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e-MFP European Microfinance Week 2009

e-MFP European Microfinance Week 2009. Growth and resilience of savings-based MFIs during the global crisis Moderator: Hans Dieter Seibel Luxembourg, 25 November 2009. The meltdown… … and the evidence from savings-based MFIs. The meltdown…

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e-MFP European Microfinance Week 2009

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  1. e-MFP European Microfinance Week 2009 Growth and resilience of savings-based MFIs during the global crisis Moderator: Hans Dieter Seibel Luxembourg, 25 November 2009

  2. The meltdown… … and the evidence from savings-based MFIs • The meltdown… • “The $32-billion microfinance sector has been pounded by the worst economic slowdown since the Great Depression“ (The American Banker, 1 Sep 2009) • „…microcredit portfolios are stagnant or shrinking” (CGAP, May 2009) • … and the evidence from savings-based MFIs: • PCF Vietnam: 1,015 member-owned credit coops • BRI MBU: 4,600 commercial microbanking units • CIF West Africa: 6 mutualist microfinance networks

  3. Growth and resilience of the People’s Credit Funds, Vietnam By Nguyen Thac Tam (Central People’s Credit Fund) Hans Dieter Seibel (KGFE/e-MFP)

  4. People‘s Credit Funds (PCF), Vietnam(rural savings and credit cooperatives) • Late 1980s: collapse of command economy incl. 7,200 rural credit cooperatives • Transition to market economy (private agriculture and SMEs) • 1990 Financial institutions law, includes SCCs • Government commission examines options for SCCs=>>PCFs • *1983, PCFs initiated by central bank, TA by DID • PCFs are self-financed and self-governed rural MFIs • Prudentially regulated, supervised, trained by SBV, ie central bank • Consolidation 2000-2002, (82 PFs closed by SBV) • *1985, Central fund (CCF): • Liquidity exchange and refinancing of PCFs • Since 2001 retail finance to rural and urban clientsA • PCFs and CCF: savings are the main sources of funds

  5. PCFs, 2007-2008 (amounts in million US$)

  6. Impact of the global crisis on PCFs in 2008:none Graph 1: • Steady growth of membership Graph 2: • Steady growth of deposits, loans • Decline of domestic borrowings

  7. Number of PCFs and members, 1994-2008

  8. PCF total assets, loans, deposits, borrowings, equity, 1994-2008 (million US$)

  9. CCF, 2007-2008 (amounts in million US$)

  10. Impact of the global crisis on CCF in 2008:moderate (due to urban SME clients) Graph: • Loans outstanding constant • Deposits decline (by urban SMEs) • Borrowings constant • Equity up (due to SBV capital injection) • Overdues up • ROA slightly down

  11. CCF total assets, loans, deposits, 1995-2008(in million US$)

  12. Conclusion: Impact of the crisis on PCFs(local FIs with a rural clientele) PCFs: • Resilient, continual growth of outreach, loans & deposits • Savings-to-deposit ratio increases from 80% to 87% • Steady earnings (despite SBV interest rate restrictions) PCF members: • Stagnating no of borrowers (doubts about future) • Repayment rate very high, unaffected by crisis

  13. Conclusion: Impact of the crisis on CCF(rural wholesale (since 1995) & urban retail services (since 2001): CCF: • Spectacular growth since 2001 • 2008: standstill of growth, declining deposits • Savings-to-deposit ratio declines from 96% to 79% • Earnings slightly affected (by SBV interest rate restrictions) CCF clients: • (Rural) PCFs deposit more and borrow less • (Urban) clients, reacting to the credit crunch, deposit less and borrow more • Repayment rate moderately affected

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