The Council of Microfinance Equity Funds (CMEF) is the first membership organization to bring together the leading private entities that make equity investments in microfinance institutions (MFIs) in the developing world. The Council’s members seek both social and financial returns from their investments in these institutions, all of which provide a range of financial services to poor households in developing countries.
As an industry association, the CMEF convenes its members on a semi-annual basis for in-person meetings and networking. In addition, the Council, through its secretariat at the Center for Financial Inclusion, represents the voice of equity investors through a range of ongoing industry initiatives, such as the Social Performance Task Force and CGAP Microfinance Investment Vehicle (MIV) disclosure guidelines.
Equity investors in microfinance face tremendous opportunities and challenges, and at the same time they bear great responsibility for the health of the microfinance institutions they support. Issues of concern to equity investors range from pipeline development to governance to valuation. By offering a forum for investors to share their experiences and challenges, CMEF helps investors collaborate to address shared difficulties and improve the practice of investing in microfinance.
CMEF members are active investors in microfinance and adjacent sectors. Members must have a primarily private ownership structure, at least two equity investments in MFIs, a double bottom line commitment, and an active governance role in their investments. More information about CMEF membership requirements and benefits is available on the CMEF website.
- The “Microfinance Banana Skins” survey, 2008, 2009, 2011 and 2012 in collaboration with Citi, CGAP and Centre for the Study of Financial Innovation (CSFI). The survey explores the risks facing the microfinance industry in the context of challenges such as growth, changing economic environments and an expanding product range.
- Governance Guidelines, first published in 2005 as "The Practice of Corporate Governance in Shareholder—Owned Microfinance Institutions," to provide practical guidance for stakeholders in governance – investors and prospective investors, board members, and senior managers – in strengthening the governance of their own MFIs. The Governance Guidelines have since been widely used and highly regarded as an excellent source for governance information within the microfinance industry. Since 2005, much has changed in the field of microfinance, and good governance has become increasingly important. Therefore, in 2012, the Council updated this reference document as "The Practice of Corporate Governance in Microfinance Institutions" to reflect new thinking and resources that have emerged in the microfinance industry around governance since the original version was published.
- The Council supports the CGAP and J.P. Morgan Global Microfinance Valuation Survey, 2009, 2010, 2011, 2012. This report combines CGAP and CMEF knowledge of microfinance with J.P. Morgan’s equity research skills in emerging markets. The objective of the project is to provide benchmarks for valuation of microfinance equity.
- CMEF collaborated with responsAbility, Triodos, and the Center for Microfinance at the University of Zurich to publish “Over-indebtedness and Microfinance: Constructing an Early Warning Index.” As responsible investors, CMEF members place great importance on reducing the risk of over-indebtedness. Triple Jump has recently joined this effort and is taking the lead on producing a follow-up over-indebtedness study.
- CMEF’s signature series, “The Growth of Commercial Microfinance”, 2004, 2006 and 2011, seeks to illustrate the changes in growth, expansion and maturity of the commercial microfinance industry over the past eight years.
Governance Roundtable Webinar: CMEF, CFI and the UN PRI’s PIIF are hosting a Governance Roundtable Webinar on October 11, from 9:30am-10:45am EST. The webinar will focus on the recently-released Governance Guidelines. Click here for more information, including on how to join the webinar.
Equity Valuation Survey: CGAP and J.P. Morgan, with support from CMEF, recently released a valuation report for microfinance institutions. Click here for a summary of the findings.
Board Remuneration Survey: The CMEF conducted a first-ever survey of members regarding board remuneration practices at MFIs. This survey we conducted in collaboration with the MicroFinance Network (MFN) with data from both MFIs and CMEF member funds to create more transparency for Council members on this issue. The results of this survey were shared with Council members at the Amsterdam meeting in April 2012. Click here to learn more.
The “Get Real” Valuation Project: Some investors are starting to evaluate whether actual returns from investing in microfinance are matching up with expectations, and are also looking for industry benchmarks to measure the performance of their funds. While plenty of data exists on debt returns, there is less information on equity returns. A blind study has been conducted so CMEF members can share a range of their returns confidentially with other Council members. The survey results were shared with CMEF members at the Amsterdam meeting in April 2012.