By Andrea Vujosevic
World Vision microfinance helped this Cambodian entrepreneur increase her income from US$10 per week to US$10 per day. Now, two World Vision microfinance institutions have been listed among Forbes magazine's top 50.
There are currently in excess of 12,000 microfinance institutions (MFIs) in the world. "EKI", the World Vision MFI in Bosnia Herzegovina is ranked 14th, while "Agroinvest", World Vision's MFI in Montenegro and Serbia is ranked 22nd in a recent list by Forbes magazine.
MFIs offer long-term financial services, such as small loans, savings and insurance to disadvantaged people who are not eligible for services through traditional means.
In 2007, EKI disbursed 38,000 loans amounting to US$93 million. From all disbursed loans, 45 percent was for agriculture development, 43 percent for small and medium-scale entrepreneurs and the remainder was for housing loans and improved living standards.
In 2007, AgroInvest disbursed 30,000 loans totaling US$64 million. Agroinvest impacts the lives of more than 56,000 children every year through a model in which a percentage of each loan is put directly back into funds for the community.
To qualify for a ranking in Forbes, the institutions must have made available their audited financials and must have passed review by
a Forbes panel of advisers.
Forbes rankings are based on the size of the gross loan portfolio of each MFI, including efficiency, which considers operating expense and the cost per borrower as a percent of the gross national income per capita of the country of operation; risk, which looks at the quality of the loan portfolios, measured as the percent of the portfolio at risk greater than 30 days; and return, which is measured as a combination of return on equity and return on assets. Each category is equally weighted for an institution's overall ranking.
World Vision, through its VisionFund subsidiary, operates microfinance institutions in 47 countries.
Access to financial services gives families the opportunity to build local businesses, thus helping to make the improvements brought by World Vision's development work sustainable. Better health care, nutrition, and education can be sustained only when households have increased earnings and greater control over financial resources.
Families with improved earnings can save money, which reduces their vulnerability when a business slows, a child gets sick or a crisis hits. Microfinance gives families options for the future and enables them to give their children the best start in life.
Additional reporting by other World Vision staff.
Category: Payday loans