By Alicia Singh

When Forbes magazine decided to compile a list of the world’s top 50 microfinance institutions, two World Vision projects made the list.

Microfinance has become a popular concept in the investment world, with the notion that individuals and institutions can invest in ventures that help alleviate poverty. Small loans are granted to entrepreneurs who have sound business ideas, but no assets or credit history to qualify for a traditional loan.

To help investors sort through the growing list of microfinance institutions (MFIs)—currently, there are more than 12,000 MFIs issuing loans worldwide—Forbes created its first-ever list of the world’s top institutions.

Ranking at number 14 on the Forbes list, World Vision’s Ekonomsko Kreditna Institucija (EKI) is a program that seeks to create jobs and reduce poverty in Bosnia and Herzegovina. At number 22, Agroinvest is a World Vision program in Serbia and Montenegro that assists entrepreneurs, especially women.

How MFIs Were Chosen
To compile the list, Forbes collected 2006 data from the Microfinance Information Exchange and analysis from ratings firms Micro-Credit Ratings International and MicroRate.

In order to qualify for the ranking, institutions must have made their audited financial statements available and must have passed review by a Forbes panel of advisors.

Rankings are based on:

• size of the gross loan portfolio of each MFI;
• the efficiency, which considers the operating expense and cost per borrower;
• the risk, which looks at the quality of their loan portfolios; and
• return, which is measured as a combination of return on equity and return on assets.

Each category is equally weighted for an institutions overall ranking.

The top 50 were chosen from a field of 641 reporting microfinance providers. 

About EKI
Bosnia and Herzegovina has experienced a “brain drain,” due to many of its qualified workers moving to other countries, according to the United Nations Development Programme. In addition, a weak education system helps perpetuate poverty for generations to come.

To combat this problem, World Vision created the microcredit organization EKI to enable clients to start new businesses or to expand existing ones in order to hire others. 

Last year, EKI distributed 38,000 loans adding up to US$93 million. The majority of loans went towards agriculture development and small- and medium-scale entrepreneurs. 

About AGROINVEST
Across the world the significant number of women entering the workforce over the past three decades has greatly transformed economies. Investing in women has proven to be the most effective way to increase social development in many countries.

The MFI Agroinvest was started in 1999 and has a client base that is more than 60% female. Last year, it disbursed 30,000 loans worth a total of US$64 million.

Agroinvest also helps more than 56,000 children each year through its Happy Child Project, where a percentage of each loan is put aside for funds for the community. 
 
More Info
Click here to read more about World Vision’s approach to microfinance.