MFIs in Africa face collapse as financial crisis bites

While half of the MFIs participating in the survey expected loan delinquencies to improve over the next six months, this optimism was tempered by the finding that more than 60 per cent of MFIs expect to face liquidity pressures over the same period.

A majority of MFIs report that the liquidity drought is hurting, with smaller institutions suffering more acutely than their larger counterparts.

Sixty-five per cent of respondents to the CGAP survey reported declining — or at best stable — loan portfolios in the most recent six months, reflecting the impact of the credit crunch.

In addition, more than two-thirds of MFIs reported an increase in their portfolio-at-risk levels.

There are, however, strong regional differences, with MFIs in more integrated economies — particularly Europe and Central Asia and Latin America — reporting the largest impacts from the crisis.

It is expected that the same effects will befall those operating in the emerging economies like Africa in the second phase of the crisis.

The World Bank predicts that between 50 million and 90 million more people could be driven into poverty by the current global crisis.