Each year, the Microfinance Banana Skins sets out to measure perceptions of risk in the industry. The 2012 survey highlights concerns about overindebtedness, which was ranked as a top risk by respondents in over half of participating countries. This is, without a doubt, a serious issue that presents both reputational and practical risks that go to the heart of the mission of microfinance: client welfare.
As the sponsors of this report, we are pleased to see the degree of self-awareness the 2012 Microfinance Banana Skins reflects among microfinance practitioners. Awareness of risk is, after all, a “precondition to coping,” as one survey respondent noted, and a first step in beginning to manage and move beyond the risk. Practitioners reported a fair degree of confidence in their overall preparedness and ability to handle the risks identified. Already we have seen awareness morphing into action through the responsible finance agenda, with initiatives such as the Smart Campaign and the Principles for Client Protection gaining traction around the world. However, the Banana Skins survey results do raise important questions about MFIs’ capacity to rise to the occasion, and in particular management and staff capacity to cope with the complexities of the new operating environment.