Study: Perception of permissiveness of legal and regulatory environment in ECA

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Jan 2008
Warsaw, Poland, January, 31 2008 - The MFC in its 2007 annual mapping study surveyed the MFIs on their perception of legal and regulatory environment as a conducive factor for microfinance industry development.

The results show wide differences across the ECA region and within the subregions. The highest satisfaction with legal and regulatory conditions for microfinance is seen in low-income countries thanks to intensive development efforts aimed at creating conditions for microfinance as a tool for poverty reduction. MFIs there enjoy higher profits as there are fewer restrictions affecting MFI operations. However, this comes at a cost of social performance – fewer women are served and the outreach is shallower among those MFIs which are satisfied with the legal and regulatory conditions for microfinance in their country. They tend to have a more commercial, profit-seeking approach rather than follow a development-oriented agenda. On the country level practitioners saw the least favourable environment in Croatia, Macedonia and Uzbekistan and the most favourable in Poland and Montenegro.

The absence of the option to provide savings collection is perceived as the most unfair regulation for NGOs/NBFIs all over the region especially in view of increased competition coming from banks. In the opinion of many NGOs/NBFIs, especially in Bosnia and Herzegovina, Romania and Kazakhstan, they are subject to the same limitations as banks, but cannot benefit from the same privileges



 

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