Benchmarking the Financial Performance, Growth, and Outreach of Greenfield MFIs in Sub-Saharan Africa

This paper uses regression analysis to benchmark greenfield MFIs in Sub-Saharan Africa relative to other microfinance providers in the region. It finds that the greenfields grew faster in terms of deposits and lending, improved their profitability to levels comparable to top MFIs, and substantially increased their lending to women. These effects were especially strong for greenfields that followed a consultant-led model to establish a deep retail banking presence spanning multiple countries, including the creation of extensive branch networks. The paper states that although the loan sizes of these greenfields are somewhat larger than those of most African MFIs, they have achieved rapid gains in financial inclusion on a broad scale. It covers the following sections in detail:

• Review of related literature;
• Organization and strategy of microfinance greenfields in Africa;
• Methodology with a focus on data and approach used for estimation;
• Regression results comparing greenfileds to other African MFIs in four areas: depth of outreach to poorer market segments, financial performance including portfolio quality, growth in lending and deposits over time, and the evolution of operating costs and loan pricing;
• Concluding remarks and findings.