MIMOSA 2.0 Emmanuelle Javoy, Daniel Rozas, Planet Rating & David Roodman
The sector needs a common metric of market saturation to reduce risk of repayment crises The sector’s reputation would suffer strongly from a new repayment crisis Warning signs were present in all past crises, but insufficiently strong to induce timely changes of strategy MIMOSA 1: a basic model using Findex and HDI can produce a useful indicator of market saturation It is possible to create a more robust indicator by pooling efforts June 2014 2
MIMOSA 1.0 REVIEW OF KEY FEATURES 3
Key features of the first version of MIMOSA Relies exclusively on indicators from Global Findex and HDI Provides an opinion on the risk of market saturation by comparing the use of credit in a country to comparable countries in terms of HDI, formal savings and semi formal credit Provides scores for 148 countries, among which 119 have an HDI below 80 Webinar Presentation - MIMOSA 4
A simple scoring scale Number (share) of MIMOSA Score Market Penetration countries (HDI<80) >100% above predicted 5 6 (6%) level 50-100% above 4 14 (13%) predicted level 0-50% above predicted 3 29 (27%) level 0-30% below the 2 32 (29%) predicted level >30% below predicted 1 28 (26%) level Microfinance Index for Market Outreach and 5 Saturation ( MIMOSA)
Usual suspects found in category 4 and 5 Market Score 1 5 Microfinance Index for Market Outreach and 6 Saturation ( MIMOSA)
Some weaknesses linked to the simplicity of the tool Global Findex does not allow to discriminate between regional differences E.g. Lagos vs. other regions of Nigeria Particularly problematic for large countries (Mexico, Nigeria, India, etc.) Global Findex is only updated every three years Global Findex survey likely to have some biases Cultural context influencing some answers (very low reported use of credit in MENA) 7
MIMOSA 2.0 BUILDING A SUSTAINABLE INDICATOR TO MEASURE MARKET SATURATION June 2014 8
MIMOSA 2.0 METHODOLOGY & OUTPUT June 2014 9
How to build a simple, yet robust indicator? Features retained from the first New features version of MIMOSA Scores at regional/district Comparability of scores across level within a country countries/regions Factors in regulation, Simple scale competition, and organization Use existing databases and of the MF sector and MFIs indicators to reduce data Stronger focus on the collection burden clientele served by MF Consider all sources of credit and Possibility to update scores not only MF every 12-24 months June 2014 10
MIMOSA 2.0: look within country borders Regional market capacity & penetration scores Cross-comparable across countries Support better risk assessment & investment decisions Source: MIX Market June 2014 11
Country level data • Global Findex Country Scores • HDI • MF market infrastructure ~80 countries Market & Institutions Clients Regional Scores • Competition • Cross-borrowing ~30 countries • Branch concentration • No. of MF savers • Informal finance • Governance • Staff turnover June 2014 12
Methodology design: balance precision and cost A maximum of 10 days per country, including maximum of 5 days of data collection in the field Indicators to be screened for “ value-added/collection time ” ratio The validity of the approach will be tested by comparing results to full-fledged OID surveys when they are produced in a country Emphasis on “ hard ” indicators, to maintain consistency of results More updates will be needed for riskier countries: every 12 months for countries that score 4 or 5 every 18 months for countries that score 3 every 24 months for countries that score 1 or 2 June 2014 13
Emmanuelle Javoy – javoy.emmanuelle@gmail.com skype: javoy.emmanuelle – m: +33 6 61 32 19 34 Daniel Rozas – daniel@danielrozas.com skype: danrozas – m: +32 389 677 056 Edouard Sers, Planet Rating – Esers@planetrating.com skype: pr_esers THANK YOU MERCI June 2014 14
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