Microfinance Holdings: effective market building players or unsustainable schemes?

(Sorry for those who will find this post too technical, it needs to be sometimes…)
CGAP recently posted a well documented and timely report on the performance of greenfield MFIs in Sub-Saharan Africa. I will not qualify it as the most unbiased assessment as it is financed and written by IFC folks, who supported many of those, but it definitely provide us with helpful insights. However I missed the following topics:
–       The performance of the holdings as a whole : Many Microfinance holdings seems to have 2 or 3 successful offices in their network and the rest is performing poorly, if not loss-making. Despite this, they keep willing to invest in new markets and open new entities (often competing with each other in the same market: see Tunisia and Myanmar) . So is the holding model working? What are the dynamics behind such expansion plans? Revenues to the consultancy arm (many of those holdings also have a consultancy department that help new entities with staff, IT, audit etc.) seems to mainly come through new entities, which bring the second point
–       Conflict of interest: with the consultancy and the sponsor. This was quickly tackled in the report but it is a serious reiterating issue with such models. What incentives to put in place? How to ensure that the best interest/profitability of the local entity is protected (vs the profitability of the holding and its consultancy)?
–       Technical Assistance (TA): the section about performance without TA is quite surprising as it states that the break-even year is the same, and the TA is used as buffer against high losses and hence against lower IRR. Is it the right way to use TA? (just to improve IRR expectation on an accounting level? Much of it comes from taxpayer money…)
I am sure that other investors in this space are wondering the same and I hope CGAP will be soon looking at this.

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