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The number of “microborrowers” worldwide increased by 17 percent in 2006, according to data from the Microcredit Summit Campaign, continuing double-digit annual growth that averaged some 29 percent annually between 2001 and 2006.1 (See Figure 1.) The global loan portfolio of the 340 microfinance institutions (MFIs) tracked by the Microfinance Information Exchange (MIX) also grew rapidly in 2006, at some 34 percent.2 (See Table 1.) The galloping advance of microcredit is increasing pressure on many MFIs to become more sophisticated and commercially oriented in their operations—at the expense, some analysts fear, of their original mission of poverty reduction.3
Microfinance refers to financial services, including loans, savings accounts, and insurance products, that are designed to serve people with very low incomes. The average microloan size worldwide is now $1,026 and the average savings account balance is $1,126.4 Globally, the loan write-off ratio was 3.1 percent in 2006—a better record than that of many commercial banks.5 Women are a key clientele of most microfinance programs, accounting for 98 percent of borrowers in Asia and some two thirds of clients in Africa, Latin America, and the Middle East.6 Only in Eastern Europe and Central Asia are women a minority of customers; there, some 47 percent of borrowers are women.7
As the birthplace of microfinance, Asia leads the world in total current borrowers, with nearly 113 million—some 85 percent of the global total.8 (See Table 2.) Latin America reported the fastest growth in borrowers in 2006, at 53 percent.9 This region also has the largest overall loan portfolio, while Eastern Europe and Central Asia report the largest average loan balance per borrower.
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