SANABEL's sixth annual conference Beirut – May 2009 Charles Cordier Lead analyst –Africa and MENA MIX ( Microfinance Information Exchange) 2008 MIX Global 100 Composite Rankings

Background Why a Composite Ranking? – Rankings on single results are too simplistic – Performance has many aspects to it – Composite creates a picture of well rounded MFI, balanced scorecard What performance does it attempt to measure? – Build long term profitability – Increase access to financial services – Minimize costs of those services – Disclose results

How does it work Sample – FY07 results published in MIX Market – 971 MFIs, 651 included in ranking Process – Remove MFIs with missing data – Exclude MFIs that do not meet minimum profitability requirements – Rank MFIs by 11 individual variables – Average ranks by performance area or “pillar” (i.e. outreach) – Average performance area rankings for overall ranking Methodology: Percentile ranking Efficiency Transparency Outreach Profitability

Full sample (971 MFIs) Screened for profitability (651 MFIs) Ranked on 11 variables under three pillars:  Outreach (1)  Efficiency (2)  Transparency (3) MFIs ranked according to percentile scores, averaged across the following variables (example for MBK Ventura, ranked #1 in 2008 MIX Global 100: Composite Rankings) PillarMetricResult (by metric) Percentile (by metric) Percentile (by pillar) Percentile (overall) 1 Borrowers 64, % 72.58% 87.10% Market Penetration 0.2%56.20% Growth in Borrowers %94.90% Deposits / Loan Portfolio 0.0% 56.60% Depositors / Borrowers 0.0% 2 Cost per Borrower / GNI per capital 0.9%96.50% 88.73% Profit / Loan Portfolio 0.4%88.70% Portfolio at Risk > 30 days 0.0% 81% Write off ratio 0.0% 3 Audits on MIX Market % Annual reporting on MIX Market % Methodology

#1: Overall Percentile Ranking MBK Ventura (Indonesia) Profitability screen: OSS 2007: 101% Max in last three years: 123%

#1: Outreach Percentile Ranking Borrowers: Absolute outreach (max) Market penetration: Relative outreach (max) Growth in Borrowers: Pace of increase in outreach (max) Depositors / Borrowers & Deposits / Loan Portfolio: Offering more than just credit (max)

#1: Efficiency Percentile Ranking Cost per Borrower / GNI per capita: Relative transaction cost per borrower (min) Profit / Loan Portfolio: Amount of profits built into yield (min) Write-off Ratio & Portfolio at Risk > 30 days: Cost of actual or potential credit loss (min)

#1: Transparency Percentile Ranking Annual Reporting on MIX Market: Years of publicly available information (max) Audits on MIX Market: Years of publicly available audits (min)

Distribution by Charter NGOs dominate top 25 to top 500 rankings Banks represented a small group in the overall ranking; yet, half their sample claimed spots in the top in 10 MFIs from top 10 are « for profits » ones.

Distribution by Region Latin America ranked most MFIs, 28 in top MFIs from Colombia and 6 from Ecuador. Asia gets 9 MFIs in top 10 thanks to their size (borrowers), growth in borrower and efficiency. 14 Arab region MFIs are included in top 100, with higher regional representation in top 100 than any other region, given the small number of MFIs from the region.

MENA Ranking 26 Arab MFIs in the Top 500 ranking 5 goes down and 7 goes up from 2006 and 2007 Arab MFIs Top 101 Top 254 Top 507 Top Morocco6 Egypt3 Jordan2 Lebanon1 Tunisia1 TOP 100

Distribution: Percentile Rankings Top 100 MFIs still improving efficiency, averaging 56th percentile, with majority below 60%. Outreach averaging 73rd percentile, only a few below 60th percentile.

Rankings capture important industry developments – Change in rankings reflected gains in efficiency – Ranking changes reflected “real” changes in MFI performance Market Feedback – Single most commented MIX piece, incl. drawing MFI attention to their own data – Confusion of prior year ranking “changes” – Outreach is underweighted – No data on social performance disclosure Observations and Feedback

Improve methodology – Seek guidance from an Advisory Panel – Review and revise methodology, as necessary, which may include disclosures on Social Performance 2009 Improvements

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