RP ranks 3rd in global survey on microfinance

MANILA, Philippines – The Philippines ranked third in a global survey on microfinance, even topping the category on regulatory framework, a new report released by the International Finance Corp. (IFC) showed.

The report, titled “Global Microscope on the Microfinance Business Environment,” noted that the Philippines is the strongest finisher outside of Latin America, followed closely by India in fourth place among countries with the best business conditions for microfinance.

Peru led the chart for the second year in a row, while Bolivia followed at second place. A total of six Latin American nations are among the top 10 – Peru, Bolivia, Ecuador, Nicaragua, Colombia, and El Salvador.

The top African countries are Ghana, in fifth place, and Uganda, in ninth.

Until last year, the microfinance index covered 20 countries in Latin America and the Caribbean. This year, the index expanded to 55 countries worldwide.

“The broader reach of this year’s report gives us a better understanding of where microfinance is taking off and what makes that happen,” said Peer Stein, IFC manager for access to finance advisory services. “Advancing the regulatory and institutional environment for microfinance in emerging markets is critical to building more inclusive financial markets.”

The index consists of a scorecard weighing 13 indicators grouped into three categories: regulatory framework, investment climate, and institutional development. The countries were selected based on the importance of their existing microfinance sectors or their potential for development.

However, since the global index builds on earlier studies conducted exclusively in Latin America and the Caribbean, the region is somewhat over-represented, with 21 of the total 55 countries. The index includes data from 12 countries in Sub-Saharan Africa, seven in Eastern Europe and Central Asia, seven in East Asia, five in South Asia, and three in the Middle East/North Africa.

The Philippines and Cambodia ranked at the top in regulatory framework, while Chile led the investment climate category. Bolivia and Peru tied for first place in institutional development.

Microfinance is a critical tool in the fight against poverty. Access to a range of microfinance services – savings, loans, and money transfers – enables poor families to invest in enterprise and in better nutrition, improved living conditions, and the health and education of their children.

IFC, the private sector investment arm of the World Bank Group, provides advice and investments to the microfinance sector in developing countries. –Ted P. Torres (The Philippine Star)