Beirut - May 2009

State of the Industry in 2008

Ranya Abdel-BakiTransparency & Research Manager

Sanabel 6th Annual Conference

Sanabel – The Microfinance Network of Arab Countries

Data Collection & Resources

Primary Sources:

•Sanabel Annual Industry Survey• FY 2008 data•Sample: 363 Arab MFIs

•Benchmarks (Sanabel/MIX Annual Data Collection for MBB)• FY 2007 data• Sample: 48 Arab MFIs

•Fixed Sample Benchmarks•FY 2004 FY 2008 data•Sample: 20 MFIs

Secondary Sources:

•CGAP Funders Survey (FY 2007)

The Region in a Snapshot: Overview

2008 2007

Median Age 9.75 years 8.5 years

Number of Branches 2,542 1,960

Number of Employees 21,808 18,984

Percentage of Female Employees 31% 32%

Number of MFIs with HR Managers 37 MFIs NA

Sanabel Annual Industry Survey 2008

The Region in a Snapshot: Financial Services in 2008

The Region in a Snapshot: Non-Financial Services in 2008

The Region in a Snapshot: Outreach & Scale in 2008Sanabel Annual Industry Survey 2008:

2008 2007

Number of Borrowers 3.141 million 2.985 million

% Women Borrowers 62% 59%

% Rural Borrowers 40% 42%

% Borrowers Below Poverty Line 60% 63%

Gross Loan Portfolio USD 1.492 billion USD 1.405 billion

Average Loan Balance USD 475 USD 471

The Region in a Snapshot: Outreach & Scale in 2008Sanabel Annual Industry Survey 2008:

Top MFIS # of Borrowers% of Borrowers

from TotalOutstanding GLP (USD)

% of GLP from Total

Top 5 MFIs1,337,597 43%   720,714,161 48%

Top1 0 MFIs1,866,806 59% 901,655,207 60%

Top15 MFIs2,194,517 70% 1,003,671,764 62%

Top 20 MFIs2,338,829 74% 1,079,579,440 72%

Outreach: Breakdown by Country in 2008

Scale: Breakdown by Country in 2008

Growth in Outreach and Scale (2005-2008)

Fixed Sample

Growth in Average Number of Borrowers and Percentage of Women Borrowers (2005-2008)

Fixed Sample

Change in Financial Structure in Arab Region (2007)

Funding in the Region: Amount (2007) Total Amount Committed by Funders in USD Million:

Source: CGAP, “Who is Funding Microfinance? Results of the First Global Survey of Funders”, Microfinance Portfolio, November 2008.

Funding in the Region: Key Players (2007)

Breakdown by Type of Funder

Source: CGAP, “Who is Funding Microfinance? Results of the First Global Survey of Funders”, Microfinance Portfolio, November 2008.

Funding in the Region: Financial Instruments (2007)Breakdown by Financial Instrument

Source: CGAP, “Who is Funding Microfinance? Results of the First Global Survey of Funders”, Microfinance Portfolio, November 2008.

Funding in the Region: Recipients (2007)

Breakdown by Countries

< 50 million 50 — 100 million 100—300 million > 300 million

Algeria Palestine Egypt Morocco

Djibouti Syria

Iraq Tunisia

Jordan Yemen

Lebanon

Source: CGAP, “Who is Funding Microfinance? Results of the First Global Survey of Funders”, Microfinance Portfolio, November 2008.

Breaking Down Return on Assets (2007)

Yield on Portfolio (2006-2007)

Portfolio Quality in 2008

Legislation Highlights in 2009

Developments

EGYPT •Single Regulators Law was passed•Consultation Event on the Draft General Rules for MFC was held on May 4th 2009•USAID EMF/CGAP working with MoSS on transformation plan

YEMEN •On March 22nd 2008 Parliament approved the new microfinance law allowing for the establishment of microfinance banks

Conclusion: Future Outlook

• Only strong sustainable MFIs are able to survive

• By doing what?

• Addressing key human resource challenges and align staff with MFI strategy

• Carefully selecting clients and matching products with client needs

• Clearly disclosing loan terms to clients and properly evaluating creditworthiness and repayment ability

• Introducing innovations and establishing market niches

• Securing funding and diversifying funding sources on the medium to long terms

• Applying sound governance and risk management practices