Countries & Regions

The Mexican microfinance market has been growing steadily and profitably for the last several years thanks to a high degree of support from the national government and several new legislative measures that have created an improved regulatory environment with a focus on increasing transparency throughout the sector. Credit services have continuously emphasized lending to microenterprises as reflected by one of the lowest average loan balances in the region. Some concern has however arisen over possible upcoming political changes and what they could mean for ongoing support of the microfinance industry. A detailed analysis looking at how government participation has affected the sector historically and what changes in government policies might mean for the future can be found throughout the Mexico Country Briefing:

• Overview: A high level of participation and support from the government, as well as a strong network of industry associations, has helped to make Mexico’s microfinance market one of the most dynamic in the region. Recently passed legislation looks to improve regulation and increase transparency throughout the sector.
• Supply & Demand: Maintaining an emphasis on lending to microenterprises, credit outreach has grown rapidly over the last 4 years, although growth rates showed signs of slowing down in 2011. A fund for the protection of depositors established in 2009 has led to rapid increases in average deposit balances throughout the country.
• Funding: While borrowings still constitute the largest percentage of funding in the microfinance sector, deposits have been taking on an increasingly important role over the last 2 years. Sources of lending are diverse, ranging from international to local actors, and from state-owned to private lending institutions.
• Performance: Profitability in the sector has steadily improved due to increases in outreach efficiency and decreasing loan provisioning. The market does however continue to struggle with its management of credit risk as PAR levels have shown a fair amount of volatility and significant write-offs of loans have been seen in the recent past.
• Quarterly Update: A possible change in political regimes in the upcoming presidential elections could lead to changes in the government microfinance lending program PRONAFIM. These changes could potentially have a large impact on certain types of MFIs throughout the market.

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