1. What are the Benefits of a Microfinance Rating? Nairobi, October 2009 Caterina Giordano MicroFinanza Rating Africa Africa Regional Manager

2. Users and use: Nairobi, October 2009 MFI management for internal and external use (diagnostic, external presentation) Donors, social and commercial investors, regulatory and supervisory authorities (assessment tool facilitating the access to subsidies, investments and the supervision) 1 1 2 2

3. Why using a rating? Nairobi, October 2009  For the MFI:  Access to external financial resources (independent evaluation)  Improve performance  Systematize flow of information towards stakeholders  Performance benchmarking against other MFIs

4. Nairobi, October 2009  For donors:  Contribute to the development, professionalization and transparency of the sector  Improve their performance in terms of objectives/resources allocation  Standardize assessment and monitoring tools  Facilitate the coordination and potential synergies with the investors Why using a rating?

5. Nairobi, October 2009 Why using a rating?  For the investors:  Improve the selection process and monitoring  Better understand risk profiles of the MFIs  Define the minimum INTERNAL RATE OF RETURN (IRR) of the investment

6. Why using a rating?  A second opinion which helps to focus on specific RISK AREAS (during the investor due diligence, after the investor due diligence to confirm or analyze in depth some relevant risk areas, etc)  Standardized information: basis for monitoring of the performance and risk of their investments

7. Nairobi, October 2009 How those reasons interact? The MFI need of accessing external financial resources facilitates the growth of rating market The benefits for the MFIs in terms of performance improvements : after the 1st rating The majority of the investors are systematically using ratings

8. Nairobi, October 2009 Rating Market  In 2007 ratings in the microfinance sector grew of 19.5% with 539 ratings  2280 : cumulative number of microfinance ratings since 1997. 1000 MFIs having done a rating between 1997 and 2007

9. Nairobi, October 2009 Trends

10. Trends… 1.Growing number of investments in the microfinance sector 2.MFIs need of attracting more resources to feed their growth We can demonstrate that these factors have had a positive effect on the Ratings demand

11. Nairobi, October 2009 This trend has been confirmed in 2007 by a 35% growth of the international investments in the MFIs (USD 5,7 milliards). Trends…

12. Nairobi, October 2009 How to use a rating… The Rating is not only a product (report) but also a process towards transparency and a better quality of services Ratings seem to be an Investor tool while as a transparency process are concerning all the private and public stakeholders (donors, networks, regulators, etc)