The past year has been eventful for the microfinance industry. Events unfolding in Andhra Pradesh, India, have heightened media interest towards the industry, and called into question present microfinance business models. These questions are both inevitable and healthy for microfinance, a sector which continues to re-align its double-bottom line objectives of financial and social returns.

Media scrutiny and the re-alignment of practice and objectives are all too familiar to the finance industry as a whole, including its microfinance sub-set. Media coverage of the recent financial crisis emphasised the importance of accuracy in rating financial instruments and a need to refine the financial sector's business model. Similar lessons have been learnt in the microfinance sector. For instance, MIX Market, a leading microfinance transparency initiative, only awards its maximum 5 diamonds score to MFIs with an external rating report. This suggests that MFIs increasingly deem external ratings as a necessity for ensuring prospective investors, donors, and other microfinance stakeholders of their transparency, as well as their financial and social worthiness.

The long-term need to address the lack of available and transparent information on MFIs represents one of the Rating Initiative's key long-term objectives, as through this market review the project seeks to: (1) evaluate the state of the microfinance rating market; (2) understand the rating culture in Africa and (3) provide insight into how investors and donors use rating reports. In so doing, PwC has collected a wealth of quantitative and qualitative data to analyse emerging trends in the microfinance rating market.

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The Rating Market review provides a global overview of the microfinance rating market over the period 2008-2009. This study analyses the type of ratings MFIs are using, their frequency and whether the rating was voluntary or not and/or assisted by subsidies. Results are presented in both a global and regional format.

Finally, this year's Rating Market Review completes the quantitative data collected with a certain degree of qualitative analysis. The feedback gathered directly from MFIs and rating agencies puts some of the quantitative data into context and helps shed some light on the motivations and/or obstacles that impact an MFI's decision to enter the rating process.


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Report edited by ADA in collaboration with KPMG Luxembourg: The report provides an overview of the state of the microfinance rating market as at the end of 2007. In 2007, demand within the microfinance rating market grew by 19.5% and 539 ratings were performed bringing the global grand total to 2,280. With almost 1,000 MFIs having undergone a rating between 1997 and 2007, the microfinance rating market has developed from a negligible sector to a self-sufficient and mature market in certain countries, although the situation isn't harmonious across regions.

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Appui au développement autonome Le Forum d'African Microfinance Transparency Direction de la Coopération du ministère des Affaires étrangères Microfinance Initiative Liechtenstein Swiss Agency for Development and Cooperation Oxfam Novib Coopération Internationale BlueOrchard Microfinance Investment Managers responsAbility Social Performance Task Force Oesterreichische Entwicklungsbank Interchurch organisation for development cooperation