Global Microfinance Market 2016-2020
Microfinancing is a type of banking service that is provided to low-income individuals or the unemployed or groups of people that do not have any means to obtain any financial services. The goal of microfinance companies is to provide an opportunity for low-income borrowers to become self-sufficient through saving and borrowing money and providing microinsurance. Microfinance institutions charge interests on loans for their lenders like conventional banking operations. However, these interest rates are lower than those offered by normal banks. Microenterprises are considered as the engine of economic growth for a nation to promote equitable growth and development.
Technavio’s analysts forecast the global microfinance market to grow at a CAGR of 15.56% during the period 2016-2020.
Covered in this report
The report covers the present scenario and the growth prospects of the global microfinance market for 2016-2020. To calculate the market size, the report considers the the total financing of the micro enterprises in the Americas, Asia Pacific (APAC), and Europe, the Middle East, and Africa (EMEA).The market is divided into the following segments based on geography:
Technavio Announces the Publication of its Research Report – Global Microfinance Market 2016-2020
Technavio recognizes the following companies as the key players in the global microfinance market: Albaraka, ASA, Banco do Nordeste, Bandhan Financial Services, and Fundación de la Mujer.
Other Prominent Vendors in the market are: Amhara Credit and Savings Institution, Al Amana Microfinance, Compartamos Banco, Fundación WWB Colombia, ICICI Bank, Standard Chartered, and Wells Fargo.
Commenting on the report, an analyst from Technavio’s team said: “A key trend spurring growth in this market is the increase in private sector banks across emerging markets. Many private banks provide greater incentives to incur switching costs needed to pursue new businesses in the microenterprise market. Large private firms have been one of the key driving trends for innovation that has increased the global growth for the microenterprises segment in emerging countries that is either unserved or underserved. The primary aim of these private banks is to not only to develop unique products, business solutions, or services but also commercialize themselves and convert innovative microenterprises into viable business ventures with a sustainable edge over others.”
According to the report, the high preference for better risk management practices will be a significant driver spurring the prospects for growth in this market. Banks are increasingly realizing the costs of operational and sales inefficiency, which is reflected in their revenue. As microenterprises become more active in supply chains, their ability to manage risk becomes more important. Investments in risk management is of utmost importance to compete in the global market to ensure compliance or deploying risk-minimizing technologies. This will help increase the transparency beyond the first-tier suppliers.
Further, the report states that difficulty in credit assessment of microenterprises will be a major challenge for this market. Microenterprises are highly sensitive to the economic cycles of the country, particularly because of the limited business diversification and limited capital reserves. Owing to the global economic crisis and the recent Greek crisis, the economies in the developing as well as the developed countries are undergoing a drastic drop in the demand for goods and services. This has severely affected the production volumes of the microenterprises segment. As a result, there has been less demand for financing.
Albaraka, ASA, Banco do Nordeste, Bandhan Financial Services, Fundación de la Mujer, Amhara Credit and Savings Institution, Al Amana Microfinance, Compartamos Banco, Fundación WWB Colombia, ICICI Bank, Standard Chartered, Wells Fargo