion in cash turnover.

Microfinance Statistics show that empowering women, who form a significant portion of borrowers, are often organized into supportive groups with high repayment rates.

Loans vary widely, from small (about $500) to larger loans, catering to diverse financial needs. Microfinance’s success stories highlight its potential to transform lives, foster entrepreneurship, and contribute to economic development.

While challenges like over-indebtedness exist, the sector evolves with digital innovations and efforts to reach marginalized communities, making it vital for policymakers and stakeholders to support and enhance its impact.

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