Bigger Loans Contribute to Record Microfinance Levels in South Africa

Larger loan sizes, rather than a significant increase in the number of borrowers accessing loans, have contributed to a record R6.29bn ($942.5 million) being outlaid in microfinance loans in the quarter ending August this year in South Africa.

A statement from the Micro Finance Regulator Council (MFRC) says compared with the quarter ending May 2005, the period under review shows micro credit rand value disbursements increased by 9% from R5.77 billion to R6.29bn while number of loans disbursed increased by 4% from 3.65 million to 3.79 million.

“This movement implies that the average size of loans disbursed increased by 4.7% from R1,582 ($237) to R1,657 ($248.20),” says the statement. “For the 12 months ending August 2005, disbursements were R23.3 billion. This number reflected a R5.2 billion or a 29% increase on R18.1 billion reported for the year ending August 2004.”

The value of the gross loan book was R19.4 billion as of 31 August 2005.

Banks again reported the biggest industry growth for the period with R2.6bn, a 14.2% increase over the previous quarter. At end August 2005, the banks? loan book was R9.1 billion, up 7.3% on the R8.5 billion reported at the end of May.

Private companies also reported more activity with a 6.4% increase in disbursements from R2.3 billion to R2.5 billion. The outstanding book was R9.2 billion as at the end of August, 2.2% higher than the R9.0 billion reported at the end of May.

Section 21 companies reported a 3% gain in lending. There was no movement in lending for Close Corporations, Trusts and Public Companies while Cooperatives reflected an 11.2% decline in disbursements. CC’s, Trusts and Public Companies appear to be losing market share to banks and other large private companies.