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Microfinance Investment in Sub-Saharan Africa : Turning Opportunities into Reality

ACCESS TO CAPITAL ACCESS TO FINANCE ACCOUNTING ASSET QUALITY AUDITS BANKING CRISES BANKING SECTOR BANKING SERVICES BARRIERS TO ENTRY BRANCH LICENSING BUSINESS ENVIRONMENT CAPITAL INVESTMENT CAPITAL INVESTMENTS CAPITAL MARKETS COMMERCIAL INVESTMENT CONFLICTS OF INTEREST CORRUPTION COST STRUCTURE COUNTRY RISK CREDIT COOPERATIVES CREDIT REGISTRIES CREDIT UNIONS DEBT DEBT CAPITAL DEBT INVESTMENT DEPOSIT DEPOSIT FUNDING DEPOSITORS DEVELOPMENT FINANCE DEVELOPMENT FINANCE INSTITUTIONS DIRECT INVESTMENTS DISCLOSURE DISCLOSURE GUIDELINES DUE DILIGENCE EQUITY CAPITAL EQUITY INVESTMENTS EQUITY INVESTORS EQUITY PARTICIPATION FINANCIAL ACCESS FINANCIAL INSTITUTIONS FINANCIAL SERVICE FINANCIAL SERVICE PROVIDERS FINANCIAL SERVICES FINANCIAL SYSTEMS FOREIGN CAPITAL FOREIGN DIRECT INVESTMENT FOREIGN INVESTMENT FOREIGN INVESTMENTS FOREIGN NATIONAL FUND MANAGERS FUNDING SOURCES GLOBAL ECONOMIC PROSPECTS GLOBAL FUND GLOBAL LEADER GLOBAL PORTFOLIO GOVERNMENT FUNDING GOVERNMENT OWNERSHIP GROSS DOMESTIC PRODUCT GROWTH RATE GROWTH RATES HOLDING HOLDING COMPANIES HOLDING COMPANY HOUSEHOLDS HUMAN CAPITAL INCOME INFLATION INFLATION RATE INFORMATION SYSTEMS INSURANCE INTEREST RATE INTEREST RATE SPREADS INTEREST RATES INTERNAL AUDIT INTERNATIONAL CAPITAL INTERNATIONAL INVESTORS INVESTING INVESTMENT PORTFOLIOS INVESTMENT VEHICLES KEY CHALLENGES LACK OF TRANSPARENCY LOAN LOAN PORTFOLIO LOAN SIZE LOAN SIZES LOCAL CURRENCY LOCAL DEBT LOCAL GOVERNMENT LOCAL STOCK MARKETS MACROECONOMIC INSTABILITY MARKET FRAGMENTATION MARKET INFORMATION MARKET INFRASTRUCTURE MARKET LEVEL MARKET PENETRATION MFI MFIS MICROFINANCE MICROFINANCE INSTITUTIONS MICROFINANCE LOAN MOBILE BANKING NBFI NBFIS NEW PRODUCTS NICHE FUNDS OPERATING COSTS OWNERSHIP STRUCTURES POLITICAL STABILITY PORTFOLIO POSTAL SAVINGS PRIVATE FOREIGN INVESTORS PRIVATE INVESTORS PUBLIC CREDIT REGULATORY REQUIREMENTS RESERVES RETURN RETURNS RISK MANAGEMENT RISK MANAGEMENT SYSTEMS SAVINGS BANKS SAVINGS GROUPS SHARE OF EQUITY SHORT-TERM DEPOSITS TECHNICAL ASSISTANCE TECHNICAL SUPPORT TRANSACTION TRANSACTION COSTS UNION WHOLESALE FUNDING
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Washington, DC: World Bank
Africa
2012-08-13T08:36:01Z | 2012-08-13T08:36:01Z | 2012-06

Yet despite healthy economic prospects, the region has the lowest share of banked households in the world (12 percent) and the highest share of poor people, with 50 percent of the population living on $1.25 a day or less (Consultative Group to Assist the Poor, or CGAP and World Bank 2010). More work needs to be done to expand financial access, and many governments and international funders are keen to contribute. Equity and debt capital continues to be important in developing financial services for low-income populations in the region. However, local equity is not available in most countries, and local debt funding is scarce. Sub-Saharan Africa (SSA) microfinance relies heavily on deposit funding, mostly composed of short-term deposits, while many smaller institutions cannot attract sufficient deposits to finance growth. The region received 11 percent of global microfinance funding commitments in 2010.4 In terms of cross-border investment, it received among the lowest levels in the world, $1 billion out of a total of $13 billion as of December 2010 (Reille, Forster, and Rozas 2011). This brief examines public and private foreign investment in SSA microfinance retailers, and the key challenges that limit investment. The findings are based on CGAP data on cross-border funding flows, publicly available resources, and interviews with more than 30 investors and other stakeholders conducted in the first quarter of 2012.

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