what are the benefits of a microfinance rating? nairobi, october 2009 caterina giordano microfinanza...
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What are the Benefits of a What are the Benefits of a Microfinance Rating?Microfinance Rating?
Nairobi, October 2009
Caterina GiordanoMicroFinanza Rating AfricaAfrica Regional Manager
Users Users and use:and use:
Nairobi, October 2009
MFI management for internal and
external use (diagnostic, external
presentation)
Donors, social and commercial
investors, regulatory and supervisory
authorities (assessment tool
facilitating the access to subsidies,
investments and the supervision)
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Why using a rating? Why using a rating?
Nairobi, October 2009
For the MFI: Access to external financial resources
(independent evaluation)
Improve performance
Systematize flow of information towards stakeholders
Performance benchmarking against other MFIs
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For donors: Contribute to the development,
professionalization and transparency of the sector
Improve their performance in terms of objectives/resources allocation
Standardize assessment and monitoring tools Facilitate the coordination and potential
synergies with the investors
Why using a rating? Why using a rating?
Nairobi, October 2009
Why using a rating? Why using a rating?
For the investors: Improve the selection process and
monitoring
Better understand risk profiles of the MFIs
Define the minimum INTERNAL RATE OF RETURN (IRR) of the investment
Why using a rating?Why using a rating? A second opinion which helps to
focus on specific RISK AREAS (during the investor due diligence, after the investor due diligence to confirm or analyze in depth some relevant risk areas, etc)
Standardized information: basis for monitoring of the performance and risk of their investments
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How those reasons interact?How those reasons interact? The MFI need of accessing external financial
resources facilitates the growth of rating market
The benefits for the MFIs in terms of performance improvements: after the 1st rating
The majority of the investors are systematically using ratings
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Rating MarketRating Market In 2007 ratings in the microfinance sector
grew of 19.5% with 539 ratings
2280: cumulative number of microfinance
ratings since 1997. 1000 MFIs having done a rating between 1997 and 2007
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Trends… Trends… 1. Growing number of investments in the microfinance
sector2. MFIs need of attracting more resources to feed their
growth
We can demonstrate that these factors have had a
positive effect on the Ratings demand
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This trend has been confirmed in 2007 by
a 35% growth of the international investments in
the MFIs (USD 5,7 milliards).
Trends… Trends…
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How to use a rating…How to use a rating… The Rating is not only a product (report) but
also a process towards transparency and a better quality of services
Ratings seem to be an Investor tool while as a transparency process are concerning all the private and public stakeholders (donors, networks, regulators, etc)